The rise and spectacular fall of WeWork, a company that promised to revolutionize work and community, is a cautionary tale of unchecked ambition, a charismatic founder's cult of personality, and the dangerous allure of hyper-growth valuations over sustainable profitability.
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$47 billion had just gone up in
Flames wework had been one of the most
valuable startups on the planet and the
founder believed he was the Messiah who
was going to solve The World's
problems however wework was now
bankrupt being sued for
billions and accused of being a
cult so what really happened happened
here this is a story of obscene wealth
power and dead
unicorns and as we go deeper down this
Rabbit Hole things will just get crazier and
and
crazier welcome to the spectacular rise
and fall of
weor one of the most insane business
Adam Newman had an unusual childhood to
say the least his family moved to 13
different places whilst he was growing
up meaning he never felt settled one of
those was was a kabut in Israel which
was meant to be a self-sustaining
socialist Community whilst Adam enjoyed
the communal feel he didn't like that
everyone in the community got paid the
same amount no matter which job they did
and so in 2001 at 22 years old Adam
moved from Israel to New York for one
simple reason he wanted to get rich he
told friends that New York was where
opportunity happens and he soon set up
business the idea was simple a women
shoe with a collapsible high heel so the
shoes could turn into Flats Adam quickly
found a Chinese manufacturer to produce
them however the first person who
actually tried the shoes said it nearly
sliced their finger off the design was
ugly and dangerous So Adam went out with
some friends to drown his Sorrows that
his first business idea seemed to be
going nowhere but in conversation over
some beers one friend asked why baby
clothes didn't have knee pads for all
the time baby spent crawling across hard
floors he'd said it as a joke
but Adam took it literally and thought
it was a genius business idea the next
morning Adam registered a trademark for
a new baby clothes company called
crawlers the slogan was just because
they don't tell you doesn't mean they don't
hurt Adam got some seed funding from his
grandmother and other connections he'd
made in New York and then it fully threw
himself into this new business selling
baby clothes with knee pads Adam was a
great salesman and through his Charisma
and sheer persistence
he did manage to sell some baby clothes
it helped that he stood out so much at
trade shows which were typically filled with
with
mothers and yet here was this 6'5
childless guy with a booming voice
passionately telling crowds how babies
couldn't possibly be happy in life
without builtin knee pads of course
there were some obvious flaws with his
idea babies had managed just fine for
all of human history without knee pads
and babies only craw for a few months so
would quickly grow out other clothes as
a result crawlers was struggling to make
a profit and Adam was becoming
increasingly stressed as he burned
through his investment money his hands
started to shake it was clear to Adam
this business was never going to make
him Rich he needed to think [Music]
bigger Adam walked into an elevator with
no shirt or shoes on and struck up a
conversation with the strangers inside
one of those people was a guy called
Miguel mckelvie who would go on to
become we work's co-founder alongside
Adam Miguel was in many ways the
opposite of Adam he was much more shy
and introverted but one thing they did
have in common was their unusual
childhood Miguel had also been raised on
a commune of sorts it didn't seem a
hugely happy childhood though as Miguel
recalled dumpster diving and surviving
largely off food stamps however Adam and
Miguel struck up a friendship and soon
they began talking about ways of making
money Adam said he'd heard of someone
running a profitable business simply
from renting out office space to small
companies it sounded so simple and Adam
and Miguel figured they could do that
themselves so Adam spoke to his own
landlord a guy called Joshua Gutman who
had empty floors in one of his buildings
Adam said if Gutman let them use one of
his empty floors him and Miguel would
get the customers and run everything
then they'd split the
profits Gutman was skeptical about
giving them office space he said you
sell baby clothes what do you know about
real estate Adam responded your building
is empty what do you know about real
estate it was a bold move but Gutman
clearly did need some help filling the
building so he told Adam to come back
tomorrow with their business
plan the problem was Adam and Miguel did
not have a business plan so Miguel spent
the entire night frantically trying to
write one however even though the
business plan was written in one night
Gman like it and offered them several
floors in one of his office buildings
Adam even convinced Gutman to pay for
renovations so he and Miguel could make
it look nice they decided to call this
new office based business green desk
believing they could position themselves
as being environmentally friendly but
the reality was there was nothing about
the business that was particularly
eco-friendly it was just a marketing
gimmick to try and stand out as for the
business model it was pretty simple the
plan was to create a co-working space
where lots of small business businesses
would all work in the same office they
would divide each floor in gutman's
building into little clusters
essentially mini offices with just two
or three desks each then there'd be
shared communal spaces with Furniture
coffee and conference rooms and a single
shared receptionist when a small
business signed up to Green desk
everything would already be supplied
like Wi-Fi printers and drinks so it was
all just ready to go without the hassle
of setting up a new office tenants would
pay monthly rent to Green desk and it'd
be short-term contracts they could EAS
cancel the logic was that customers
would pay more per desk than in a
traditional office because it was much
more flexible and convenient not just
that but because Adam and Miguel were
trying to position this as a co-working
space where people from different
companies would interact with each other
they could pack everyone in very tightly
together so they could fit more people
in than a normal office so basically
they could make more money from the same
amount of space Adam and Miguel also
bought most of their furniture from Ikea
to keep cost down
so that was their plan and once they'd
renovated the office space to make it
look more modern Miguel started posting
ads on sites like Craigslist to get
their first tenants now given this was
happening in 2008 right after the
financial crisis Gman wasn't sure they'd
get much interest but it actually turned
out to be a pretty great time to start a
co-working company there were a lot of
people who'd lost their jobs and were
now looking to start their own business
and thus many Freelancers and startups
quickly signed up most small businesses
didn't want a big office with long
leases which is what most landlords were
selling so what greenes was offering was
ideal for them and if their startup
failed they weren't locked into to a
long-term lease so basically Adam and
Miguel seem to have found a gap in the
market it wasn't even a new idea it was
just good timing green desk was a hit
for a monthly fee these small businesses
got access to everything they needed
Plus instead of cubicles or drywall
between offices there were glass
dividers to make the space feel more
open lots of light streamed into the
office to give it a brighter more modern
feel and soon the building was full of
small businesses often just a couple of
people each everyone seemed to love the
camaraderie in the office and it quickly
developed into a mini community in fact
Adam and Miguel threw many networking
events that were essentially more like
parties which acted as ice breakers so
everyone there could get to know each
other and build
connections soon they opened another
floor and then another and eventually
the whole building was completely filled
with 350 tenants
however Adam was already thinking a lot
bigger he wanted something that could
become a giant Empire So Adam spoke to
Gutman about this Grand Vision he had to
make this into a global
movement but Gutman wasn't as Keen to
expand so quickly and Gutman also didn't
want to lease buildings from other
landlords he said that was very risky
because then they'd have to take out
long-term leases and yet their tenants
could easily cancel so if there was
another economic downturn and everyone
canceled they'd be on the hook for huge
payments and yet they'd have no Revenue
Gutman said they had a good thing going
why not just keep it simple and low risk
but Adam was never going to be content
with that he'd finally had a small taste
of success and now he wanted to expand
rapidly So Adam convinced Miguel they
should go solo they didn't need Gutman
he just provided the building but they
could lease buildings from other
landlords and then have full control
this would allow Adam to to do whatever
he wanted and expand as much as he
desired what's interesting is that if
Adam had just stuck with greenes and
continued working with Gutman he would
eventually make millions the model
worked and it was safe as Gutman already
owned buildings they could use but Adam
was getting restless and droing much
bigger he wanted something that could
make billions not
Millions so in 2009 just a year and a
half after starting green desk Adam and
Miguel sold their sharing the company to
Gutman in exchange for about $500,000
each Adam told Miguel not to transfer
his share of the green desk money though
because Adam would just spend it so
instead Miguel kept the money safe and
they agreed to invest all of it into
their new Venture it was time for The
Adam had huge plans for their new
business before they even started it and
he told friends he was going to become a
billionaire Adam said the office spaces
would just be the beginning and that
soon they could also get into hotels and
restaurants and many other Industries
Miguel pointed out they didn't even have
a business name yet and so they began
brainstorming and eventually decided on
Wei work as this captured the community
Spirit they were hoping to focus on but
it also meant that if Adam's expansion
plans came true they could use this we
branding for all the other markets they
wanted to enter like we live we eat we
sleep we anything but first they were
starting with officers exactly like they
had with green desk wew work was going
to be very similar to Green desk but
ditching the environmental focus and
putting more focus on community and
togetherness and rather than partnering
with one landlord who took 50% we work
with simply lease buildings from
different landlords then they divide the
space up and rent out each slice to
smaller companies this did mean more
risk as they'd be paying for those
offices no matter what even if they
couldn't sell all the space but it also
meant higher potential profits and so
Adam set up meetings with every office
building owner he could the problem was
many of them were skeptical of this
brand new unproven company who would be
renting out space to other new unproven
companies but Adam was relentless and
went back to landlords again and again
then Adam met a guy called Joel shrier a
young real estate developer still in his
20s who said he wanted to invest in Wei
work he asked Adam how much he valued
the company at now Adam and Miguel
hadn't been looking for another partner
but they figured it didn't hurt to just
throw out an outrageous number so Adam
said the company was worth $45 million
even though wework didn't have a single
office yet they basically just had the
concept and yet even more shockingly
shria agreed to put in $15 million for a
third of the company that didn't really
exist yet this deal was crucial for
wework though because shrier was well
known in New York real estate and so him
being on board gave them more
credibility he also personally
guaranteed the company leases and
introduced Adam and Miguel to other
landlords So Adam and Miguel finally had
landlords willing to deal with them and
soon enough weor secured the lease on
its first office building 154 Grand
Street in SoHo would become wework's
first office but honestly it was a
rundown mess it had just one small
elevator that took nearly a minute to
get to the top floor and there were only
six floors so Adam pushed hard for low
rent and money from the landlord to do
Renovations Adam then began selling
people on becoming tenants at the first
we work office even though they didn't
have anything to show yet whilst all the
renovations were taking place they
actually got some of their first
customers by literally going to a nearby
Starbucks and approaching people who
seem to be working on their laptops they
said wouldn't you rather have a proper
desk and office and be part of the
community and some of those people did
join we were work whilst Adam and Miguel
were both doing lots of random jobs to
get everything ready it was immediately
clear Adam would be CEO leading the
overall vision and making deals he spent
a lot of his time wooing investors
partners and landlords and he also
developed a reputation for doing tequila
shots during meetings meanwhile Miguel
focused on designing the space and
wanted to make it more like a boutique
hotel than a traditional office lots of
light would be streaming in with lots of
open space the offices would be glass
cubes to give a feeling of transparency
and that everyone in wew work was
together the idea was that everyone
would get to know each other and
connections would form like if you
needed a lawyer you could just go and
chat with the one working down the hall
as all of these small businesses were
packed in together Adam also hired their
first employee and his first email to
her was good morning let's build the
largest networking community on the
planet we work officially opened
February 2010 with 17 tenants some were
startups and some individual Freelancers
like an architect and a musician having
a desk at wework was meant to be more
like being part of a club they even
called their tenants Members wework's
First it manager was a 16-year-old high
schooler with the nickname Joey cables
this was slightly problematic as
sometimes there'd be a tech issue and
they'd have to wait to get it sorted
because their it manager was stuck in
algebra class meanwhile Miguel designed
the company's first logo a stick figure
with a sledgehammer smashing a computer
that's because Adam and Miguel felt
people want wanted to rebel against the
office culture and Corporate America of
previous decades Millennials didn't want
boring isolated offices and cubicles
they wanted more social interaction and
work to be more fun and we work tried to
tap into that before they barely
finished their first building Adam
started looking for their second and
started hiring more staff all of weworks
employees in the early days had to take
on a variety of different tasks that
weren't in their job description
especially doing lots of physical labor
when a new floor of a wework office was
about to open everyone was expected to
help out whether it was building the
desks or painting the walls and they
worked extremely long hours too as Adam
set unrealistic deadlines the wework
team often tried to tell Adam they had
to postpone the launch date of an office
because they were exhausted and yet Adam
somehow managed to convince them they
could do it never give
up work until you
TR everyone would work weekends or pull
all nighters to get everything set up if
someone left at 600 p.m. they'd get
asked if they were taking a half day
despite this most wework employees did
really enjoy the job at first it was a
very young Workforce who enjoyed the
social culture wew work had and the fact
that they were being given a lot of
responsibility at an early age and since
the employees spent so much time
together many became close friends plus
there weren't many companies that handed
out free beers to employees or the CEO
skateboarded around the office the
employees also seemed to buy into Adam's
Vision that they were part of an
important important movement to change
the way people worked Adam would say
they were a family and a lot of the team
bought into his cult-like promises of
them changing the world
together I was in my mid 20s looking for
purpose and here's this person selling
this dream
and I I was an easy target for that I
definitely wanted the world he was
telling me about Adam actually bragged
that we work underpaid at staff but
reassured them because of the stock they
were all going to be millionaires one
day as they would all get we work stock
options many of the young employees had
no idea how stock options even worked
and just took Adam at his word that
their shares would be extremely valuable
and more than compensate for their low
wages I'm working 12-hour days and I
don't get paid overtime but like it's
going to come back to us tfold like at a
later date as a result of all this work
wework was growing rapidly if you had a
startup wew work seemed like a great
place to run at it felt modern and there
were regular happy hours with drinks
where people would meet and make
connections wework also added arcade
games Fruit water and craft beer on tap
in 2011 wework generated $7.4 million of
Revenue and made a very small loss of
$50,000 this was pretty good for a new
company that had been expanding a lot
things mostly seemed to be working
however the key to expanding quickly was
getting more money from investors so
they could open more offices luckily
Adam was a great salesman and his
extreme conviction and bold Vision one
investors over he'd get them excited
about all the billions of dollars they
were going to make and their eyes would
light up to be fair to investors Adam
always put on a good show he'd ask
investors to come to a wework office to
see it in action and when they arrived
he'd give all his wework employees a
code phrase activate the space which
meant to suddenly throw a party and make
sure there was lots of hype and activity
happening in the office investors didn't
realize it was basically a fake event to
create a huge buzz and excitement around
the office while the investors were
there so to them it just seemed like
wework offices were always like this I'd
get this frantic email or call Adam's
coming to DC with investors you know
activate the space like buy whatever you
got to buy but like make sure that like
everyone's having fun so I'd like I'd
order like $2,000 worth of like nitrogen
Frozen ice cream and the cool thing was
it totally worked cuz when you walked in
it looked like an ice cream party with a
million different companies and
everybody was laughing and smiling and
having a good time so we made to happen
so when you first walked in you're like
dude this place is awesome like what is
going on however the main reason Adam
was able to convince investors to put
lots of money in is Adam told them that
wework was not a real estate company and
this is where things start to get really weird
Adam told everyone that the early 2000s
was the I decade iPhone iPod but he said
the next decade is the Wii decade
focused on community and a new way of
working he spoke about a revolution in
the way people worked this confused some
people sure wework's offices were nicer
than traditional offices but it didn't
exactly seem like a revolution but Adam
said wework was the first physical
social network was actually more like a
tech company than a real estate company
he said we happen to need buildings just
like Airbnb happens to need Apartments
he also described wew work as Uber for
offices and the next Google hey guys
this is wew work the world's first
physical social network our mission is
to empower the world through
collaboration we know that the future of
the world is in small business not in
Corporate America so we're building a
community that's transparent and that's
accountable that is wew work Adam knew
that trying to position wework as a tech
company helped to make a much more
compelling story to investors Venture
Capital firms don't often invest in real
estate as it's much harder to scale
compared to a software company for
example software companies may spend a
lot of money upfront to develop their
product but then they can sell it over
and over at almost no incremental cost
so profits can be exponential whereas
real estate requires finding a new
building with a new landlord and new
tenants and lots of new UN avoidable
costs of expansion the profit margins
are much smaller andless real estate
companies make it valued at two to five
times their annual revenue but fast
growing tech companies can get
valuations more than 20 times their
revenue and are much more exciting to
investors looking for growth So Adam
tried to make clear that we were
definitely wasn't a real estate company
so it's almost like you're a real estate
company wrapped in this sort of in in
this Tech uh Sheen so we're definitely
not a real estate company
we are a community of creators we create
environment for entrepreneurs and
Freelancers we leverage technology to
connect people and it's a new way of
working and just like uber is the
sharing economy for cars and City bike
for bicycle we're the sharing economy
for space when stories appeared in the
media saying we work was a real estate
company their PR team were told to call
reporters and make them change it of
course in reality companies like uber
and Airbnb were very different to we
work as they're extremely asset like as
their platform based and can launch
their apps literally anywhere in the
world with no direct extra cost contrast
that with wework where every new office
launch locked them into an expensive
long-term lease and unlike Airbnb they
were responsible for all the maintenance
and setup costs of each building not
just that but Adam was the furthest
thing from a tech entrepreneur he barely
ever used a computer couldn't code and
struggled to even use his MacBook many
also pointed out to Adam that it wasn't
going to be easy to scale community
building a community took time and a
more personalized approach but Adam
disagreed and he did an incredible job
of creating a narrative that we work
with something new and
Innovative Adam also persuaded investors
solely to focus on the revenue numbers
which were growing rapidly and ignore
the fact that the business wasn't
actually making any profit Adam would
point out that many big tech companies
were unprofitable for a while as the
idea was they invested heavily in growth
initially to gain market share but once
they dominated the market they could
then slow expansion and become
profitable and it's true this strategy
could work well for tech companies where
adding new users had very minimal
marginal cost but that was not the case
with wework some investors did have
doubts about the business model but
wework's early growth was undeniable and
Adam was very convincing he also pitted
investors against each other and many
investors suffered from fomo and didn't
want to miss out on this fast growing
company plus investing in private
companies is very different to investing
in public companies that are listed on
the stock market as those companies have
a lot more regulations around what they
report and they have to fully disclose
their finances whereas private companies
don't have to reveal all those details
which meant Founders could focus more on
telling a story and Adam always told his
team to double their projections before
he would show them to investors even if
those projections were wildly
unrealistic and to be fair we's Revenue
growth was doubling every year the
problem was their costs were going just
as fast fast the reality was weor didn't
have the network effects of tech
companies they didn't benefit from
economies of scale they had no real
competitive Advantage it was unclear if
the business model even worked or
whether it was just being propped up by
investor money however there was a
prevailing wisdom amongst Venture
Capital firms that you bet on ambitious
entrepreneurs more than the companies
themselves and after meeting with Adam
some of the investors said let's give
him some money he'll figure it
out one of those was a venture capital
firm called Benchmark who agreed to
invest $16.5 million at a valuation of
100 million Benchmark had backed
Instagram Uber and eBay so having them
invest was a seal of approval and
validation this caused other investors
to want to invest there was a feeling of
well if they've invested the business
must have a lot of potential and sure
enough it was a domino effect where one
influential investor led to another and
then another and every time new
investors came in the valuation of wheel
grows further and Adam could keep
opening more offices and grow even
faster with all this investment money
Adam started outbidding all their
competitors for new office leases even
if it meant massively overpaying but he
told them I'm not looking to make money
right now I'm just looking to add people
Adam wanted to focus on growth and worry
about profitability later before long
Goldman Sachs wanted to invest in wework
at a $220 million valuation which would
mean in just a year weck's valuation had
doubled but Adam turned them down saying
it was too low most wework employees
thought it was crazy to turn down so
much money given that they needed the
cash as they were spending so much but
Adam's gamble paid off shortly after
rejecting the deal wework raised $40
million at a 440 million valuation
double what Goldman had proposed now the
real truth is that private valuations
are fairly meaningless there's no
specific formula or maths behind it it's
what invest ERS are estimating the
company as worth but Adam loved seeing
the valuation rise and it helped create
a narrative that wework had this
incredible upward momentum however more
investors would normally mean giving
away some control of the company but
Adam changed it so his share votes
counted 10 times more which meant he
could sell more shares but still
maintain full control of the company
several early investors warned him that
absolute power corrupts and questioned
if this was the best decision for wework
but Adam Shrugged them off and said
work to try and prove they were a tech
company we work launched weconnect kind
of like their own internal version of
LinkedIn to help connect the companies
working in different wework offices so
if you wanted to hire for a specific
role like a graphic designer you could
look on WE conect and find someone but
the system was buggy and it could take
minutes to even load pages hardly any
wework members were really using it and
it wasn't clear what the benefit was
this was a repeat cheated pattern where
rather than just using proven software
that already existed wework would try to
build their own internal version to make
it seem more like a tech company but
this meant they had a bunch of poorly
developed systems patched together so
rather than just using a well-known
billing software they tried to make
their own which wasn't as good weor even
started considering launching their own
cryptocurrency for actual tech companies
all the millions of dollars Adam had
raised could last them a long time but
we work at high costs like leases and
renovations and by 2013 they had over
200 employees so it wasn't long before
Adam needed to go and Pitch investors
for even more money as they would soon
be running out of cash due to their rate
of expansion luckily investors kept
coming Adam convinced JP Morgan and a
few other high-profile investors to put
in an additional 150 million at a 1.5
billion valuation this officially made
wework a unicorn the term used to
describe companies with more than a
billion despite raising all this money
the company forgot to Ren its healthcare
plan for Employees leaving them with no
insurance for the month meanwhile Adam
often sold some of his shares when new
investors came in this was unusual most
Founders don't sell shares until their
company goes public on the stock market
after all the employees couldn't sell
their shares yet but it was a different
rule for Adam the company was 4 years
old at this point and Adam bragged that
wework was undergoing the fastest
physical growth in the history of the
world however Outsiders couldn't make
sense of we work why was it valued so
high highy for example long before
wework ever existed a company called iwg
had been running essentially the same
business model by every metric iwg was
beating wework more members more
locations more profit and yet wework's
valuation was Far higher there were a
couple of differences like we's offices
were more modern and vibrant and
appealed more to Millennials but still
business model and economics were the
same it seemed like the real
differentiator was simply the exciting
narrative that Adam was pushing that he
was building a movement people were
getting caught up in the hype Charisma
and story Adam was telling and how fast
the company was expanding that's why
Adam always took potential investors on
an in-person tour of wework as the
numbers alone wouldn't have been
compelling Adam needed to put on a show
and investors who'd missed out on
startups like Facebook were Keen not to
miss out on the next one and so they
didn't scrutinize things as closely as
they should have even those who were
skeptical felt that once the company
went public they could offload their
shares this is known as the greater fool
Theory speculating on overvalued assets
costing a lot more than their intrinsic
value believing those assets can be
resold at an even higher price to
someone else basically believing there's
an even bigger fall we'll pay an even
every summer all of wework's employees
headed off to the company's annual
summer camp event a mini festival with
live music in the evenings and a variety
of events in the day like rock climbing
canoeing yoga and ziplining there were
also bars everywhere serving unlimited
amounts of free alcohol for many of
wework's young Workforce it was a
perfect weekend they might not have been
able to take a vacation so this was
their chance to completely let loose and
party you'd see Executives stumbling
around high or with a water gun filled
with vodka the head of HR got so drunk
she was rushed to hospital but by summer
camp 2015 the event was costing millions
of dollars for a company event they were
getting massive artists to perform
including Lord and bestile chain smokers
played and were paid in wework stock and
at the weekend arrived by helicopter to
play a surprise set it's like if you
went to Coachella but it was run by your
boss to me it's just this perfect
example of how we work wanted to blur
that line between your personal and
professional life blur it so completely
it was basically erased most employees
loved the event as it was essentially a
big party but some of the older
employees resented it as it was
mandatory and that they had tracking
bracelets to ensure staff attended
someone actually got fired for leaving
early even though Adam actually left
early as well Adam always said the idea
behind the Wii movement was that
everyone was equal and yet whilst the
employees slept in tents in the mud at
summer camp Adam had a luxurious trailer
at the top of a hill some employees
described it as cult-like in the way
staff members defended Adam as a kind of
god-like figure one employee even got a
wework tattoo and nobody partied more
than Adam there was one example where a
manager showed up at a wework office one
morning to find it smelling of weed with
cups of alcohol left everywhere he
looked at the security tape so he knew
which employee was responsible only to
find out it had been Adam and another
wework executive drinking all through
the night Adam later installed a high
power ceiling vent which many believed
was so he could smoke in his office or
another example during a company ski
trip Adam and several Executives grabbed
waiters trays to go sledding when a
hotel employee asked them to stop Adam
said I could buy this whole hotel but
parties were a key aspect of wew work
they even introduced a thank God its
Monday meeting each week which had lots
of tequila shots along with big rallying
speech from Adam about how they were
changing the world and how fast the
company was growing they' then chant we
work over and over again and you'd be
sitting in your office and all of a
sudden you hear chanting throughout the entire
entire
building one manager said he was told to
drink the Kool-Aid at we work they'd
meant it in a positive way but the
phrase actually means accepting a
deranged or foolish ideology and the
was the fun partying atmosphere and
rapid growth made it seem like
everything was going perfectly in 2015
wework made a
$227 million loss Adam said that's
because they had prioritized growth
instead of profitability he convinced
investors it wasn't a problem as wework
was hitting its Revenue targets and Adam
said if they wanted to be profitable
they could just stop expansion but the
reality was their losses were getting
bigger each year with no sign of getting
even close to profitable and Adam wanted
to increase expansion a lot more as he
knew that's what would impress future
investors and bring more money in which
would allow even more expansion in truth
Adam seemed to love the process of
raising more money and seeing weick's
value grow along with his own net worth
so Adam continued to impress investors
with the fast growing Revenue numbers
and soon enough weor secured $355
million more of funding at a $5 billion
valuation Adam said our trajectory looks
like Amazon's except our Market is
larger and our growth is faster he also
said that just like Amazon started with
books then expanded into selling
everything else we work had started with
offices but would soon expand to do
everything else and now that he had all
this investment money it was time to
make his world domination plans a reality
as early as 2014 Adam had been
trademarking names for future product
lines like we eat for food delivery or
we bike for a bicycle valet service
ideas were casually thrown around like
wework should make an energy drink one
wework member pointed out that even
basic things like coffee machines and
elevators were broken in the wework
offices maybe they should fix stuff like
that before worrying about launching an
energy drink but as we got more and more
money from investors suddenly there was
enough funding for all of Adam's World
ideas firstly Adam launched we Studios a
movie production company but the main
goal of that seemed to be to try and
launch the film career of his wife
Adam's wife was Rebecca paltro when she
first met Adam she'd said I just knew
that he was going to be the man that was
going to help save the world Rebecca was
the cousin of gwynth paltro as she
frequently liked to tell people but
Rebecca hadn't had the same acting
success herself and so wi Studios was
meant to help her get more roles but
after their first full movie flopped at
the box office they didn't make another
however as we were grew Rebecca started
to become more involved in the company
Rebecca was very spiritual and that
definitely rubbed off on Adam and thus
it rubbed off on wew work he started
talking a lot more about energy and he
brought his spiritual adviser into the
office to preach about the importance of
hard work next they opened a boutique
gym offering yoga classes infused with
an entrepreneurial Spirit wework also
hired a cent artist to create a
signature wework fragrance so many of
these new Ventures seem like pet
projects based on Adam and Rebecca's
personal interests rather than making
business sense they seem to think we can
make anything work so let's just do
everything but it was difficult to see
how the company could possibly develop
expertise in all these different
unrelated businesses it seemed like a
distraction given their core business
model of leasing office space still
wasn't close to profitable the thing is
Adam had seen how most of the big tech
companies seem to be diversifying just
think of all the completely different
business lines companies like Google and
Amazon have and since he was adamant
wework was a tech company he wanted to
do the same he wanted to build an entire
Wei World in fact he wanted to go beyond
this world because he told a reporter
that wew work Mars is in our pipeline he
explained how when Elon gets everyone to
Mars wew work will build a community
like there's never been unfortunately
when Adam eventually managed to meet
Elon for a couple of minutes Elon didn't
seem remotely interested in the idea of
a wework on
Mars as well as creating new companies
Adam was very keen to start buying them
he initially wanted to buy Etsy until
someone told him it was a billion dollar
public company he also looked into
buying a company called magnesis a
membership club created by Billy
McFarland the guy who would go on to
create the absolutely disastrous fire
festival and subsequently end up in jail
ironically Billy we work as an
inspiration for firefest meanwhile Adam
had become friends with Jared Kushner
Donald Trump's son-in-law and Adam
claimed that if Trump got elected Jared
would consider letting Adam reimagine
America's post offices and libraries
nobody knew quite what that meant but
Adam was thrilled with how influential
he was
becoming however the world spending on
random projects didn't seem to matter as
Adam kept convincing more investors to
come on board during one meeting with a
big investor Adam took into the roof of
the building to do shots together and
then celebrated by spraying the investor
with a fire extinguisher one we workor
employee commented should Adam have done
that maybe not but you have to tip your
hat to him we close the deal the next week
Adam was not content with just trying to
change the way people worked he wanted
to change the way people lived andless
he decided wework was going to launch a
new initiative called we live small
apartments with big common spaces so
residents could easily hang out together
a type of communal living that Adam said
would change residential real estate
forever ironically when he'd been at
College Adam had pitched a very similar
idea to his Professor who told him he
didn't think it would work Adam was
determined to prove him wrong
essentially it was like a college dorm
for adults small rooms communal kitchens
and a game room and lots of happy hours
they were starting this in New York and
it wasn't clear if the people of New
York actually wanted even smaller
apartments with more people crammed in
just so they could have more communal
areas we Liv's economics also made even
less sense than we work they would have
to build apartments from the ground up
to get the layout and architecture they
wanted and there were a lot more
regulations for apartments than offices
that forbid you squeezing so many people
into such a tight space not to mention
all the plumbing costs but for Adam
expanding into a whole new giant market
was a great selling point to convince
more investors to give him money Adam
told them that we live would be even
bigger than we work the initial slide
deck Adam showed investors predicted
that within 4 years we live should have
34,000 residents and be making $600
million in rent in reality they
struggled to even open two locations and
they lost lots of money on it but in
January 2016 two we live floors finally
opened at 110 Wall Streets to help get
some momentum we workk employees and
members were offered the chance to stay
in a we live for just $500 a month as an
initial trial although this meant
sharing a small studio apartment with a
coworker but many of wew work's
employees were on low salaries and this
also meant they could live extremely
close to their wework office so they
accepted the offer however imagine for a
moment you're spending the majority of
your waking hours at Wei work and then
when you come home you're coming back to
we live soon you realize your entire
life and Social Circle was all connected
to this one company many employees soon
realized they had no friends outside of
Wei work they said it was starting to
feel like a bit of a cult I was working
in we work and living in we live my
entire life was being propped up by the
Wii community and we Works problems were
real estate prices were rising and we
work with sometimes paying triple the
amount per square foot that it had in
its early days and because Adam was
opening so many new offices and product
lines they were already starting to
think about needing more money soon even
though they raised 355 million not that
long ago in less than a year we workor
had also tripled its employee number and
now had over a thousand full-time staff
many of the senior positions were held
by Adam's friends and family Adam didn't
see that as problematic though during a
company toast Adam asked one of his team
what's that word you always use when I
hire my family and friends nepotism he
replied yes that's it Adam said cheers
to nepotism considering it was meant to
be a tech company weck's infrastructure
was quite shocking one member realized
that weck's network was so insec cure
that they could see data from other
wework customers the person who noticed
this was from a small data analytics
startup called thinknum who were
themselves using a wework office using
this security loophole in wework system
they found out that wework's churn rate
meaning how quickly wework members were
leaving had been on the rise they also
discovered that wework's internal
LinkedIn was hardly used at all and only
about 20% of users had ever even posted
so tham posted this data publicly on its
blog after all the data had been freely
available even if it wasn't meant to be
but the very next day they were kicked
out of wework for violating the
happiness Clause of their contract and
were told they had 30 minutes to leave
an even more worrying stat for wework
was that its occupancy rate was falling
now that they were leasing so many
offices many of which were quite close
together the fact that wework offices
were normally quite full had been a key
selling point Adam showed to investors
and so to stop the occupancy rate from
falling and ensure their buildings
remain full we work started offering
several months of free rent to any new
tenants who joined with no contract at
all many companies would simply take the
free months and then move to a nearby
wework to get the discount all over
again thus getting unlimited free office
space wework was so Keen to boost their
numbers they didn't really keep track
and the team were told to spend no
expense on fancy dinners to Woo new
members wew spending and costs were
spiraling higher and higher wew work had
not always been this way in the early
days they'd worked hard to save money
and so So Adam made a big speech about
how they needed to start fighting for
every dollar again Adam decided to pull
back some of his new ideas like we Kids
Daycare however many employees felt he
was being hypocritical for example in
one meeting Adam suggested they buy
cheap furniture from China to save money
and then he turned to Miguel and asked
if he wanted to take a helicopter to The
Hamptons one wework employee who was
particularly unhappy was Joanna strange
her boss had given her his login details
so she could help him with different
admin tasks but one day Joan and noticed
an email about upcoming layoffs and so
she clicked on it it turned out weor was
cutting 7% of its entire Workforce and
she saw that her name was on the list of
people to be fired she also saw that one
manager was bragging he'd managed to lay
off more staff from his team than the
other managers had so Joanna leaked the
emails about layoffs to a reporter Adam
was Furious the big number of layoffs
hurt the narrative he was pushing about
wework's incredible growth and whilst it
was true that Revenue was still growing
fast the more the revenue grew the more
money the company lost overall this
meant they were stuck in a cycle of
constantly having to raise more money
from investors by 2016 wework was losing
$1 million a day and once again it would
soon be running out of cash wework was
big enough now that most companies would
go public at this point meaning to list
their shares on the public stock markets
to raise more money for context Amazon
went public just 3 years after it was
founded Apple was four years but even
though wework was now into its sixth
year Adam still wanted to hold off on
going public as long as possible staying
private meant much less scrutiny from
the press or investors and it meant they
didn't have to fully share all their
finances however it seemed like there
were no options left because there were
barely any private investors left who
were big enough to invest given how high
weworks valuation had become but then
all of a sudden Adam struck up a
conversation with just about the only
private investor in the world who did
have enough money and this meeting was change
everything before we dive into Adam's
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free masayoshi son is a fascinating
character and a key player in the wework
story he's the founder of the Investment
Company SoftBank and perhaps more than
any other investor in the world masasa
is known for making big bets at one
point during the dot boom in the year
2000 Massa briefly became the richest
man in the world but it lasted just 3
days and then he lost around $70 billion
almost overnight when the dotom crash
happened which was the biggest personal
loss an investor had ever
made but that didn't stop Massa he then
invested in Alibaba in its early days
when the company had had just a few
employees and he turned a 20 million
investment into over $70 billion making
it one of the best Venture Capital
Investments of all
time but this is where masassa gets even
more intriguing when asked about why he
invested in Alibaba he didn't talk about
the company he just spoke about the
founder Jack Mah well he had no business
plan and uh zero Revenue but his eyes
was was very strong strong eyes strong shining
shining
eyes um I could tell from the way he
talk the way he look at he has a
Charisma he has a leadership Masa
explained that they just talked about a
shared Vision he said jackar had very
bright sparkles in his eyes which were
as bright as the sparkles in the eyes of
Bill Gates and Steve Jobs Massa said
that him and jackar were both a little
crazy which is what caused Massa to
invest in other words Massa bet on
people more than anything else and over
the years Massa had gotten even more
ambitious Massa had decided to create a
hundred billion investment fund called
The Vision fund which would be used to
invest in tech companies with a
particular focus on AI to raise this
much money Massa had a meeting with
Saudi Arabia's leader as masasa knew the
Saudis wanted to diversify away from
being so reliant on oil and Massa
convinced them to put in $45 billion the
largest commitment to any Venture Capital
Capital
Fund in 1 hour you convinced him to
invest $45 billion no no it's not true
okay 45 minutes $45 billion1 billion per
minute so Mason now had the biggest
investment fund and was looking for
Innovative companies to invest in and
one day in 2017 he was heading to visit
Trump after he just got elected as
president ladies ladies and gentlemen
this is Masa of soft Bank from
Japan but on that very same day Masa
also scheduled a 2-hour meeting with
wework where he was going to listen to a
presentation from Adam Adam had
everything planned out ready to activate
the space on masa's arrival everyone was
in position ready to throw a big party
when Masa arrived however masassa was
running very late Adam grew more and
more anxious as the minutes ticked by
and Masa still wasn't there when Masa
eventually showed up up he apologized
and said instead of 2 hours he only had
12 minutes so Adam launched into a
shortened version of his pitch and since
he knew Massa like tech companies it was
all focused on how wework was indeed a
tech company and he took Massa to their
research and development lab to show in
various random projects they were
working on this included a standing desk
that automatically adapts to your height
and a phone booth with smart lighting it
was unclear why any of this was
necessary but Adam's message was simple
we're a tech company not a real estate
company after the 12 minutes were up
Masa told Adam to join him in his car
and they'd continue talking there on the
way to massa's next meeting Adam pulled
out his iPad in the backseat of the car
ready to continue his pitch but Masa
said it wasn't necessary Massa explained
he was impressed at how fast wework was
expanding in just the last 30 days
wework had open new offices in 13
different cities but in particular Masa
liked the vision Adam talked about how
they were essentially going to take over
the world and so Messa pulled out his
own iPad and started writing out terms
for a deal where he would invest around
$4.4 billion into wework wework had
already raised a lot of money but this
was significantly larger than any
investment wework had ever had it was
also the largest investment so far from
the vision fund Mass's own Investment
Company SoftBank was also putting some
money in and so after just a 12-minute
meeting Masa was now writing up a
contract in the back of the car that was
one of the largest Venture Capital
Investments of all time Massa signed his
name then handed it to Adam to sign his
normally Adam would ask for more money
in any deal but even he was shocked by
what was happening and so he just signed
immediately before this meeting wework
had been in desperate need of more cash
and yet now they had more cash than ever
before and with this new 4 billion
investment SoftBank also gave wework a
new valuation of $20 billion making it
one of the most valuable private
companies not just that but Adam now had
a new mentor Massa son who became a
father-like figure to him as Adam's own
dad hadn't been around much when he was
younger Adam was a foot taller than
Massa and their appearance couldn't have
been more different but they shared a
similar vision and excitement for the
future Adam said he had a special
connection with Massa and Masa told Adam
the last person I felt this with was Jack
Jack
Mah now why was Masa putting in over 4
billion dollar from a 12-minute meeting
well massa's strategy with the vision
fund was that because he had so so much
money he could basically pick the winner
in any industry as the companies he
invested in should be able to beat any
competitors simply by having so much
cash and thus if a company convinced
Massa they could become the number one
player in their Market he would give
them basically unlimited funds to make
it happen and he clearly believed in
Adam this was happening throughout
Silicon Valley some have described it as
one of the greatest wealth transfers in
history as investor money was being
thrown at startups to offer consumers
heavily subsidized product and services
from discounted ride sharing to food
delivery to unlimited movies and this
caused whole Industries to become warped
and it became hard to know which
business models even made sense anymore
as these companies were all burning
money to try and win market share
quickly however whil Massa was clearly
entranced by Adam and believed that weor
could dominate their entire industry
most of the other people at soft bank
and the vision fund did not feel the
same way firstly their priority was
meant to be tech companies and Ai and
despite what Adam was preaching we would
very much seem like a real estate
company and secondly looking at weck's
numbers more closely painted a worrying
picture they'd missed some of their
targets by 80% and they were nowhere
near being profitable so even though the
deal had been agreed in principle by
Massa and Adam wework employees worried
it would fall through once SoftBank
started doing due diligence it was clear
that most people at SoftBank apart from
Massa were very skeptical but SoftBank
was led by Massa and Massa claimed that
his insights in those first few minutes
of meeting a Founder are often more
meaningful than the months of due
diligence his company does afterwards he
liked to quote Yoda don't think just
feel it use the force now admittedly
this all sounds insane but Masa had
pulled off several incredible deals
before and it was his company so
ultimately he had the final say no
matter the concerns his advisers raised
the $4.4 billion investment into wework
was Happ happening the investment was
officially announced in August 2017
wework became the fourth most valuable
startup in America behind only Uber
Airbnb and
SpaceX the deal also allowed Adam to
sell some more of his own personal Wei
work stock 361 million to be exact this
was certainly suspicious if you so
strongly believe in the company like you
say why sell so many shares now but it's
believed a big part of the reason was
that Adam needed the money to fund his
increasingly expensive lifestyle Adam
and Rebecca had built five different
homes and their personal spending and
luxurious trips seemed to be getting out
of control despite this Rebecca talked
about how they had an asset likee
lifestyle meaning not having many
material Goods even though they just
bought a new $15 million house their
constant flaunting of wealth was
frustrating to wework's underpaid
employees but then after the deal closed
Massa asked Adam a question who wins in
a fight fight the smart guy or the crazy
guy MAA said the answer is the crazy guy
who is willing to do whatever it takes
but he didn't think Adam was being crazy
enough he said whatever your current
strategy is make it 10 times bigger this
was something Masa often told companies
he invested in earning him the nickname
Mr 10 times often without even knowing
what numbers a company was projecting
Masa would simply tell them multiply
everything by 10 meaning go much bigger
and B
however in the case of Adam Newman and
wework Adam already had insanely high
goals the wework team were genuinely
shocked to hear Master say that Adam
wasn't thinking big enough most people
who knew Adam would say he was already
the craziest person they knew and yet
now his new Mentor was telling him to
think bigger and amplify everything by
10 many believe this was the defining
moment in wework history for the first
time in his life someone was telling
crazier Adam now had a war chest
billions of dollars from masaan and his
instruction was simple think bigger act
crazier any plans to try and be more
restrained with spending were now gone
Adam's first step was to try and wipe
out any competition he invited the CEO
of a competitor co-working firm called
industrious onto a private jet and
pitched him on the idea of wework
acquiring their company but the
competitor didn't want to join forces So
Adam told him if industrious didn't join
with Wei work his team would approach
all of their customers and offer them a
Year's free rent if they switch to
wework instead if that didn't work Adam
said he would offer them 2 years free
and if any of their tenants still didn't
switch wework would give them 3 years
free rent this was unheard of there
would be no possible way industrious or
any company could compete with
that now everyone knew Adam did have a
crazy amount of cash after the masaan
deal so industrious was definitely
concerned by the threat but industrious
couldn't figure out how it made
Financial sense for we work to do it the
losses would be catastrophic he figured
Adam must be bluffing and turned him
down but Adam wasn't bluffing and we
were excited offering fre years of
office space to lure away customers from
competitors even tiny competitors with
just one office were targeted by
Adam by 2017 Adam had threatened to buy
or Crush basically every single one of
we's competition for one of their
competitors they sent an employee over
pretending to be a potential customer
but whilst he was getting a tour of
their building the Weck employee was
writing down the names of every single
tenant so that wework could contact them
all and offer a year free if they
switched to wework for another of their
competitors they hired a steel drum band
to play outside their offices whilst
announcing weworks crazy discounts Adam
bragged to investors I can obliterate
any co-working company I
want wework also began filing a lot more
lawsuits there were rival companies
called your work we laabs and highw work
which they sued because of the
similarity of their names the lawsuit
claimed that we work objected to the
combination of a two-letter pronoun
followed immediately by the word work it
seemed a little ridiculous and most of
these companies being sued were tiny
businesses that weren't even a threat to
wework so there was definitely a
disconnect between Adam's ruthless
warlike strategy versus his message of
community and positively changing the
world after masson's investment weor
also tripled their marketing spending
immediately they began hiring 50 new
employees a week which soon Rose to 100
new employees each week it took them
just one year to go from 100 locations
to 200 locations they had a Gong in
their headquarters which they bang when
opening a new office but soon that was
happening so often they had to stop as
distracting the problem with such rapid
expansion is that they were entering
markets they knew nothing about when
opening a new wew work in koala lampor
Adam asked if it was a city or a country
we work had around 100,000 members at
this point and yet Adam was somehow
predicting they'd have 1 million soon
then Massa told him why only a million
and not 5 million so everyone within wew
work was told to Inc increase their
targets and projections much higher to
keep up with these wild expectations for example in the entirety of 2016 we work
example in the entirety of 2016 we work could generated $400 million in Revenue
could generated $400 million in Revenue whilst making a massive loss of course
whilst making a massive loss of course but Adam said he now wanted one single
but Adam said he now wanted one single region to bring in over $1 billion alone
region to bring in over $1 billion alone basically the numbers had no relation to
basically the numbers had no relation to reality as Adam urged his team to open
reality as Adam urged his team to open even more wework locations they also had
even more wework locations they also had to stop doing the same level of due
to stop doing the same level of due diligence they used to they started
diligence they used to they started overpaying commissions they started
overpaying commissions they started offering 100% of the first year free to
offering 100% of the first year free to tenants and since everyone knew they had
tenants and since everyone knew they had so much money and was so desperate for
so much money and was so desperate for growth they lost the upperhand in
growth they lost the upperhand in negotiations and often wildly overpaid
negotiations and often wildly overpaid for the leases they were signing the
for the leases they were signing the deals were nowhere near as good as they
deals were nowhere near as good as they were in the early days of wework when
were in the early days of wework when they'd been much more careful with the
they'd been much more careful with the budget for example they used to
budget for example they used to negotiate that landlords would pay for
negotiate that landlords would pay for renovations of the building but now we
renovations of the building but now we work with funding those themselves
work with funding those themselves perhaps worst of all there was no real
perhaps worst of all there was no real Playbook or system it all seemed very
Playbook or system it all seemed very happy Hazard and chaotic but the wework
happy Hazard and chaotic but the wework team was on strict instructions not to
team was on strict instructions not to slow down expansion so there was no real
slow down expansion so there was no real chance to re-evaluate or make the
chance to re-evaluate or make the process more efficient the original
process more efficient the original Target in 2017 had been to make a $500
Target in 2017 had been to make a $500 million profit instead wework recorded a
million profit instead wework recorded a nearly $1 billion loss expenses were
nearly $1 billion loss expenses were growing even faster than Revenue
growing even faster than Revenue now however Adam would say the strategy
now however Adam would say the strategy had changed they were simply staying in
had changed they were simply staying in growth mode a lot longer Revenue was
growth mode a lot longer Revenue was still Rising which meant so was wework's
still Rising which meant so was wework's valuation and that's What mattered to
valuation and that's What mattered to Adam profitability would come later
Adam profitability would come later right was Masa and Adam were happy with
right was Masa and Adam were happy with the plan many of wework's earlier
the plan many of wework's earlier investors did express some concerns with
investors did express some concerns with this ruthless expansion strategy some of
this ruthless expansion strategy some of them even started to doubt if Adam was
them even started to doubt if Adam was the right person to be CEO but it would
the right person to be CEO but it would be a terrible look for the Venture
be a terrible look for the Venture Capital firms to try and push the
Capital firms to try and push the founder out that had already happened
founder out that had already happened with Uber's CEO and VC firms were
with Uber's CEO and VC firms were desperate to be seen as founder friendly
desperate to be seen as founder friendly so no matter what doubts they had they
so no matter what doubts they had they went along with Adam's plan plus Adam
went along with Adam's plan plus Adam shares had extra votes so he had full
shares had extra votes so he had full control
control anyway another worry for wework though
anyway another worry for wework though was that an internal study found there
was that an internal study found there was much less community at wework than
was much less community at wework than they expected 69% of wework members said
they expected 69% of wework members said they didn't have any other friends at
they didn't have any other friends at wework outside of their co-workers
wework outside of their co-workers suggesting the initial camaraderie and
suggesting the initial camaraderie and togetherness from wework's first few
togetherness from wework's first few offices had been lost during the quick
offices had been lost during the quick expansion in other words maybe Community
expansion in other words maybe Community couldn't be easily scaled after all but
couldn't be easily scaled after all but if Community wasn't wework's unique
if Community wasn't wework's unique selling point what was it when Adam was
selling point what was it when Adam was asked about this he said our valuation
asked about this he said our valuation and size today much more based on our
and size today much more based on our energy and spirituality than it is on a
energy and spirituality than it is on a multiple of Revenue but Adam dismissed
multiple of Revenue but Adam dismissed any concerns by reminding everyone
any concerns by reminding everyone wework was not a real estate company
wework was not a real estate company Adam started referring to wework as
Adam started referring to wework as space as a service to capitalize on the
space as a service to capitalize on the trend of software as a service and Adam
trend of software as a service and Adam said what they were building would be
said what they were building would be bigger than the
bigger than the iPhone and indeed Adam was spending lots
iPhone and indeed Adam was spending lots of money on more Tech rated projects
of money on more Tech rated projects within wework one of those he referred
within wework one of those he referred to as Google analytics for space it was
to as Google analytics for space it was an internal system that would analyze
an internal system that would analyze data from interviews and sensors they
data from interviews and sensors they placed around the office and it would
placed around the office and it would organize all that data into valuable
organize all that data into valuable nuggets of information that could
nuggets of information that could improve wew work they actually were
improve wew work they actually were trying to create some pretty Advanced
trying to create some pretty Advanced systems but it was used for very mundane
systems but it was used for very mundane and pointless problems for example one
and pointless problems for example one of their findings from this system was
of their findings from this system was that people who lived closer together
that people who lived closer together tended to be better friends than people
tended to be better friends than people who didn't and they found that people
who didn't and they found that people preferred desks near Windows it was
preferred desks near Windows it was hardly groundbreaking insights given how
hardly groundbreaking insights given how much they were spending to try and
much they were spending to try and develop these
develop these systems when it became clear they were
systems when it became clear they were struggling to engineer their own
struggling to engineer their own technology Adam went on an acquisition
technology Adam went on an acquisition spree but most of the deals seemed
spree but most of the deals seemed completely unrelated to their actual
completely unrelated to their actual business one of the strangest deals Adam
business one of the strangest deals Adam did was spending 13.8 million for a
did was spending 13.8 million for a significant stake in wave Garden a
significant stake in wave Garden a Spanish company that manufactured wave
Spanish company that manufactured wave pool for Surfers nobody was quite sure
pool for Surfers nobody was quite sure what this had to do with Wei work but
what this had to do with Wei work but Adam liked it he also acquired
Adam liked it he also acquired meetup.com in late 2017 for around $156
meetup.com in late 2017 for around $156 million despite being in business 15
million despite being in business 15 years meetups finances weren't very good
years meetups finances weren't very good but that didn't stop Adam buying it it
but that didn't stop Adam buying it it got to the point where the weick team
got to the point where the weick team tried to stop Adam meeting other
tried to stop Adam meeting other Founders as he'd always tried to buy
Founders as he'd always tried to buy their companies he thought that if he
their companies he thought that if he controlled it it would perform better
controlled it it would perform better besides weor had billions of dollars
besides weor had billions of dollars from
from Massa what could go
Massa what could go [Music]
wrong Adam announced wework was opening a location in Africa he said it was not
a location in Africa he said it was not because he thought it was a good growth
because he thought it was a good growth opportunity but because of the positive
opportunity but because of the positive effect he believed weor could have on
effect he believed weor could have on the continent Adam was talking more and
the continent Adam was talking more and more about how weor could have more
more about how weor could have more influence on world issues than
influence on world issues than governments and at one point suggested
governments and at one point suggested maybe he would be president of the
maybe he would be president of the United States one day someone pointed
United States one day someone pointed out that was impossible as he wasn't
out that was impossible as he wasn't born in America and asked him what about
born in America and asked him what about President of Israel but Adam said the
President of Israel but Adam said the job wasn't big enough for him and he
job wasn't big enough for him and he suggested he could be president of the
suggested he could be president of the world instead we work employees didn't
world instead we work employees didn't know what exactly to take seriously but
know what exactly to take seriously but either way it was clear Adam's ego was
either way it was clear Adam's ego was growing along with wework's valuation
growing along with wework's valuation but Adam said I want to have the big
but Adam said I want to have the big biggest valuation I can because when
biggest valuation I can because when countries are shooting at each other I
countries are shooting at each other I want them to come to me he suggested
want them to come to me he suggested weor may be able to help solve the
weor may be able to help solve the Syrian refugee crisis and help bring
Syrian refugee crisis and help bring peace in the Middle East he declared we
peace in the Middle East he declared we are here in order to change the world
are here in order to change the world nothing less than that interests me with
nothing less than that interests me with the money he had from SoftBank and the
the money he had from SoftBank and the vision fund Adam decided to create his
vision fund Adam decided to create his own fund where he could invest in
own fund where he could invest in companies that interested him there was
companies that interested him there was a competition for companies to pitch him
a competition for companies to pitch him ideas called The Creator Awards which
ideas called The Creator Awards which Ashton Kutcher was brought in to host
Ashton Kutcher was brought in to host the Investments hadam made included a
the Investments hadam made included a medical marijuana company and an app
medical marijuana company and an app that was meant to be Shazam for TV
that was meant to be Shazam for TV nearly 20% of the funds went to multiple
nearly 20% of the funds went to multiple different coffee creamer companies it
different coffee creamer companies it was unclear what any of this had to do
was unclear what any of this had to do with Wei
with Wei work when Adam met founders of other
work when Adam met founders of other companies he was thinking of investing
companies he was thinking of investing in he'd say that if they weren't trying
in he'd say that if they weren't trying to raise a billion dollars how could he
to raise a billion dollars how could he take them seriously another sign of
take them seriously another sign of Adam's ego growing was that he had a
Adam's ego growing was that he had a meeting booked with Justin Trudeau
meeting booked with Justin Trudeau Canada's prime minister and yet a before
Canada's prime minister and yet a before the meeting Adam said he needed to
the meeting Adam said he needed to reschedule basically snubbing a world
reschedule basically snubbing a world leader and saying his schedule was more
leader and saying his schedule was more important another example was that
important another example was that whilst wework was trying to cram more
whilst wework was trying to cram more people into tighter spaces in its
people into tighter spaces in its offices Adam's office was being made
offices Adam's office was being made bigger he installed a private saer and
bigger he installed a private saer and call tub along with a large photo of
call tub along with a large photo of himself on the wall Adam would also make
himself on the wall Adam would also make major decisions on a whim he arbitrarily
major decisions on a whim he arbitrarily announced they should fire 20% of
announced they should fire 20% of employees every year to ensure standard
employees every year to ensure standard state High even though many felt this
state High even though many felt this would cause huge problems and disruption
would cause huge problems and disruption however one of Adam's biggest decisions
however one of Adam's biggest decisions was a new scheme where weor started
was a new scheme where weor started renting our entire office floors to big
renting our entire office floors to big companies instead of subdividing the
companies instead of subdividing the space and renting to small companies
space and renting to small companies like they usually did this meant weor
like they usually did this meant weor would be leasing office space from a
would be leasing office space from a landlord then just immediately leasing
landlord then just immediately leasing the entire thing out to huge businesses
the entire thing out to huge businesses this did quickly increase weick's
this did quickly increase weick's revenue and meant even faster growth
revenue and meant even faster growth however it was even more risky as they
however it was even more risky as they were giving massive companies like
were giving massive companies like Facebook and Microsoft short-term
Facebook and Microsoft short-term contracts they could cancel any time not
contracts they could cancel any time not just that but the whole idea behind
just that but the whole idea behind wework had been an emphasis on community
wework had been an emphasis on community and people connecting but if the entire
and people connecting but if the entire floor of the office building was just
floor of the office building was just one company that was no longer the case
one company that was no longer the case it was a totally different business
it was a totally different business model but the reality was Adam was
model but the reality was Adam was struggling to fill up all the office
struggling to fill up all the office space he bought with Freelancers and
space he bought with Freelancers and small companies so he now needed to bulk
small companies so he now needed to bulk sell to Big
sell to Big corporations once again they tried to
corporations once again they tried to make this sound like a tech company so
make this sound like a tech company so they called this New Concept woss a
they called this New Concept woss a platform that allowed businesses to
platform that allowed businesses to Outsource all their real estate needs
Outsource all their real estate needs one of those big companies was IBM who
one of those big companies was IBM who in 2017 agreed to rent out an entire
in 2017 agreed to rent out an entire office building from Wei work but it
office building from Wei work but it turned out the building had a lot of
turned out the building had a lot of issues the elevators were out of order
issues the elevators were out of order it had patchy internet connection and so
it had patchy internet connection and so on normally the building landlord would
on normally the building landlord would be responsible not we work but it turned
be responsible not we work but it turned out this building was owned by Adam
out this building was owned by Adam himself and he was the Landlord Leasing
himself and he was the Landlord Leasing it to wework this man Adam was
it to wework this man Adam was collecting rent from his own company and
collecting rent from his own company and he'd agreed a special deal where he
he'd agreed a special deal where he wasn't responsible for repairs he hadn't
wasn't responsible for repairs he hadn't publicized this as being the landlord to
publicized this as being the landlord to your own company was clearly a conflict
your own company was clearly a conflict of interests as he set the price Adam
of interests as he set the price Adam had been paid $12 million in rent from
had been paid $12 million in rent from Wei work already Adam seemed to be
Wei work already Adam seemed to be making more and more controversial
making more and more controversial decisions like this some within the
decisions like this some within the company urged him to bring in a more
company urged him to bring in a more experienced operator to help him Runway
experienced operator to help him Runway work just like Mark Zuckerberg had
work just like Mark Zuckerberg had brought in the experienced Cheryl
brought in the experienced Cheryl Sandberg at Facebook but Adam said he
Sandberg at Facebook but Adam said he was both Mark and Cheryl and didn't need
was both Mark and Cheryl and didn't need any help Rebecca obviously backed him up
any help Rebecca obviously backed him up saying isn't he amazing some people
saying isn't he amazing some people think he's the
think he's the Messiah the truth is Adam's leadership
Messiah the truth is Adam's leadership had worked well when weor was small by
had worked well when weor was small by setting high goals being heavily
setting high goals being heavily involved and yelling when he was upset
involved and yelling when he was upset he'd managed to get the small team to
he'd managed to get the small team to achieve more than they thought they
achieve more than they thought they could but as wew could started hiring
could but as wew could started hiring thousands of employees the chaotic
thousands of employees the chaotic management structure was becoming a
management structure was becoming a bigger problem of course the team around
bigger problem of course the team around Adam knew some of what he was doing was
Adam knew some of what he was doing was crazy but they enjoyed the
crazy but they enjoyed the responsibility Adam gave them and Adam's
responsibility Adam gave them and Adam's Vision was compelling they all stood to
Vision was compelling they all stood to get rich if even half of what he said
get rich if even half of what he said actually happened so nobody really stood
actually happened so nobody really stood in Adam's way Adam was increasingly
in Adam's way Adam was increasingly surrounded by yes men who didn't want to
surrounded by yes men who didn't want to ever push back against him Adam also
ever push back against him Adam also told staff members they should report
told staff members they should report back anything people said about him when
back anything people said about him when he wasn't around which created a very
he wasn't around which created a very paranoid culture where people were
paranoid culture where people were scared to speak up or they'd be pushed
scared to speak up or they'd be pushed out one of the executives described it
out one of the executives described it as Game of Thrones with Adam pitting
as Game of Thrones with Adam pitting Executives against each other but
Executives against each other but perhaps one of Adam's most controversial
perhaps one of Adam's most controversial decisions was when he announced wework
decisions was when he announced wework was buying a private jet this again
was buying a private jet this again seemed very hypocritical as Adam had
seemed very hypocritical as Adam had previously cut back travel budgets for
previously cut back travel budgets for employees so they had to fly coach
employees so they had to fly coach instead of business class yet he was
instead of business class yet he was pying himself a private jet for $63
pying himself a private jet for $63 million up until this point we work had
million up until this point we work had rented private jets when Adam wanted to
rented private jets when Adam wanted to fly somewhere but on one trip the cabin
fly somewhere but on one trip the cabin crew found that Adam had stuffed weed in
crew found that Adam had stuffed weed in a cereal box and they weren't happy he
a cereal box and they weren't happy he transported an illegal drug into a
transported an illegal drug into a foreign country then on another flight
foreign country then on another flight there was so much smoke in the cabin
there was so much smoke in the cabin that the crew had to put on their oxygen
that the crew had to put on their oxygen masks after these incidents the private
masks after these incidents the private jet rental companies were very unhappy
jet rental companies were very unhappy and so that's why Adam wanted wework to
and so that's why Adam wanted wework to have its own jet for a venture capital
have its own jet for a venture capital back startup to buy a private jet was
back startup to buy a private jet was pretty unheard of in ters weren't happy
pretty unheard of in ters weren't happy but of course Adam had control and 63
but of course Adam had control and 63 million in the grand scheme of things
million in the grand scheme of things wasn't even that much for a company
wasn't even that much for a company supposedly worth 20 billion so as always
supposedly worth 20 billion so as always Adam got his
way many of weck's employees came straight from college they'd start off
straight from college they'd start off feeling excited but then they'd quickly
feeling excited but then they'd quickly get burnt out and disillusioned after
get burnt out and disillusioned after working more than 60 hours a week people
working more than 60 hours a week people were working themselves under the ground
were working themselves under the ground and they're just doing it with this
and they're just doing it with this crazy smile like oh my God I'm so happy
crazy smile like oh my God I'm so happy to be here it kind of felt like
to be here it kind of felt like everybody is miserable but nobody will
everybody is miserable but nobody will say anything by the end of 2018 wew had
say anything by the end of 2018 wew had nearly 10,000 employees and yet half of
nearly 10,000 employees and yet half of them had been there less than 6 months
them had been there less than 6 months some expressed they were worried about
some expressed they were worried about leaving the company since their only
leaving the company since their only friends left were other wework employees
friends left were other wework employees or if they left they wouldn't be able to
or if they left they wouldn't be able to buy their wework stock options when the
buy their wework stock options when the company finally went public which would
company finally went public which would mean all this underpaid work would have
mean all this underpaid work would have been for nothing plus wework made them
been for nothing plus wework made them all sign agreements not to work with any
all sign agreements not to work with any competitors so they'd have to find a new
competitors so they'd have to find a new career path so some felt stuck then one
career path so some felt stuck then one day hadam randomly announced to all
day hadam randomly announced to all employees that wework was Banning meat
employees that wework was Banning meat this was brand new information even to
this was brand new information even to wework's executive team even Miguel
wework's executive team even Miguel wasn't sure what it meant it seemed like
wasn't sure what it meant it seemed like Adam and Rebecca were just making things
Adam and Rebecca were just making things up as they went along
up as they went along and they didn't clarify what this meat
and they didn't clarify what this meat ban actually involved or why they were
ban actually involved or why they were doing this but many assumed that Rebecca
doing this but many assumed that Rebecca was behind it as she was vegan she said
was behind it as she was vegan she said when you eat something you're also
when you eat something you're also absorbing the energy of that thing so if
absorbing the energy of that thing so if the animal is sad then you're kind of
the animal is sad then you're kind of taking in there the wework executive
taking in there the wework executive team tried to spin the meat ban as the
team tried to spin the meat ban as the company being more eco-friendly even
company being more eco-friendly even though Adam had just bought a private
though Adam had just bought a private jet but some employees had health issues
jet but some employees had health issues requiring meat in their diets and more
requiring meat in their diets and more importantly why should their employ be
importantly why should their employ be having any involvement in what they ate
having any involvement in what they ate and to make matters worse Adam was seen
and to make matters worse Adam was seen eating meat in wework after the ban it
eating meat in wework after the ban it was just so hypocritical when he was the
was just so hypocritical when he was the one who created the rule but when he
one who created the rule but when he wasn't inventing random new policies
wasn't inventing random new policies Adam was hyping up we work's potential
Adam was hyping up we work's potential in a speech at one of weor summer camp
in a speech at one of weor summer camp events he told his employees there are
events he told his employees there are 150 million orphans in this world today
150 million orphans in this world today if we do the work right we could wake up
if we do the work right we could wake up one day and say we want to solve the
one day and say we want to solve the problem of children without parents in
problem of children without parents in this world and do it within 2 years
this world and do it within 2 years Rebecca added and children who are in
Rebecca added and children who are in abusive situations Adam then continued
abusive situations Adam then continued and from that we can go to world hunger
and from that we can go to world hunger there's so many topics that we can take
there's so many topics that we can take one by one and we'll be able to tackle
one by one and we'll be able to tackle anything we set our minds to and just in
anything we set our minds to and just in case you think I'm exaggerating here's
case you think I'm exaggerating here's the clip we could wake up one day say we
the clip we could wake up one day say we want to solve the problem of children
want to solve the problem of children without parents in this world we can win
without parents in this world we can win and do it within 2 years and then
and do it within 2 years and then children abusive situations and from
children abusive situations and from that we can go to world hunger and
that we can go to world hunger and there's so many topics that we could
there's so many topics that we could take one by one and we will be able to
take one by one and we will be able to tackle anything that we set our mind
tackle anything that we set our mind stood it seemed like Adam and Rebecca's
stood it seemed like Adam and Rebecca's levels of delusion were reaching new
levels of delusion were reaching new levels genuinely telling employees they
levels genuinely telling employees they could solve world hunger but some of the
could solve world hunger but some of the young Workforce brought into Adam's
young Workforce brought into Adam's promises one weick employee proposed to
promises one weick employee proposed to his girlfriend at wework summer camp
his girlfriend at wework summer camp because he said he wanted to do it was
because he said he wanted to do it was surrounded by his extended family he was
surrounded by his extended family he was then fired a couple of months later
then fired a couple of months later meanwhile a female employee complained
meanwhile a female employee complained that a colleague had groped her but her
that a colleague had groped her but her claims were dismissed because he was a
claims were dismissed because he was a high performer if seemed like wew wasn't
high performer if seemed like wew wasn't quite the family Adam claimed it
was most wework team members were surprised to see the news that wework
surprised to see the news that wework was launching its own Elementary School
was launching its own Elementary School called We Grow not even the
called We Grow not even the communications team at wework had known
communications team at wework had known about this it turns out that Adam and
about this it turns out that Adam and Rebecca had looked at many school
Rebecca had looked at many school options over the summer and concluded
options over the summer and concluded that none of them were good enough for
that none of them were good enough for their daughter so Rebecca decided to
their daughter so Rebecca decided to Simply start her own School sure she had
Simply start her own School sure she had no formal training in education but she
no formal training in education but she felt confident she could do better than
felt confident she could do better than current schools Adam said he expected we
current schools Adam said he expected we grow to be even bigger than we work
grow to be even bigger than we work before they'd even opened the first
before they'd even opened the first school they were already planning to
school they were already planning to open more and he said eventually they'd
open more and he said eventually they'd launch their own college so they could
launch their own college so they could offer education from birth until death
offer education from birth until death now School curri uls normally have a lot
now School curri uls normally have a lot of planning involved but Rebecca was
of planning involved but Rebecca was quite literally making hers up as she
quite literally making hers up as she went along after returning from Hawaii
went along after returning from Hawaii she said we gr should include surfing
she said we gr should include surfing lessons Rebecca also decided which
lessons Rebecca also decided which teachers to hire which was difficult
teachers to hire which was difficult because she said most applicants had the
because she said most applicants had the wrong energy but in the Autumn of 2018
wrong energy but in the Autumn of 2018 the first weo class finally began with
the first weo class finally began with 46 students which included Adam and
46 students which included Adam and Rebecca's own children tuition cost up
Rebecca's own children tuition cost up to $42,000 per child although there was
to $42,000 per child although there was financial aid available for those less
financial aid available for those less well off as Rebecca wanted children from
well off as Rebecca wanted children from all walks of
all walks of life the launch was chaotic Wego forgot
life the launch was chaotic Wego forgot to pay its security team who threatened
to pay its security team who threatened to quit every day it began with teachers
to quit every day it began with teachers playing ukuleles and Bongos there was
playing ukuleles and Bongos there was then often a congol line and 25 minutes
then often a congol line and 25 minutes of meditation there were also classes in
of meditation there were also classes in robotics and Hebrew articles appeared
robotics and Hebrew articles appeared saying is this New York City's most
saying is this New York City's most obnoxious Elementary School and pretty
obnoxious Elementary School and pretty much everyone was asking what do they
much everyone was asking what do they know about educating kids the school
know about educating kids the school would also have a business focus as
would also have a business focus as Rebecca said children are ready to start
Rebecca said children are ready to start creating their life's work when they're
creating their life's work when they're five Rebecca did cause a little
five Rebecca did cause a little controversy internally when she removed
controversy internally when she removed one of the singers in the student band
one of the singers in the student band so that her own daughter could be the
so that her own daughter could be the lead singer instead and when teachers
lead singer instead and when teachers asked for modest raises Rebecca called
asked for modest raises Rebecca called an emergency meeting and said it was an
an emergency meeting and said it was an honor to even be a part of this and they
honor to even be a part of this and they shouldn't be doing it for money
shouldn't be doing it for money meanwhile Rebecca also began to become
meanwhile Rebecca also began to become more embedded in other parts of wework's
more embedded in other parts of wework's business she was even listed as the
business she was even listed as the company's third official founder in
company's third official founder in interviews she regularly implied she'd
interviews she regularly implied she'd always been one of the co-founders of
always been one of the co-founders of the company talking about working long
the company talking about working long nights to help get everything started
nights to help get everything started however the other early employees didn't
however the other early employees didn't remember Rebecca ever being involved
remember Rebecca ever being involved that much it felt like wew work's story
that much it felt like wew work's story was being Rewritten and Rebecca being
was being Rewritten and Rebecca being portrayed as having much more influence
portrayed as having much more influence in the early days of wework than she
in the early days of wework than she really had Miguel was pushed to the side
really had Miguel was pushed to the side and it became the Adam and Rebecca show
and it became the Adam and Rebecca show employees also became quite annoyed that
employees also became quite annoyed that when they were deciding things of the
when they were deciding things of the office Adam would ask what does Rebecca
office Adam would ask what does Rebecca think even when she wasn't around one of
think even when she wasn't around one of Rebecca's decisions was that any
Rebecca's decisions was that any employee overseeing specific regions
employee overseeing specific regions would be called a c weo she also
would be called a c weo she also encouraged couples at wew work to have
encouraged couples at wew work to have we babies as then they could get free
we babies as then they could get free education at wework
schools so just a recap weor was fundamentally a very basic real estate
fundamentally a very basic real estate leasing company and yet now it owned
leasing company and yet now it owned countless random businesses including a
countless random businesses including a wavepool company meetup.com and now
wavepool company meetup.com and now their own spiritual Elementary School
their own spiritual Elementary School that Adam's wife was running and yet
that Adam's wife was running and yet despite losing hundreds of millions of
despite losing hundreds of millions of dollars a year we work with one of the
dollars a year we work with one of the most valuable private companies ever
most valuable private companies ever thanks to Saudi oil money being funneled
thanks to Saudi oil money being funneled into it by a crazy investor from Japan
into it by a crazy investor from Japan so that's where we're up to in the story
so that's where we're up to in the story so far but what if I told you it was
so far but what if I told you it was about to get
about to get [Music]
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description weor launched its own self-driving robot Division and Adam
self-driving robot Division and Adam started investing in bioscience
started investing in bioscience companies as he said he wanted to live
companies as he said he wanted to live forever he also had new plans to expand
forever he also had new plans to expand into Airlines Fitness and hotels and at
into Airlines Fitness and hotels and at one point Adam looked into buying LT
one point Adam looked into buying LT another company that was losing huge
another company that was losing huge amounts of money despite only sleeping a
amounts of money despite only sleeping a few hours a night Adam constantly had
few hours a night Adam constantly had energy he wanted to be the world's first
energy he wanted to be the world's first trillionaire and said wew work would be
trillionaire and said wew work would be the first trillion dollar company so to
the first trillion dollar company so to help achieve his trillion dollar goals
help achieve his trillion dollar goals Adam devised a new plan Adam pointed out
Adam devised a new plan Adam pointed out that they were still paying other
that they were still paying other landlords rent construction companies
landlords rent construction companies were still making money from building
were still making money from building the offices management companies were
the offices management companies were getting rich cleaning the offices and
getting rich cleaning the offices and running security and Brokers were
running security and Brokers were getting big commissions for leasing weor
getting big commissions for leasing weor space so Adam said wew work should do
space so Adam said wew work should do all of this themselves and vertically
all of this themselves and vertically integrate wework would build the
integrate wework would build the buildings from scratch own the buildings
buildings from scratch own the buildings lease the buildings manage the buildings
lease the buildings manage the buildings and offer services within the buildings
and offer services within the buildings like designing the space we work would
like designing the space we work would own the whole system in other words weor
own the whole system in other words weor could become the real estate company
could become the real estate company involved in every single aspect of the
involved in every single aspect of the process it was a little crazy to think
process it was a little crazy to think you could just take over the entire real
you could just take over the entire real estate market but unlike many of Adam's
estate market but unlike many of Adam's ideas like surf ball companies wework
ideas like surf ball companies wework Executives thought this made a lot of
Executives thought this made a lot of sense if they could pull this off it
sense if they could pull this off it really would disrupt the real estate
really would disrupt the real estate market however wework was already losing
market however wework was already losing hundreds of millions of dollars a year
hundreds of millions of dollars a year just from leasing buildings and buying
just from leasing buildings and buying huge amounts of expensive real estate
huge amounts of expensive real estate outright and owning the buildings was
outright and owning the buildings was going to require far more money plus
going to require far more money plus Adam had previously said we definitely
Adam had previously said we definitely do not buy properties that would make us
do not buy properties that would make us a real estate company but Adam also knew
a real estate company but Adam also knew that buying buildings could help raise
that buying buildings could help raise wework's valuation which is what he
wework's valuation which is what he seemed most obsessed with so weor was
seemed most obsessed with so weor was going to start buying buildings instead
going to start buying buildings instead of just leasing them the wework team
of just leasing them the wework team suggested they need to raise another 1
suggested they need to raise another 1 billion to do that but Adam decided they
billion to do that but Adam decided they should start the largest real estate
should start the largest real estate investment firm on the planet within Wei
investment firm on the planet within Wei work and he said they should raise a $1
work and he said they should raise a $1 billion instead for context Blackstone
billion instead for context Blackstone the world's largest real estate fund
the world's largest real estate fund manager was also around the 100 billion
manager was also around the 100 billion Mark but they'd been in business for
Mark but they'd been in business for more than three decades Adam wanted to
more than three decades Adam wanted to do immediately of course Adam was great
do immediately of course Adam was great at raising money but this would need a
at raising money but this would need a whole new level of investment so he went
whole new level of investment so he went to meet Massa to tell him about this
to meet Massa to tell him about this plan to take on the entire real estate
plan to take on the entire real estate market wework would be the landlord the
market wework would be the landlord the tenant and everything else in between
tenant and everything else in between there was sort of a logic to it Adam
there was sort of a logic to it Adam essentially wanted wework to become so
essentially wanted wework to become so large and so dominant in the real estate
large and so dominant in the real estate world that they'd be too big to fail
world that they'd be too big to fail already S&P Global ratings had said
already S&P Global ratings had said there was three billion in commercial
there was three billion in commercial Mortgage Debt Securities at risk of
Mortgage Debt Securities at risk of default if we were collapsed if so many
default if we were collapsed if so many people rely on your business they're
people rely on your business they're going to have to help you out if you're
going to have to help you out if you're struggling and by dominating the market
struggling and by dominating the market we work in theory should be able to
we work in theory should be able to negotiate the best deals this was the
negotiate the best deals this was the exact kind of big thinking Massa had
exact kind of big thinking Massa had wanted Adam and Massa were both excited
wanted Adam and Massa were both excited and they seem to make each other get
and they seem to make each other get even more carried away Massa scribbled
even more carried away Massa scribbled some numbers down estimating by 2028
some numbers down estimating by 2028 wework would have 100 million members
wework would have 100 million members and 500 billion Revenue the math seemed
and 500 billion Revenue the math seemed to be just vague calculations in his
to be just vague calculations in his head but he estimated this plan could
head but he estimated this plan could make we work worth1 trillion by 2028 for
make we work worth1 trillion by 2028 for context at this point no company in the
context at this point no company in the world was even worth 1 trillion and the
world was even worth 1 trillion and the entire value of the US Stock Market was
entire value of the US Stock Market was 30 trillion yet wework was apparently
30 trillion yet wework was apparently going to be worth 10 trillion they would
going to be worth 10 trillion they would need to raise a lot of money to pull
need to raise a lot of money to pull this off but Massa agreed his company
this off but Massa agreed his company would put some of the money in Massa
would put some of the money in Massa would buy out most of weck's current
would buy out most of weck's current shareholders for 10 billion leaving
shareholders for 10 billion leaving mostly just Adam Massa and a few other
mostly just Adam Massa and a few other True Believers he said the vision fund
True Believers he said the vision fund would also put another 10 billion into
would also put another 10 billion into wework making it the largest ever buyout
wework making it the largest ever buyout and investment in a US startup in total
and investment in a US startup in total Masa was proposing a20 billion package
Masa was proposing a20 billion package putting wework's new valuation at 47
putting wework's new valuation at 47 billion at the time this meant wework
billion at the time this meant wework was valued more than public companies
was valued more than public companies like Dell FedEx Ford and Ferrari and yet
like Dell FedEx Ford and Ferrari and yet weor was hemorrhaging money at an insane
weor was hemorrhaging money at an insane rate but it seemed like every single
rate but it seemed like every single year weick's valuation was practically
year weick's valuation was practically doubling and to Massa and Adam that was
doubling and to Massa and Adam that was all that matters
all that matters since Adam personally owned a fifth of
since Adam personally owned a fifth of wework's shares he estimated his net
wework's shares he estimated his net worth would rise to 13 billion making
worth would rise to 13 billion making him one of the richest people in the
him one of the richest people in the world and thanks to this new investment
world and thanks to this new investment we could stay private avoiding the
we could stay private avoiding the scrutiny that going public would involve
scrutiny that going public would involve it was around this time Adam officially
it was around this time Adam officially rebranded the business to the Wii
rebranded the business to the Wii company after all wework's office space
company after all wework's office space business was now just a tiny fraction of
business was now just a tiny fraction of what the company was planning they
what the company was planning they already had we live the apartment
already had we live the apartment buildings we grow the elementary school
buildings we grow the elementary school and Adam was busy dreaming up less other
and Adam was busy dreaming up less other product lines they could start now they
product lines they could start now they were getting another 20 billion he had a
were getting another 20 billion he had a poster on his wall with a mockup for the
poster on his wall with a mockup for the first wi City an entire city run by the
first wi City an entire city run by the company so to try and Encompass
company so to try and Encompass everything their business was planning
everything their business was planning they would simply be known as the Wii
they would simply be known as the Wii company whilst Adam would say these new
company whilst Adam would say these new product lines were a sign of Rapid
product lines were a sign of Rapid expansion and growth many would say it
expansion and growth many would say it was a sign of having no Focus for
was a sign of having no Focus for example Steve Jobs had famously asked
example Steve Jobs had famously asked his senior Executives to come up with a
his senior Executives to come up with a list of Apple's top 10 PR priorities and
list of Apple's top 10 PR priorities and then said they could only do three of
then said they could only do three of them the message was simple they needed
them the message was simple they needed laser focus on just a very small number
laser focus on just a very small number of core things that they would do really
of core things that they would do really well but Adam and wework were going the
well but Adam and wework were going the exact opposite approach the more
exact opposite approach the more different product lines the better even
different product lines the better even if they had no expertise in these other
if they had no expertise in these other markets Adam was just focused on
markets Adam was just focused on valuation and being involved in so many
valuation and being involved in so many different Industries helped him sell
different Industries helped him sell people on the company's world changing
people on the company's world changing potential and so over the summer of 2018
potential and so over the summer of 2018 Adam and Massa began began planning out
Adam and Massa began began planning out the details of this new 20 billion
the details of this new 20 billion investment every project within wework
investment every project within wework now seemed to have a code name the New
now seemed to have a code name the New Deal between Adam and Massa was called
Deal between Adam and Massa was called project fortitude and Adam spoke as if
project fortitude and Adam spoke as if the deal was already done he had a
the deal was already done he had a handshake agreement from Massa they were
handshake agreement from Massa they were both on the same page so in his mind
both on the same page so in his mind there was no way wework would not be
there was no way wework would not be getting the 20 billion investment as
getting the 20 billion investment as always Adam negotiated hard whilst the
always Adam negotiated hard whilst the contract was being drawn up he insisted
contract was being drawn up he insisted even if he went to jail SoftBank
even if he went to jail SoftBank wouldn't be able to remove him as CEO
wouldn't be able to remove him as CEO without paying a penalty however whilst
without paying a penalty however whilst Adam and Massa were Keen to proceed with
Adam and Massa were Keen to proceed with this new investment once again massa's
this new investment once again massa's team were analyzing wework's financials
team were analyzing wework's financials and drawing worrying conclusions wework
and drawing worrying conclusions wework would lose around $2 billion in 2018 and
would lose around $2 billion in 2018 and despite all the billions it had received
despite all the billions it had received from investors wework was once again low
from investors wework was once again low on cash many urged masasa against the
on cash many urged masasa against the deal but he told them to feel the force
deal but he told them to feel the force and push ahead so after months of tense
and push ahead so after months of tense negotiations project fortitude seemed to
negotiations project fortitude seemed to be done Adam headed off to Hawaii for
be done Adam headed off to Hawaii for Christmas feeling excited in fact
Christmas feeling excited in fact everyone was excited as investors were
everyone was excited as investors were getting bought out and we workk
getting bought out and we workk employees were finally getting their big
employees were finally getting their big pay day Adam had
pay day Adam had promised little did they know what was
promised little did they know what was about to
happen it was Christmas Eve and Adam was serving in Hawaii blissfully unaware the
serving in Hawaii blissfully unaware the project fortitude was falling apart in
project fortitude was falling apart in order to put in $2 billion like agreed
order to put in $2 billion like agreed Massa had hoped to use money from the
Massa had hoped to use money from the vision fund but Saudi Arabia and Abu
vision fund but Saudi Arabia and Abu Dhabi were two of the biggest
Dhabi were two of the biggest contributors to the vision fund and they
contributors to the vision fund and they were refusing to allow any more money to
were refusing to allow any more money to be invested in Wei work whil they had
be invested in Wei work whil they had planned to trust Massa with the
planned to trust Massa with the Investments and not get too involved
Investments and not get too involved they'd also expected his Focus would be
they'd also expected his Focus would be Innovative tech companies and they had
Innovative tech companies and they had the right to veto deals above 3 billion
the right to veto deals above 3 billion which this definitely was this meant
which this definitely was this meant Masa would have to use his own company
Masa would have to use his own company SoftBank to fund the investment instead
SoftBank to fund the investment instead of course SoftBank had a lot of money
of course SoftBank had a lot of money but they didn't have 20 billion just
but they didn't have 20 billion just laying around and A Series of
laying around and A Series of Unfortunate Events were currently
Unfortunate Events were currently conspiring for
conspiring for Massa firstly the public markets were
Massa firstly the public markets were getting more cautious stock prices were
getting more cautious stock prices were falling worldwide and softbank's own
falling worldwide and softbank's own stock fell by a third in just a couple
stock fell by a third in just a couple of months if it kept falling lenders
of months if it kept falling lenders could demand SoftBank repay some of its
could demand SoftBank repay some of its loans meaning it would run out of cash
loans meaning it would run out of cash sending SoftBank into a was spiral
sending SoftBank into a was spiral secondly softbank's Japanese mobile
secondly softbank's Japanese mobile phone arm went public which Masa had
phone arm went public which Masa had hoped would raise a lot of money but it
hoped would raise a lot of money but it didn't the stock tanked and lost $3
didn't the stock tanked and lost $3 billion the very first day one of the
billion the very first day one of the worst opening days ever and Massa was
worst opening days ever and Massa was told that if they made another risky bet
told that if they made another risky bet like putting 20 billion into Wei workor
like putting 20 billion into Wei workor SoftBank stock would almost certainly
SoftBank stock would almost certainly tank much further it soon became clear
tank much further it soon became clear the 20 billion deal was no longer
the 20 billion deal was no longer possible on Christmas Eve Adam's phone
possible on Christmas Eve Adam's phone rang it was Massa and he told told him
rang it was Massa and he told told him the project fortitude was dead this was
the project fortitude was dead this was devastating news to Adam his heart sank
devastating news to Adam his heart sank not believing what he was hearing Adam
not believing what he was hearing Adam flew out to meet Massa hoping he could
flew out to meet Massa hoping he could still change his mind but the reality
still change his mind but the reality was masassa still wanted to do the deal
was masassa still wanted to do the deal it's just with the market crash and all
it's just with the market crash and all the other investors pulling out it just
the other investors pulling out it just wasn't possible Adam was crushed by this
wasn't possible Adam was crushed by this and felt let down by the man he viewed
and felt let down by the man he viewed as a father figure from this point on
as a father figure from this point on Adam's Behavior became even more erratic
Adam's Behavior became even more erratic however even though sof Bank couldn't
however even though sof Bank couldn't invest the 20 billion they'd initially
invest the 20 billion they'd initially told wework they would invest they
told wework they would invest they couldn't just put in nothing wework was
couldn't just put in nothing wework was burning money at a rapid pace and needed
burning money at a rapid pace and needed cash and soft Bank was already so deeply
cash and soft Bank was already so deeply invested they couldn't just let wew go
invested they couldn't just let wew go bankrupt plus they needed to try and
bankrupt plus they needed to try and save face so it didn't look like soft
save face so it didn't look like soft Bank were totally bailing on them so
Bank were totally bailing on them so instead Massa agreed they put in 2
instead Massa agreed they put in 2 billion here was a small consolation
billion here was a small consolation prize compared to the 20 billion planned
prize compared to the 20 billion planned and would mean weor would still somehow
and would mean weor would still somehow need to get more money so shortly after
need to get more money so shortly after the deal fell apart Adam roped in a
the deal fell apart Adam roped in a celebrity friend of his Ashton Kutcher
celebrity friend of his Ashton Kutcher to do a bizarre interview on CNBC where
to do a bizarre interview on CNBC where they tried to make out like everything
they tried to make out like everything was totally fine now they have 10
was totally fine now they have 10 billion do invested in this company so
billion do invested in this company so the notion that anybody is projecting
the notion that anybody is projecting that they don't have confidence in the
that they don't have confidence in the company I think is crazy I have
company I think is crazy I have confidence in the
confidence in the company the idea was to convince the
company the idea was to convince the world the deal collapsing wasn't an
world the deal collapsing wasn't an issue Ashton Kutcher was not invested in
issue Ashton Kutcher was not invested in wework himself he said initially he
wework himself he said initially he struggled to see how wework was a tech
struggled to see how wework was a tech company but when he had a a closer look
company but when he had a a closer look he realized it was a tech company he
he realized it was a tech company he said I realize that through technology
said I realize that through technology that this company has it has a greater
that this company has it has a greater capacity than any other company in the
capacity than any other company in the entire world to bring people together
entire world to bring people together and to close the Divide between the
and to close the Divide between the Haves and the Have Nots they were trying
Haves and the Have Nots they were trying to control the narrative but it was
to control the narrative but it was clear Adam was very stressed and not his
clear Adam was very stressed and not his usual energetic self Adam also claimed
usual energetic self Adam also claimed we work had about 5 years of Runway so
we work had about 5 years of Runway so they didn't need the 20 billion from
they didn't need the 20 billion from soft Bank this was a lie wework was on
soft Bank this was a lie wework was on track to run out cash by the end of the
track to run out cash by the end of the year they literally had just a few
year they literally had just a few months left because they'd been spending
months left because they'd been spending money so wildly internally at wew work
money so wildly internally at wew work employees were very
employees were very concerned it was also around this time
concerned it was also around this time that a documentary came out about Theos
that a documentary came out about Theos the story of a startup who'd raised huge
the story of a startup who'd raised huge amounts of money from investors thanks
amounts of money from investors thanks to the vision laid out by its founder
to the vision laid out by its founder but ended up being a complete fraud
but ended up being a complete fraud wework employees noticed an eerie
wework employees noticed an eerie similarity now to be fair a lot of
similarity now to be fair a lot of people have compared wework with Theos
people have compared wework with Theos but there is a fundament Al difference
but there is a fundament Al difference theosis blood test never even worked in
theosis blood test never even worked in the first place whereas we Works cor
the first place whereas we Works cor Offa was something real that people did
Offa was something real that people did genuinely like but what was not clear is
genuinely like but what was not clear is whether it could ever be
profitable wew work was opening 79 new locations in December alone more than it
locations in December alone more than it had in its first 6 years by the end of
had in its first 6 years by the end of 2018 weick was the largest private
2018 weick was the largest private tenant in New York City now most
tenant in New York City now most companies have economies of scale which
companies have economies of scale which is savings and cost advantages that come
is savings and cost advantages that come from being a bigger company for example
from being a bigger company for example Walmart can buy items in such huge bulk
Walmart can buy items in such huge bulk quantities that they get a much bigger
quantities that they get a much bigger discount than a smaller shop buying
discount than a smaller shop buying those same items however weor somehow
those same items however weor somehow had managed the opposite the bigger
had managed the opposite the bigger wework got the more it managed to spend
wework got the more it managed to spend because the team felt so much pressure
because the team felt so much pressure to grow they had started wildly
to grow they had started wildly overpaying for leases and there was also
overpaying for leases and there was also so much waste one example was the
so much waste one example was the furniture for wework offices at one
furniture for wework offices at one point they bulk ordered orange couches
point they bulk ordered orange couches from China and the idea was they could
from China and the idea was they could be kept in storage and used for future
be kept in storage and used for future offices this made sense as they got a
offices this made sense as they got a great deal the problem was that when
great deal the problem was that when opening new offices they'd randomly
opening new offices they'd randomly decide the couches no longer looked
decide the couches no longer looked right or the color didn't fit the space
right or the color didn't fit the space this meant they had to quickly go and
this meant they had to quickly go and find new couches often at retail price
find new couches often at retail price for thousands of dollars each sometimes
for thousands of dollars each sometimes if their new couches were running late
if their new couches were running late they'd pay for expediated Air Freight
they'd pay for expediated Air Freight delivery which cost thousands more extra
delivery which cost thousands more extra meanwhile those cheaper couches they'd
meanwhile those cheaper couches they'd bought in bulk just sat in storage and
bought in bulk just sat in storage and would eventually be disposed of plus
would eventually be disposed of plus because they'd expanded so quickly we
because they'd expanded so quickly we workor often had multiple people doing
workor often had multiple people doing the exact same job there were three
the exact same job there were three different teams working on the same
different teams working on the same project Adam did sometimes tried to
project Adam did sometimes tried to demand cutbacks on spending but then
demand cutbacks on spending but then Executives would tell him that this
Executives would tell him that this would make it harder to grow Revenue so
would make it harder to grow Revenue so Adam kept the budgets high and one of
Adam kept the budgets high and one of the biggest waste of money of all was we
the biggest waste of money of all was we were trying to be a tech company they
were trying to be a tech company they had a team of 1,500 people working on
had a team of 1,500 people working on technology projects all on high salaries
technology projects all on high salaries but there was no clear Direction they
but there was no clear Direction they were scattered between a wide mix of
were scattered between a wide mix of random unrelated ideas for example they
random unrelated ideas for example they had a team dedicated to artificial
had a team dedicated to artificial intelligence who designed a system of
intelligence who designed a system of sensors for wew offices that would
sensors for wew offices that would supposedly give amazing insights about
supposedly give amazing insights about how people worked and used the space but
how people worked and used the space but their findings were extremely simplistic
their findings were extremely simplistic like there was a long line at the coffee
like there was a long line at the coffee station so they should hire another
station so they should hire another Barista you could have seen these things
Barista you could have seen these things by literally just looking at the office
by literally just looking at the office and yet they spent countless hundreds of
and yet they spent countless hundreds of thousands of dollars on the project by
thousands of dollars on the project by the start of 2019 we work was in 27
the start of 2019 we work was in 27 countries around the world and a total
countries around the world and a total of 425 different locations with over
of 425 different locations with over 400,000 members using their office space
400,000 members using their office space from the outside it was glorious from
from the outside it was glorious from the inside the truth was shocking we
the inside the truth was shocking we workor was due to run out of money
workor was due to run out of money before the end of the year there were no
before the end of the year there were no other PR investors left who were big
other PR investors left who were big enough to give Adam the money he needed
enough to give Adam the money he needed and the fact soft Bank was reducing its
and the fact soft Bank was reducing its investment looked like a major red flag
investment looked like a major red flag to other VCS so there was only one
to other VCS so there was only one option left going public selling their
option left going public selling their shares to the public on the stock market
shares to the public on the stock market would mean publicly disclosing all their
would mean publicly disclosing all their finances and giving the world a much
finances and giving the world a much closer look inside wew work's business
closer look inside wew work's business which of course Adam did not want but he
which of course Adam did not want but he didn't have a choice
didn't have a choice [Music]
wework's employees were thrilled at the news wework was finally going public
news wework was finally going public they had stock options and believed this
they had stock options and believed this would be the moment they cashed in and
would be the moment they cashed in and got rich employees began discussing all
got rich employees began discussing all the ways they were going to spend their
the ways they were going to spend their money there was still huge optimism as
money there was still huge optimism as it seemed like the company's value had
it seemed like the company's value had just been growing and growing which
just been growing and growing which surely meant they were on the right path
surely meant they were on the right path we workor took solace in the fact that
we workor took solace in the fact that Uber was also losing billions and yet
Uber was also losing billions and yet there still seemed to be plenty of
there still seemed to be plenty of excitement about their IPO however when
excitement about their IPO however when Uber listed its shares on the New York
Uber listed its shares on the New York Stock Exchange it had one of the worst
Stock Exchange it had one of the worst opening days ever this was doubly bad
opening days ever this was doubly bad for Mason and SoftBank firstly it
for Mason and SoftBank firstly it indicated that the public markets were
indicated that the public markets were not looking kindly on these money losing
not looking kindly on these money losing companies with fast growth but it was
companies with fast growth but it was also bad for Massa because he'd invested
also bad for Massa because he'd invested heavily in Uber himself he couldn't
heavily in Uber himself he couldn't afford for weck's IPO to go as badly as
afford for weck's IPO to go as badly as Uber's but Adam thought he knew how to
Uber's but Adam thought he knew how to ensure weck's IPO was more successful
ensure weck's IPO was more successful you see before Uber had gone public they
you see before Uber had gone public they had made a lot of effort to cut down
had made a lot of effort to cut down their expenses to try and demonstrate
their expenses to try and demonstrate their cost were decreasing and they were
their cost were decreasing and they were being more financially responsible but
being more financially responsible but of course this meant sacrificing growth
of course this meant sacrificing growth Adam felt that slowing the growth down
Adam felt that slowing the growth down was the reason Uber's IPO hadn't worked
was the reason Uber's IPO hadn't worked out so well so the lesson Adam took was
out so well so the lesson Adam took was he needed to put the accelerator down
he needed to put the accelerator down even harder so in the runup to weick's
even harder so in the runup to weick's IPO instead of showing restraint weok
IPO instead of showing restraint weok was signing more new leases than ever on
was signing more new leases than ever on boarding a 100 new employees each week
boarding a 100 new employees each week and aiming to wow investors with the
and aiming to wow investors with the rapid speed they were growing money
rapid speed they were growing money losing companies like wework often
losing companies like wework often pointed to Amazon who famously were
pointed to Amazon who famously were unprofitable for many years but then
unprofitable for many years but then went on to become one of the world's
went on to become one of the world's most valuable companies in hindsight it
most valuable companies in hindsight it was clear that Amazon had spent years
was clear that Amazon had spent years investing in growth and it had paid off
investing in growth and it had paid off in the long run and allowed them to
in the long run and allowed them to dominate their Market however we work
dominate their Market however we work lost nearly $2 billion in 2018 which was
lost nearly $2 billion in 2018 which was higher than any loss Amazon had ever had
higher than any loss Amazon had ever had and Amazon had made such big losses
and Amazon had made such big losses because they'd invested in systems that
because they'd invested in systems that would earn them more money in the long
would earn them more money in the long term whereas wework's costs seemed to
term whereas wework's costs seemed to just be spiraling higher and higher with
just be spiraling higher and higher with no end in sight so wework really wasn't
no end in sight so wework really wasn't comparable to Amazon at all but still
comparable to Amazon at all but still despite the concerns over the company's
despite the concerns over the company's finances Weck was officially going
finances Weck was officially going public and the banks were all competing
public and the banks were all competing to be involved with the IPO as it would
to be involved with the IPO as it would be a huge Payday for them but Adam
be a huge Payday for them but Adam played the banks off each other and he
played the banks off each other and he didn't choose who he was going to work
didn't choose who he was going to work with until the last minute so that all
with until the last minute so that all the banks kept trying to sweet talk him
the banks kept trying to sweet talk him for example Goldman Sachs gave adam a
for example Goldman Sachs gave adam a pitch showing wework's potential path to
pitch showing wework's potential path to $1 trillion they compared wework to
$1 trillion they compared wework to Facebook and said wework was growing
Facebook and said wework was growing even faster of course Facebook was
even faster of course Facebook was profitable but nobody pointed that out
profitable but nobody pointed that out Goldman knew what buttons to push to get
Goldman knew what buttons to push to get Adam excited some of the banks did try
Adam excited some of the banks did try to be more realistic and tell Adam they
to be more realistic and tell Adam they expected weworks valuation might be
expected weworks valuation might be lower than he wanted but Adam got angry
lower than he wanted but Adam got angry with them and said they just didn't get
with them and said they just didn't get weor
weor now unlike with private investors where
now unlike with private investors where you can sell them on a vision and a
you can sell them on a vision and a story to list on a stock exchange you
story to list on a stock exchange you have to be fully transparent with your
have to be fully transparent with your finances that starts by creating a
finances that starts by creating a document called an S1
document called an S1 form this is basically a guide book
form this is basically a guide book explaining to potential investors what
explaining to potential investors what the company does and showing its
the company does and showing its finances it's normally quite a dry
finances it's normally quite a dry document filled with graphs and
document filled with graphs and disclosing to investors any risks of
disclosing to investors any risks of investing however in 2019 wework began
investing however in 2019 wework began creating their S1 document
creating their S1 document and it would be nothing like anyone had
and it would be nothing like anyone had ever seen before of course like
ever seen before of course like everything else at we work it had to
everything else at we work it had to have a code name so they called it
have a code name so they called it project wingspan the first challenge was
project wingspan the first challenge was that Adam was adamant they should not
that Adam was adamant they should not say wework was a real estate company but
say wework was a real estate company but then what was it the wework team
then what was it the wework team drafting the document struggled to
drafting the document struggled to explain what exactly wework even was the
explain what exactly wework even was the next issue was that selling shares to
next issue was that selling shares to the public would normally mean giving up
the public would normally mean giving up some control so Adam decided he wanted
some control so Adam decided he wanted to boost his voting power from 10 votes
to boost his voting power from 10 votes per share to 20 votes per share this was
per share to 20 votes per share this was definitely uncommon and would mean Adam
definitely uncommon and would mean Adam still kept total control all the bankers
still kept total control all the bankers told him this was a terrible idea but
told him this was a terrible idea but Adam disagreed Adam also insisted on a
Adam disagreed Adam also insisted on a clause that Rebecca would be the one to
clause that Rebecca would be the one to choose Adam's successor again this is a
choose Adam's successor again this is a very bizarre thing for a public company
very bizarre thing for a public company CEO to have his wife decide who the next
CEO to have his wife decide who the next CEO should
CEO should be but Adam told them not to worry as
be but Adam told them not to worry as Rebecca was almost always 99% right then
Rebecca was almost always 99% right then Rebecca herself got involved d one day
Rebecca herself got involved d one day she randomly decided we work needed to
she randomly decided we work needed to have a dedication page at the start of
have a dedication page at the start of their S1 document she wrote The
their S1 document she wrote The Following we dedicate this to the energy
Following we dedicate this to the energy of Wei greater than any one of us but
of Wei greater than any one of us but inside each of us many people involved
inside each of us many people involved begged Rebecca to take this out this was
begged Rebecca to take this out this was meant to be a serious Financial document
meant to be a serious Financial document to convince investors that we work was a
to convince investors that we work was a safe bet this bizarre dedication talking
safe bet this bizarre dedication talking about energy was the exact opposite of
about energy was the exact opposite of that but Rebecca overruled them Rebecca
that but Rebecca overruled them Rebecca also f focused on the S1 documents
also f focused on the S1 documents presentation which is not something
presentation which is not something companies normally spend much time
companies normally spend much time focusing on given it's a financial
focusing on given it's a financial document with hundreds of pages of
document with hundreds of pages of charts and disclosures but Aesthetics
charts and disclosures but Aesthetics and presentation had always been key to
and presentation had always been key to wework so Rebecca focused on graphics
wework so Rebecca focused on graphics and adding a picture section in the
and adding a picture section in the middle of the documents Rebecca spent
middle of the documents Rebecca spent endless hours approving every photo they
endless hours approving every photo they even paid extra to have a famous
even paid extra to have a famous professional photographer who shot for
professional photographer who shot for Vogue come and take some new photos for
Vogue come and take some new photos for the S1 documents so ironically they
the S1 documents so ironically they spent hundreds of thousands of dollars
spent hundreds of thousands of dollars on artwork for the document that was
on artwork for the document that was supposed to convince investors they were
supposed to convince investors they were financially
financially responsible at one point Rebecca
responsible at one point Rebecca actually complained the document was
actually complained the document was getting weighed down with numbers and
getting weighed down with numbers and facts she said we've got to tell the
facts she said we've got to tell the story of Wii she then told them they
story of Wii she then told them they needed to print the document on recycled
needed to print the document on recycled paper but then complained about the
paper but then complained about the texture which delayed things
texture which delayed things further the levels of delusion had only
further the levels of delusion had only increased Rebecca told a group of
increased Rebecca told a group of employees the only reason we work was
employees the only reason we work was going public was to say Save the Planet
going public was to say Save the Planet the S1 document proudly stated our
the S1 document proudly stated our mission is to elevate the world's
mission is to elevate the world's Consciousness we have built a worldwide
Consciousness we have built a worldwide platform that supports growth shared
platform that supports growth shared experiences and true
experiences and true success however the biggest challenge of
success however the biggest challenge of all they had was presenting the
all they had was presenting the company's finances while they were a
company's finances while they were a private company Adam frequently
private company Adam frequently suggested they were profitable even
suggested they were profitable even though they weren't are you actually
though they weren't are you actually turning a profit in definitely turning a
turning a profit in definitely turning a profit I'm bored of the businesses that
profit I'm bored of the businesses that don't turn a profit I don't believe in
don't turn a profit I don't believe in them but now we work had to reveal its
them but now we work had to reveal its financial situation and ordinarily there
financial situation and ordinarily there is a common Financial acronym used in
is a common Financial acronym used in business called iida which stands for
business called iida which stands for earnings before interest taxes
earnings before interest taxes depreciation and amortization in very
depreciation and amortization in very simple terms it's a standard way of
simple terms it's a standard way of understanding a company's operating
understanding a company's operating profitability and using this metric
profitability and using this metric wework was not at all profitable so
wework was not at all profitable so rather than using this universally
rather than using this universally accepted Financial metric wework
accepted Financial metric wework invented its own version called
invented its own version called Community adjusted eida which painted
Community adjusted eida which painted its finances in a much more positive
its finances in a much more positive light basically when calculating their
light basically when calculating their profit they would remove costs like
profit they would remove costs like marketing design and admin expenses
marketing design and admin expenses because we were claimed these would
because we were claimed these would dissipate over time even though it
dissipate over time even though it seemed extremely unlikely those costs
seemed extremely unlikely those costs would ever just disappear but by
would ever just disappear but by removing all of these massive costs it
removing all of these massive costs it meant instead of the company making a
meant instead of the company making a 933 million loss in 2017 it looked like
933 million loss in 2017 it looked like a $233 million profit we would claim
a $233 million profit we would claim this figure more accurately showed how
this figure more accurately showed how profitable they'd be if they stopped
profitable they'd be if they stopped spending so much on growth
spending so much on growth however an economics reporter said the
however an economics reporter said the metric was extremely misleading and was
metric was extremely misleading and was just earnings without all the bad stuff
just earnings without all the bad stuff wework's financials were further
wework's financials were further distorted using accounting tricks that
distorted using accounting tricks that made things seem much better to
made things seem much better to investors than it really was and so the
investors than it really was and so the SEC pushed back many times before the S1
SEC pushed back many times before the S1 was released firstly they were confused
was released firstly they were confused about some of the unnecessary photos
about some of the unnecessary photos Rebecca had added but their biggest
Rebecca had added but their biggest concern was we work's madeup Financial
concern was we work's madeup Financial metrics as the SEC felt they were
metrics as the SEC felt they were completely misleading wework made some
completely misleading wework made some changes and renamed it to contribution
changes and renamed it to contribution margin but the SEC and wework went back
margin but the SEC and wework went back and forth countless times making
and forth countless times making edits eventually though after endless
edits eventually though after endless redrafts the S1 document was released to
redrafts the S1 document was released to the world and nobody at wework expected
the world and nobody at wework expected what was coming
next it's fair to say wework's business model was a disaster and a big part of
model was a disaster and a big part of the problem was how it cost so much
the problem was how it cost so much money to expand every new office needed
money to expand every new office needed extremely expensive leases and furniture
extremely expensive leases and furniture and lots of employees but what if I told
and lots of employees but what if I told you there was a business model where you
you there was a business model where you can still make crazy money but you can
can still make crazy money but you can do it from literally anywhere in the
do it from literally anywhere in the world with zero full-time staff needed
world with zero full-time staff needed and basically no startup costs I'm
and basically no startup costs I'm talking about running a faceless YouTube
talking about running a faceless YouTube channel that's exactly what I've done
channel that's exactly what I've done with magnates media and now I get paid
with magnates media and now I get paid to make videos about whatever topics
to make videos about whatever topics interest me and because I'm not on
interest me and because I'm not on camera I can run the Channel with
camera I can run the Channel with literally just a laptop which means I
literally just a laptop which means I can work from wherever I want whether
can work from wherever I want whether that's relaxing at home or traveling the
that's relaxing at home or traveling the world I literally researched this video
world I literally researched this video while sat on a beach in Thailand but you
while sat on a beach in Thailand but you can do the exact same thing whatever you
can do the exact same thing whatever you spend time researching for free right
spend time researching for free right now or whatever you enjoy talking about
now or whatever you enjoy talking about you could create many documentaries
you could create many documentaries about that it's like running your own
about that it's like running your own Netflix where you choose what shows to
Netflix where you choose what shows to make and with the help of online
make and with the help of online Freelancers you can just Outsource any
Freelancers you can just Outsource any parts you don't want to do such as
parts you don't want to do such as editing and here's the exciting part
editing and here's the exciting part when you make good content YouTube
when you make good content YouTube promotes it for free and you earn money
promotes it for free and you earn money from ads sponsors Affiliates and so many
from ads sponsors Affiliates and so many other income streams and look I know the
other income streams and look I know the words passive income get thrown around a
words passive income get thrown around a lot but YouTube is one of the best forms
lot but YouTube is one of the best forms of genuine passive income because once
of genuine passive income because once you create a library of videos YouTube
you create a library of videos YouTube can keep pushing them for years to come
can keep pushing them for years to come and every time someone watches you're
and every time someone watches you're making money videos I made years ago
making money videos I made years ago still get views and earn money every
still get views and earn money every single day with no extra work from me
single day with no extra work from me and that's why I think investing in
and that's why I think investing in content is one of the best investments
content is one of the best investments you can ever make because unlike
you can ever make because unlike investing in stocks which may go down in
investing in stocks which may go down in value once you've made a piece of
value once you've made a piece of content it can just keep printing money
content it can just keep printing money and that's why it's never a problem if I
and that's why it's never a problem if I take a break for a few months as I have
take a break for a few months as I have a portfolio of old videos making money
a portfolio of old videos making money 24/7 so given how great the business
24/7 so given how great the business model is of running a faceless YouTube
model is of running a faceless YouTube channel Channel why don't more people do
channel Channel why don't more people do it the reality is most people don't have
it the reality is most people don't have a system to follow they're just guessing
a system to follow they're just guessing what to do and following bad advice that
what to do and following bad advice that no longer works so they never get any
no longer works so they never get any momentum with their Channel but here is
momentum with their Channel but here is the good news I've already put in 5
the good news I've already put in 5 years figuring out exactly what works so
years figuring out exactly what works so you don't have to you can literally just
you don't have to you can literally just copy my system which you already know is
copy my system which you already know is proven to work and you can also just
proven to work and you can also just copy and paste all the resources I've
copy and paste all the resources I've spent years making so that way you don't
spent years making so that way you don't need past experience I'll just show you
need past experience I'll just show you how to turn your interests into a highly
how to turn your interests into a highly profitable business if you'd like to
profitable business if you'd like to learn more about this opportunity just
learn more about this opportunity just click the link in the description that
click the link in the description that says magnetes
says magnetes media.com since this includes
media.com since this includes personalized help from me spaces are
personalized help from me spaces are limited so if you're interested click
limited so if you're interested click the link in the description now I'll see
the link in the description now I'll see you there
you there [Music]
when wework's S1 document was finally released the backlash was immense there
released the backlash was immense there were just so many issues the S1 laid a
were just so many issues the S1 laid a lot of the skeletons in we's closet
lot of the skeletons in we's closet visible for the world to see they'd had
visible for the world to see they'd had no choice but to disclose everything and
no choice but to disclose everything and it was bad one of the biggest concerns
it was bad one of the biggest concerns of all was how it seemed Adam was
of all was how it seemed Adam was enriching himself off the back of a
enriching himself off the back of a company for example there was Adam's
company for example there was Adam's personal ownership of building he was
personal ownership of building he was leasing to his own company weor had
leasing to his own company weor had already paid Adam 20 million in rent on
already paid Adam 20 million in rent on those buildings with hundreds of
those buildings with hundreds of millions more to come another shocking
millions more to come another shocking Revelation from the document was that
Revelation from the document was that Adam had personally owned several
Adam had personally owned several trademarks related to the word Wii and
trademarks related to the word Wii and he had apparently sold them to we work
he had apparently sold them to we work for $5.9 million so he appeared to be
for $5.9 million so he appeared to be profiting off the word we and this
profiting off the word we and this seemed like yet another conflict of
seemed like yet another conflict of interests where Adam was making money
interests where Adam was making money from weor he later said he was donating
from weor he later said he was donating that money to charity but it was just
that money to charity but it was just yet another crazy detail in an already
yet another crazy detail in an already crazy document aside from all the
crazy document aside from all the strange extras Rebecca had added in the
strange extras Rebecca had added in the numbers themselves were quite shocking
numbers themselves were quite shocking too it turns out that wework was losing
too it turns out that wework was losing an average of $3,000 every single minute
an average of $3,000 every single minute another interesting statistic was that
another interesting statistic was that in the S1 filing the word Community
in the S1 filing the word Community appeared 150 times the name Adam
appeared 150 times the name Adam appeared 169 times meanwhile the phrase
appeared 169 times meanwhile the phrase office space got mentioned just nine
office space got mentioned just nine times like always wework was trying to
times like always wework was trying to focus on some abstract vision rather
focus on some abstract vision rather than the reality of what the company was
than the reality of what the company was and even though the company was named
and even though the company was named Wii it all seemed to be about Adam
Wii it all seemed to be about Adam shortly after release there was a huge
shortly after release there was a huge outpour of criticism including articles
outpour of criticism including articles and academic papers detailing the major
and academic papers detailing the major flaws with weck's business the whole
flaws with weck's business the whole thing became a joke with many people
thing became a joke with many people mocking everything about the document
mocking everything about the document some landlords began to fear wework
some landlords began to fear wework might claps and started secretly
might claps and started secretly reaching out to its
reaching out to its competitors employees weren't happy
competitors employees weren't happy either they hadn't realized Adam had
either they hadn't realized Adam had sold so much of his stock was of course
sold so much of his stock was of course they'd not been able to sell theirs it
they'd not been able to sell theirs it was revealed Adam had cashed out more
was revealed Adam had cashed out more money than any other startup CEO not
money than any other startup CEO not just that wework had also restructured
just that wework had also restructured the company in a way that meant Adam and
the company in a way that meant Adam and the top Executives would be able to pay
the top Executives would be able to pay a much lower rate of tax than the rest
a much lower rate of tax than the rest of the wework employees once again it
of the wework employees once again it seemed like one rule for Adam a
seemed like one rule for Adam a different rule for the rest between
different rule for the rest between loans and stock sales Adam had taken out
loans and stock sales Adam had taken out close to a
close to a billion now Adam had pledged in the S1
billion now Adam had pledged in the S1 to give away a billion dollars to
to give away a billion dollars to charity over the next de decade which he
charity over the next de decade which he thought would bring a lot of positive
thought would bring a lot of positive headlines but whilst that does seem very
headlines but whilst that does seem very generous the penalty if he didn't do it
generous the penalty if he didn't do it was that his shares would only have 10
was that his shares would only have 10 times as many votes as everyone else
times as many votes as everyone else instead of 20 Adam and Rebecca had not
instead of 20 Adam and Rebecca had not expected this backlash they were shocked
expected this backlash they were shocked Rebecca seemed genuinely confused she
Rebecca seemed genuinely confused she asked why the Press hated her and Adam
asked why the Press hated her and Adam so much and said we're just trying to
so much and said we're just trying to help the world this was the first time
help the world this was the first time many people had even heard of Wei work
many people had even heard of Wei work so even though a lot of this craziness
so even though a lot of this craziness had been going on for a while this was
had been going on for a while this was the first time the public was hearing
the first time the public was hearing the full story and the reaction was not
the full story and the reaction was not good part of the issue was that an S1
good part of the issue was that an S1 document puts the real hard numbers in
document puts the real hard numbers in plain sight all the previous investors
plain sight all the previous investors had been pitched by Adam allowing him to
had been pitched by Adam allowing him to craft a narrative explain away the
craft a narrative explain away the losses and sell them on a vision but the
losses and sell them on a vision but the raw number showed that wework was indeed
raw number showed that wework was indeed a real estate company not a tech company
a real estate company not a tech company and it was losing billions a year it
and it was losing billions a year it turns out there really wasn't that much
turns out there really wasn't that much that differentiated it from its
that differentiated it from its competition the difference was that they
competition the difference was that they were profitable the tides seemed to have
were profitable the tides seemed to have turned at one point the market seemed to
turned at one point the market seemed to welcome unprofitable companies as long
welcome unprofitable companies as long as they were growing hoping it had
as they were growing hoping it had become the next Amazon now normaly
become the next Amazon now normaly seemed to have returned investors wanted
seemed to have returned investors wanted businesses that actually made a profit
businesses that actually made a profit this negativity wasn't something Adam
this negativity wasn't something Adam was used to as up until now he'd always
was used to as up until now he'd always convinced investors to just go along
convinced investors to just go along with whatever he wanted but seeing all
with whatever he wanted but seeing all the backlash he realized he had to make
the backlash he realized he had to make some concessions so they backtracked and
some concessions so they backtracked and said Rebecca wouldn't be able to choose
said Rebecca wouldn't be able to choose his successor and he wouldn't get 20
his successor and he wouldn't get 20 votes for each of his shares but the
votes for each of his shares but the damage had already been done during the
damage had already been done during the road show to advertise the IPO Adam was
road show to advertise the IPO Adam was nowhere near his normal slick self this
nowhere near his normal slick self this was a guy known for giving incredible
was a guy known for giving incredible speeches yet the stress of the situation
speeches yet the stress of the situation seemed to have got the better of him as
seemed to have got the better of him as he rambled aimlessly it was so bad some
he rambled aimlessly it was so bad some people thought he might be high Adam
people thought he might be high Adam increasingly seemed like a liability
increasingly seemed like a liability things got worse when an article came
things got worse when an article came out about Adam smoking weed on a private
out about Adam smoking weed on a private jet to Israel nobody with him we work
jet to Israel nobody with him we work was surprised to hear this it seemed
was surprised to hear this it seemed like a standard Adam thing to do but in
like a standard Adam thing to do but in the midst of the IPO where they were
the midst of the IPO where they were trying to convince the public they were
trying to convince the public they were a serious company it was yet another bad
a serious company it was yet another bad luck during all of this Adam was
luck during all of this Adam was photographed walking barefoot through
photographed walking barefoot through New York with frizzy hair it didn't look
New York with frizzy hair it didn't look like a reassuring image of a CEO in
like a reassuring image of a CEO in control well-known Silicon Valley
control well-known Silicon Valley entrepreneur Scott Galloway published a
entrepreneur Scott Galloway published a scathing analysis of the company he said
scathing analysis of the company he said any Wall Street analyst who believes
any Wall Street analyst who believes it's worth over 10 billion is lying
it's worth over 10 billion is lying stupid or both
stupid or both Banks told Adam the valuation was going
Banks told Adam the valuation was going to be far lower than originally expected
to be far lower than originally expected it seemed like every day the estimates
it seemed like every day the estimates were falling 25 billion then 20 billion
were falling 25 billion then 20 billion then 15 billion Adam had put so much
then 15 billion Adam had put so much focus on valuation so being told these
focus on valuation so being told these estimates from Bankers was hard to take
estimates from Bankers was hard to take his Stress and Anxiety increased the
his Stress and Anxiety increased the bank started to question if they could
bank started to question if they could even go ahead with the IPO the interest
even go ahead with the IPO the interest in wew work stock was falling fast with
in wew work stock was falling fast with all this negative media masaan called an
all this negative media masaan called an emergency meeting with Adam he said
emergency meeting with Adam he said based on the reaction to the S1 we would
based on the reaction to the S1 we would couldn't go ahead with the IPO or it'd
couldn't go ahead with the IPO or it'd be a disaster they needed to postpone
be a disaster they needed to postpone and try again later Adam had never
and try again later Adam had never wanted an IPO in the first place but he
wanted an IPO in the first place but he knew they needed the money desperately
knew they needed the money desperately or they'd run out of cash and scrapping
or they'd run out of cash and scrapping it completely would be humiliating and
it completely would be humiliating and make them look even weaker so despite
make them look even weaker so despite the negativity Adam tried to press on he
the negativity Adam tried to press on he told wework employees that he had played
told wework employees that he had played the private Market games to Perfection
the private Market games to Perfection but they were still learning the rules
but they were still learning the rules of the public markets for we were
of the public markets for we were employees who believed they were on the
employees who believed they were on the verge of getting rich the public
verge of getting rich the public reaction was extremely worrying they
reaction was extremely worrying they thought they'd been part of a company
thought they'd been part of a company changing the world and were about to get
changing the world and were about to get a giant Payday for all their hard work
a giant Payday for all their hard work however now wew work had become a
however now wew work had become a laughing stock further articles were
laughing stock further articles were released detailing some of Adam's odd
released detailing some of Adam's odd behavior and ridiculous purchases and
behavior and ridiculous purchases and Adam's performances to investors were
Adam's performances to investors were getting worse his usual confidence and
getting worse his usual confidence and Charisma was gone for the first time he
Charisma was gone for the first time he was negotiating from a position of
was negotiating from a position of weakness everyone was skeptical of
weakness everyone was skeptical of wework rather other than excited The
wework rather other than excited The Narrative had changed Adam even started
Narrative had changed Adam even started missing some of the board meetings
missing some of the board meetings things seemed to be getting worse and
things seemed to be getting worse and worse and it was clear they had to
worse and it was clear they had to abandon the
IPL Adam didn't know what to do it seemed like they were no longer in a
seemed like they were no longer in a position to go public but they also
position to go public but they also didn't have the money to continue if
didn't have the money to continue if they didn't go public as more and more
they didn't go public as more and more stories about him got published in the
stories about him got published in the Press he became increasingly unhinged
Press he became increasingly unhinged and paranoid it seemed like someone
and paranoid it seemed like someone close to him must be leaking information
close to him must be leaking information and then it got worse one by one Adam's
and then it got worse one by one Adam's investors and advisers all seemed to
investors and advisers all seemed to turn on him and told him he needed to
turn on him and told him he needed to step away he'd become toxic all the
step away he'd become toxic all the negativity around wework was directly
negativity around wework was directly linked to Adam and his position as CEO
linked to Adam and his position as CEO was putting the company at further risk
was putting the company at further risk technically because of the extra control
technically because of the extra control Adam got he could just fire the board of
Adam got he could just fire the board of directors if they tried to push him out
directors if they tried to push him out and there must have been a part of him
and there must have been a part of him that wanted to do that and keep fighting
that wanted to do that and keep fighting but the thing is Adam had taken out a
but the thing is Adam had taken out a $500 million personal line of credit
$500 million personal line of credit which was backed by his wework stock if
which was backed by his wework stock if wework's value continued to plummet he
wework's value continued to plummet he could be in serious financial trouble of
could be in serious financial trouble of course Adam didn't want to leave but he
course Adam didn't want to leave but he knew that him staying was tarnishing the
knew that him staying was tarnishing the company further and thus putting his own
company further and thus putting his own personal Fortune at risk as well all his
personal Fortune at risk as well all his houses around the world would be at
houses around the world would be at stake eventually with all the board now
stake eventually with all the board now against him Adam made the decision to
against him Adam made the decision to step away from Wei work but not without
step away from Wei work but not without first negotiating himself an extremely
first negotiating himself an extremely generous exit package Adam wanted a big
generous exit package Adam wanted a big cash payout to leave or else he wouldn't
cash payout to leave or else he wouldn't give up his voting shares in other words
give up his voting shares in other words he wanted payment to stop hurting his
he wanted payment to stop hurting his own company SoftBank agreed on $185
own company SoftBank agreed on $185 million consulting fee for him to walk
million consulting fee for him to walk away many felt it was shocking that
away many felt it was shocking that after every
after every Adam was getting any payout at all let
Adam was getting any payout at all let alone W this big not just that but Adam
alone W this big not just that but Adam managed to negotiate that SoftBank would
managed to negotiate that SoftBank would loan him 500 million so he could pay
loan him 500 million so he could pay back the line of credit he'd taken from
back the line of credit he'd taken from his bank on top of that SoftBank had to
his bank on top of that SoftBank had to agree to forgive almost $2 million in
agree to forgive almost $2 million in personal expenses Adam had paid through
personal expenses Adam had paid through the company meanwhile SoftBank agreed to
the company meanwhile SoftBank agreed to put in a little more money to stop the
put in a little more money to stop the company going bankrupt they now valued
company going bankrupt they now valued we work at 8 billion a huge drop down
we work at 8 billion a huge drop down from their own 47 billion valuation just
from their own 47 billion valuation just 9 months ago wework was imploding at a
9 months ago wework was imploding at a speed very few companies in history ever
speed very few companies in history ever have over $40 billion of paper value had
have over $40 billion of paper value had been wiped out in months and this
been wiped out in months and this valuation would be reduced even lower
valuation would be reduced even lower again very shortly however the idea of
again very shortly however the idea of this new investment was to try and show
this new investment was to try and show SoftBank was still confident in the
SoftBank was still confident in the company even though the IPO had been
company even though the IPO had been called off but in reality this was just
called off but in reality this was just to try and stop the company going
to try and stop the company going bankrupt wew work employees who had
bankrupt wew work employees who had stock options were horrified to see that
stock options were horrified to see that because we work's valuation had fallen
because we work's valuation had fallen so much their stock stock options were
so much their stock stock options were now essentially worthless they were even
now essentially worthless they were even more horrified to see that Adam could
more horrified to see that Adam could sell up to $970 Million worth of his
sell up to $970 Million worth of his shares so in other words investors lost
shares so in other words investors lost billions employees were stuck with
billions employees were stuck with worthless stock options and yet Adam
worthless stock options and yet Adam Newman walked away as a billionaire
Newman walked away as a billionaire whilst Adam had once Been Loved by
whilst Adam had once Been Loved by wework employees now he had managed to
wework employees now he had managed to anger pretty much everyone at the
anger pretty much everyone at the company particularly when you've been
company particularly when you've been preached that about it's all about we if
preached that about it's all about we if that's your deal and you're sitting on
that's your deal and you're sitting on all his money and you really believe in
all his money and you really believe in what you were saying the whole time you
what you were saying the whole time you should give some of the money back to
should give some of the money back to help the employees who got screwed his
help the employees who got screwed his reputation was in tatters that year
reputation was in tatters that year people dressed up as Adam Newman as a
people dressed up as Adam Newman as a Halloween costume of course Adam was the
Halloween costume of course Adam was the reason things had got so big in the
reason things had got so big in the first place but he was also the reason
first place but he was also the reason it had fallen apart and seeing him leave
it had fallen apart and seeing him leave behind the wreckage whil personally
behind the wreckage whil personally getting a billion doll exit package did
getting a billion doll exit package did not sit right so many wework employees
not sit right so many wework employees had put so much work in doing all this
had put so much work in doing all this unpaid overtime believing in Adam's
unpaid overtime believing in Adam's Mission however to fully put all the
Mission however to fully put all the blame on Adam is honestly unfair those
blame on Adam is honestly unfair those close to Adam from the banks to
close to Adam from the banks to investors had all encouraged Adam whilst
investors had all encouraged Adam whilst weck's value was rising and they were
weck's value was rising and they were getting richer they knew about his crazy
getting richer they knew about his crazy behavior and wild spending and they had
behavior and wild spending and they had facilitated it they only turned on him
facilitated it they only turned on him when it threatened to impact them
when it threatened to impact them negatively this was a systemwide issue
negatively this was a systemwide issue as Adam himself said the people backing
as Adam himself said the people backing him were supposed to be some of the
him were supposed to be some of the smartest investors and the rising
smartest investors and the rising valuation had kept reinforcing to him
valuation had kept reinforcing to him that what he was doing was right our
that what he was doing was right our valuation was given by the most
valuation was given by the most sophisticated valuers in the world but
sophisticated valuers in the world but now that Adam was gone what did that
now that Adam was gone what did that mean for we
work after Adam left we work postp own its IPO indefinitely the plan now was
its IPO indefinitely the plan now was ruthless cost cutting no more summer
ruthless cost cutting no more summer camps or huge teams no more wild
camps or huge teams no more wild Acquisitions they were going to be a
Acquisitions they were going to be a straightforward Office subleasing
straightforward Office subleasing business and tried to become profitable
business and tried to become profitable all those random Ventures we work had
all those random Ventures we work had started or acquired like surf pools
started or acquired like surf pools meetup.com and we live would all be
meetup.com and we live would all be closed or sold off at massive losses
closed or sold off at massive losses some of the companies Adams bought would
some of the companies Adams bought would just shut down completely Adam's jet
just shut down completely Adam's jet would also be sold we would Clos down
would also be sold we would Clos down many of its buildings and thousands of
many of its buildings and thousands of employes were fired as for the other
employes were fired as for the other co-founder Miguel it was very unclear
co-founder Miguel it was very unclear what his role even was anymore so he
what his role even was anymore so he left soon as well now Adam had
left soon as well now Adam had previously told CNBC that wework had
previously told CNBC that wework had four to 5 years before needing to raise
four to 5 years before needing to raise more money most people knew this wasn't
more money most people knew this wasn't true but things were even worse than
true but things were even worse than most people thought weor basically had
most people thought weor basically had less than two months before running out
less than two months before running out of cash completely which is staggering
of cash completely which is staggering when you consider how much money they'd
when you consider how much money they'd raised from investors already but wework
raised from investors already but wework was broke so much so they literally
was broke so much so they literally couldn't afford to fire employees they
couldn't afford to fire employees they wanted to lay off thousands more staff
wanted to lay off thousands more staff to cut costs but they didn't have enough
to cut costs but they didn't have enough money for their severance pay everything
money for their severance pay everything they'd been doing had been focused on
they'd been doing had been focused on growth at all costs with the expectation
growth at all costs with the expectation they'd be getting huge amounts of money
they'd be getting huge amounts of money from soft bank or the public market but
from soft bank or the public market but now they had no more investment coming
now they had no more investment coming in and no investors wanted to go near
in and no investors wanted to go near them and then just about the worst
them and then just about the worst possible thing that could happen for
possible thing that could happen for wework actually happened Chinese
wework actually happened Chinese researchers say they have identified a
researchers say they have identified a new virus Corona virus officially
new virus Corona virus officially hitting the us today the World Health
hitting the us today the World Health Organization officially announced that
Organization officially announced that this is a global
this is a global pandemic for a co-working company who
pandemic for a co-working company who makes money by squeezing people into
makes money by squeezing people into smaller and smaller offices and
smaller and smaller offices and emphasizes communal parties and events
emphasizes communal parties and events covid-19 was about the worst thing that
covid-19 was about the worst thing that could have happened as City shut down
could have happened as City shut down and the majority of people began working
and the majority of people began working from home weick was in a terrible
from home weick was in a terrible position they'd taken on long-term
position they'd taken on long-term leases from landlords that they couldn't
leases from landlords that they couldn't get out of and had to keep paying whil
get out of and had to keep paying whil they'd offered their own tenants very
they'd offered their own tenants very flexible short-term contracts that they
flexible short-term contracts that they could easily cancel which they did the
could easily cancel which they did the upshot was wework's finances were
upshot was wework's finances were already dire but the pandemic just added
already dire but the pandemic just added fuel to the fire the pandemic also
fuel to the fire the pandemic also caused SoftBank to try and pull out of
caused SoftBank to try and pull out of the latest deal they'd agreed the reason
the latest deal they'd agreed the reason SoftBank had been putting in more money
SoftBank had been putting in more money was simply to try and Salvage the
was simply to try and Salvage the company from bankruptcy but now it
company from bankruptcy but now it looked beyond saving SoftBank pulling
looked beyond saving SoftBank pulling out again also put Adam's exit package
out again also put Adam's exit package at risk So Adam ended up suing soft bank
at risk So Adam ended up suing soft bank maason had once been his mentor his
maason had once been his mentor his partner the man who shared Adam's
partner the man who shared Adam's excitement and vision for Wei work now
excitement and vision for Wei work now he was suing him the lawsuit would drag
he was suing him the lawsuit would drag on a while but Adam would eventually get
on a while but Adam would eventually get his settlement and walk away with a lot
his settlement and walk away with a lot of money although Adam himself then got
of money although Adam himself then got sued by some of his former wework
sued by some of his former wework employees on the grounds he'd misled
employees on the grounds he'd misled them on the
them on the valuation as for wework going public was
valuation as for wework going public was the only way they'd be able to raise the
the only way they'd be able to raise the money they needed to keep running but
money they needed to keep running but given how badly it had gone last time
given how badly it had gone last time they attempted that they knew doing it
they attempted that they knew doing it the official way wasn't an
the official way wasn't an option so in 2021 the company reached a
option so in 2021 the company reached a deal to become a public company via a
deal to become a public company via a special purpose acquisition company
special purpose acquisition company known as a spa this is basically a
known as a spa this is basically a publicly traded shell company with no
publicly traded shell company with no assets except cash that merges with a
assets except cash that merges with a private company thus allowing this
private company thus allowing this company to go public but avoid the usual
company to go public but avoid the usual lengthy and highly regulated IPO
lengthy and highly regulated IPO process we work struck a deal to merge
process we work struck a deal to merge with back and list publicly it was
with back and list publicly it was valued around $8 billion a huge fall
valued around $8 billion a huge fall from its peak but it was finally going
from its peak but it was finally going public unsurprisingly though the public
public unsurprisingly though the public markets were not remotely convinced by
markets were not remotely convinced by weor by April 2023 wework faced the
weor by April 2023 wework faced the listing on the New York Stock Exchange
listing on the New York Stock Exchange as its stock price had fallen below the
as its stock price had fallen below the $1 threshold the company was now valued
$1 threshold the company was now valued at just 360 million later that year we
at just 360 million later that year we work once a $47 billion firm fils for
work once a $47 billion firm fils for bankruptcy after acre $2.9 billion of
bankruptcy after acre $2.9 billion of debt as for Adam Newman given all that
debt as for Adam Newman given all that had happened you would think he would
had happened you would think he would never be involved in running a company
never be involved in running a company again
right after we work spectacular claps and all the negative media attention
and all the negative media attention Adam and Rebecca and ially went back to
Adam and Rebecca and ially went back to Israel but they didn't last long before
Israel but they didn't last long before returning to America Adam was restless
returning to America Adam was restless and wanted to get back in the game and
and wanted to get back in the game and back in the spotlight he began buying
back in the spotlight he began buying residential real estates and in 2022 he
residential real estates and in 2022 he announced a new startup called flow Adam
announced a new startup called flow Adam Newman was back so Flo is an experienced
Newman was back so Flo is an experienced first residential real estate company
first residential real estate company we're vertically integrated so we have
we're vertically integrated so we have technology we have operations and we
technology we have operations and we have H the people that bring it all
have H the people that bring it all together its mission is giving renters a
together its mission is giving renters a sense of security community and genuine
sense of security community and genuine ownership the details are all a bit
ownership the details are all a bit vague but just like we work Adam is
vague but just like we work Adam is talking a lot about community and saying
talking a lot about community and saying this new company is the future of living
this new company is the future of living and once again he is also talking about
and once again he is also talking about how it's a tech company flow is Tech
how it's a tech company flow is Tech first and product first we use
first and product first we use technology as a tool to achieve the
technology as a tool to achieve the mission and the goals that we have Flo
mission and the goals that we have Flo said its apartment would incorporate
said its apartment would incorporate crypto wallets and a model where renters
crypto wallets and a model where renters could get equity in the apartments
could get equity in the apartments amazingly VC firm A6 invested $350
amazingly VC firm A6 invested $350 million in Adam's new business this gave
million in Adam's new business this gave the company a 1 billion valuation before
the company a 1 billion valuation before it had even launched or made any money
it had even launched or made any money but Adam said he would learn from the
but Adam said he would learn from the lessons of we work we built a global
lessons of we work we built a global brand we had over 10,000 employees that
brand we had over 10,000 employees that were so passionate we helped redefine a
were so passionate we helped redefine a category and every single thing we did
category and every single thing we did had to do almost anything and everything
had to do almost anything and everything with Community I am the kind of person
with Community I am the kind of person that actually learns more from from
that actually learns more from from their mistakes than from their successes
their mistakes than from their successes so all the great things we did in the
so all the great things we did in the past we're going to do again but as well
past we're going to do again but as well as launching his new company that's
as launching his new company that's already valued at a billion dollars
already valued at a billion dollars another twist came when Adam tried to
another twist came when Adam tried to buy wework back after it went into
buy wework back after it went into bankruptcy co-founder and former CEO of
bankruptcy co-founder and former CEO of wework Adam Newman reportedly making a
wework Adam Newman reportedly making a $500 million bid to buy the company
$500 million bid to buy the company according to the Wall Street Journal
according to the Wall Street Journal what will happen with weor and Adam's
what will happen with weor and Adam's new company Still Remains to be seen but
new company Still Remains to be seen but the reality is this whole story has a
the reality is this whole story has a pretty troubling lesson because despite
pretty troubling lesson because despite everything Adam is still Rich he lives
everything Adam is still Rich he lives the high life and there were no real
the high life and there were no real repercussions You could argue Adam
repercussions You could argue Adam played the system
played the system perfectly time and time again we see
perfectly time and time again we see that Society is wooed by charismatic
that Society is wooed by charismatic Leaders with a big Vision we're all
Leaders with a big Vision we're all susceptible to a great story and being
susceptible to a great story and being able to craft a narrative people buy
able to craft a narrative people buy into is arguably one of the most
into is arguably one of the most powerful skills in the world what
powerful skills in the world what happened with wework was crazy but it
happened with wework was crazy but it certainly won't be the last time
certainly won't be the last time something like this
something like this [Music]
happens now if you have made it to this point I just want to say thank you as
point I just want to say thank you as you can tell from the length of this
you can tell from the length of this video I loved researching this story and
video I loved researching this story and I hope you've enjoyed the wework story
I hope you've enjoyed the wework story as much as I did when I started magnates
as much as I did when I started magnates media I never thought I'd be making
media I never thought I'd be making movie length videos like this and so I
movie length videos like this and so I seriously really appreciate you watching
seriously really appreciate you watching and supporting the channel and coming on
and supporting the channel and coming on this crazy ride with me if you do want
this crazy ride with me if you do want more business stories like this feel
more business stories like this feel free to subscribe or click here to check
free to subscribe or click here to check out some of my other videos but either
out some of my other videos but either way thanks again for watching I'll see
way thanks again for watching I'll see you next time cheers
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