WeWork founder Adam Neumann: After $4.2 billion, forgot the mission

In an interview on Steven Bartlett's show, WeWork founder Adam Neumann stated that the turning point for the company was the $4.2 billion financing with SoftBank's Masayoshi Son in December 2016, not the subsequent failed IPO.

The night before, the board had just decided to raise only $300 to $400 million, halt new lease signings, and focus on profitability before going public. At that time, the company had completed financing six months earlier at a valuation of $16 billion, with annual revenue of about $950 million. The team arranged a meeting with Masayoshi Son and requested not to discuss investment. In the lobby, Son remarked that the building "smelled like dreams," and then called Neumann to his car.

In the car, Son overruled his own team, stating, "I am the boss," initially offering $3 billion, and then breaking it down into $4.2 billion covering the parent company and entities in China, Japan, and Southeast Asia. He wrote down the terms on an iPad, and they signed on the spot. Neumann's planned financing amount was increased by more than ten times.

After signing, he walked back to the headquarters from 54th Street to 18th Street. He said with every step, his ego emerged: $20 billion valuation, $1 billion in Japan, $1.5 billion in Southeast Asia, $5 billion in China, with about 25% of his shares, of which about $1 billion would go to old shareholders including himself. Upon entering the headquarters, he remarked that the person in the car who was still discussing the mission was no longer there; the company had become "about money."

Salesforce founder Marc Benioff called that night, advising him to fly to Japan to return the money, go public at a $5 billion valuation, sell 20% for $1 billion, and first learn to be a public company CEO. He did not listen. In the show, Neumann equated his ego and desires as the same word, stating that the company made hundreds of decisions daily, originally able to align on 98, but with his deviation, the entire company deviated.

In 2019, WeWork's IPO attempt failed, with its valuation dropping from $47 billion to about $7 billion after a bailout from SoftBank. After leaving, Neumann cashed out over $1 billion through selling shares to SoftBank and a $185 million consulting fee. He later founded a housing project called Flow.

The buyer was SoftBank, which was raising about $100 billion for its Vision Fund, while the seller was WeWork's board, which initially aimed for a small financing and to stop expansion. This was a capital injection driven by a single meeting, not order-driven. The money flowed from the Vision Fund to new entities in China, Japan, and Southeast Asia, benefiting the immediately revalued old shareholders, while putting pressure on leases, renovations, and an unprepared IPO window.

Source: Public Information