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Transcript for Episode 2: The Failed Deal That Doomed WeWork (no, not the one you're thinking of)

Aimee Keane (00:06):

In December, 2018, Adam Newman was ready to celebrate. The WeWork CEO, and his top executives had just spent months negotiating an investment that would dramatically change the future of the office sharing company.

Eliot Brown (00:20):

This was ready to happen, and they had been sort of assured that everything was pencils down, the deal's done.

Aimee Keane (00:31):

They were thrilled, a little tired and ready for the winter break.

Eliot Brown (00:35):

And so Adam took the WeWork private jet, that he bought with WeWork's money, and brought it to Hawaii and was surfing with Laird Hamilton, the surfing legend on the waves there. And then on Christmas Eve, he gets a call from Masa.

Aimee Keane (00:57):

Masa being Japanese tech investor and WeWork's biggest backer, Masayoshi Son.

Eliot Brown (01:03):

And Masa just simply tells him the deal's off. Uh, we, I, I can't go through with this.

Aimee Keane (01:13):

Masa was also Adam's mentor, and the two men had concocted an audacious plan to take on the global real estate sector. Yet just when Neumann's own vision was coming together, his biggest supporter was backing out. The question now was how to respond.

Eliot Brown (01:31):
I mean, he scrambled, in shock. He calls his deputies and then kind of rapidly tries to, to salvage it, and it doesn't work. This was going to be the largest buyout ever of a startup. And if you look back on it, the notion that it almost happened is totally insane. I mean, it was incredibly close to happening.

Aimee Keane (01:54):

This is The Closer, the inside story of the deals that change the world. I'm Aimee Keane. On this episode: WeWork, but not the WeWork story you might know already. This is a story about a little known deal that came before the company tried to go public. A 20 billion idea codenamed Project Fortitude that never came to be. It was a turning point in WeWork's history. And that failure led to this one.

News_clip (02:24):

The company was one of the hottest startups in history. Then it plunged from nearly 50 billion in value to basically worthless in just six weeks.
News_clip (02:33):

WeWork is withdrawing its IPO prospectus.

News_clip (02:36):

As soon as these numbers went out, nobody wanted to buy this company.

Aimee Keane (02:44):

The spectacular implosion of WeWork in 2019 didn't come out of nowhere. The story starts much earlier when Adam and Masa first entered each other's orbit. To understand the series of events that led to the company's downfall. I talked to a pair of reporters from the Wall Street Journal who pieced together the story of this company in gritty detail. Eliot Brown.

Eliot Brown (03:06):

It's just insane. It is still a bit hard for me to comprehend even after having written a book about it.

Aimee Keane (03:12):

And Maureen Farrell.

Maureen Farrell (03:13):

Adam was, is really like the poster child for this generation of entrepreneurs. Really no one thought bigger, almost no one raised as much money as him, and no one had a swifter fall.

Aimee Keane (03:27):

In 2021, Maureen and Eliot published The Cult of We: WeWork, Adam Neumann and the Great Startup Delusion. It was the product of years of reporting on WeWork and the private investment in tech that created a generation of so-called unicorn companies, meaning private companies valued at a billion dollars or more. They were called unicorns because they were rare, at least at one point. And what sets WeWork apart from the other unicorns comes down to the two men at the center of this deal. There's Adam Neumann, the co-founder of WeWork.

Adam Neumann (04:01):

When you go into a WeWork, if we did it right, there's an energy that you feel, and it's an energy of people doing their own thing while actually still being part of something greater than themselves. We like to call it the we generation.

Aimee Keane (04:13):

The CEO of the Japanese multinational conglomerate, SoftBank.

Masayoshi Son (04:17):

I have a vision, I have a vision of singularity that's really coming. So, we created Vision Fund, right? We go and change the world together.

Aimee Keane (04:29):

But these two guys,

Eliot Brown (04:31):

These were two people that you know, really shouldn't never have met.

Aimee Keane (04:35):

Eliot covers finance for The Journal, which is how he first met Adam Neumann back in 2013.

Eliot Brown (04:42):

And I was covering the office market and there was this, you know, fast growing co-working company, and that was a trend I was following. So I went to Lower Manhattan to just meet him, and he was 30 minutes late. He kept me waiting. I go into, he sort of brings me into the office and he's this really tall lumbering guy who just seems totally full of energy. You know, he's just like, name dropping and talking about Ashton Kutcher and his meeting with Rahm Emanuel and how this, this firm is just gonna keep growing and growing and growing and this thing that has like five offices. So I, I remember sort of being puzzled as to both amazed at the, the pace of the business. And before I thought too much of it, and then kind of taken with this like, totally crazy guy who just seemed full of energy and he was like, you know, you're, you're the real estate reporter. I don't think you're the right one for this story. But then I sort of convinced him that I was the only one who was gonna do it. And then he opens up the door to the office, uh, as I'm leaving and he yells to everyone, everyone, this is Eliot, he's a friend. Give him whatever he wants.

Aimee Keane (05:44):

Quite a first meeting.

Eliot Brown (05:46):

Ah, yeah.

Aimee Keane (05:49):

Fast forward a few years, Maureen was covering IPOs or initial public offerings where a company first sells shares to the market. And a big story was forming on her beat. Saudi Arabia was about to take Aramco, the state oil company, public.

Maureen Farrell (06:04):

Suddenly they were going to essentially like take the whole country public. And, there's this huge like pot of like gold seemingly for bankers and investors and everyone coming for all this oil money that was suddenly gonna be in the public markets. So, you know, the world was essentially kind of flocking to the kingdom as they were opening up its coffers. But, probably the largest beneficiary in some ways was Masa Son.

Aimee Keane (06:32):

Masa had been an investor in tech companies for years.

Maureen Farrell (06:35):

This took him to a new level and he was really like supercharging everything about financing.

Aimee Keane (06:42):

So Adam and Masa meet for the first time in India. It's 2016, and they're both in New Delhi for a startup conference.

Maureen Farrell (06:49):

At this cocktail, party after the big event, they kind of sat in a corner together and really just talked nonstop for like a half an hour. And Adam was being Adam, he was making a lot of jokes, like people thought he was kinda like really cracking Masa up. And it's funny, a lot of people who knew both of them were like, there's the minute they meet each other. There's no way that this won't, they won't be in business together.

Aimee Keane (07:17):

But Masa isn't quite ready to invest in WeWork. He is, however, working on something big.

Maureen Farrell (07:23):

Later on in 2016, basically it became clear that Masa was gonna raise this never before seen amount of money all directed at tech startups.

Aimee Keane (07:33):

A hundred billion dollars that would go into something he called the Vision Fund. Money for big thinking tech founders who Masa believed in. This was the era of investors putting a lot of money into new tech startups, especially in Silicon Valley, with the bet that they'd earn back multiples of their investment when these companies eventually went public.

Eliot Brown (07:54):

It was solely the result of, of kind of money irrationally thinking that there was a pot of gold at the end of the rainbow.

Aimee Keane (08:01):

Eliot's point about irrational money is really important here because the Vision Fund is about to make that pot at the end of the rainbow seem a whole lot bigger. It's also going to give the founders it invests in more room and more time to grow their businesses and to do so away from the scrutiny of the market. This was something no one had seen at this scale before. In December, 2016, Masa makes a visit to New York. He's got two people to see.

Maureen Farrell (08:29):

Masa was actually coming, to meet Donald Trump, who is then the president-elect. And there was some intermediaries who knew Masa we're close to Adam, who were saying, you know, you have to get a meeting with him. You met him. Um, he's coming to New York.

Aimee Keane (08:43):

So, before Masa's big meeting with Donald Trump, he makes a pit stop at WeWork's headquarters.

Maureen Farrell (08:49):

And Adam was so excited for this and, you know, really knew he needed this money. He knew he had to really land this deal basically. So Masa came in and they had prepared the office in such a way. There's always this thing where they would so-called “activate the space” where they'd get people, you know, doing fun things, drinking, doing whatever it was to show that there was all this energy in the WeWork space. And people said they even, he even had someone making waffles, how the smell of waffles would be nice  as he walked around. But Adam, who was always known for keeping people waiting forever, he kept Adam waiting. He was, Masa was very late to show up to this meeting. And then once he came in, he did a true whirlwind tour. He took about 12 minutes to go through the whole office, and at the end of it, he said, just come in the car with me to Adam. So Adam jumps in the car, they're going from WeWork headquarters about like 30 or 40 blocks up to Trump Tower. They get very much stuck in Midtown traffic. So it takes them a while. And over the course of this, say, 45 minute-ish car ride up to Trump Tower, they start talking about what an investment in WeWork by SoftBank would look like.


And Adam starts talking about what he'd do with the money. They sort of look together, sketch out a map of the world and how WeWork would take over the world. And by the time Adam walks out of this car, he's dropped off the Trump Tower, he's landed about more than 4 billion in new investment, which was, well more than they had ever landed before. And it was just this giant amount of cash.

Aimee Keane:

Adam likes to tell people that it took him 28 minutes to get Masa to write him a 4 billion dollar check.

Eliot Brown (10:41):

He, uh, he is just like jubilant and he comes back to the office and he emerges into one of his top deputies rooms and just says like, guess what happened, <laugh>

Aimee Keane (10:50):

For Adam, this was a huge win. For Masa, well, he goes on to his meeting with the president-elect.

Maureen Farrell:

If you remember he was sort of bringing all these people in. It was like a, a big show and it was all, um, you know, we were watching a lot of it live on TV.

Donald Trump (11:06):

So ladies and gentlemen, this is Masa of SoftBank from Japan, and he's just agreed to invest 50 billion in the United States and 50,000 jobs, and he's one of the great men of industry. So I just want to thank you very much.

Masayoshi Son:

Thank you, thank you, thank you very much.

Donald Trump:

If you'd like to speak to him, you can, but one of the truly great men, thank you.

Masayoshi Son:

Thank you, appreciate, thank you, thank you, thank you so much.

Donald Trump:

You may wanna say hello.

Masayoshi Son:

Yes, yes. Thank you.

Donald Trump:

I'll see you soon. Okay.

Aimee Keane (11:39):

And after Trump leaves the lobby, the TV cameras turn to Masa.

Masayoshi Son (11:47):

Masa Son. CEO. No, no, I'm CEO of SoftBank.

Aimee Keane (11:52):

Someone, possibly a reporter off camera, mistakes Masa for the CEO of Foxconn, which is this Taiwanese company that makes electrical parts for Apple.

Masayoshi Son (12:01):

No, no, we don't make Apple phones, my friend make Apple phones. We are SoftBank. I just came to celebrate his, uh, his, uh, new, new job. United States, US will, uh, become great again.

Maureen Farrell (12:17):

At the time. It's funny, when the Vision Fund started, all of a sudden there were all these articles saying, you know, this very little-known investor from Japan is investing in these startups. If you read the articles at the time of the dot com boom, he was one of the biggest investors, SoftBank, in the United States. He has had this very long, very up and down career as an investor.

Aimee Keane (12:43):

Masa likes to say he was the richest man in the world for a few days. This was during the dot com boom. But then he lost about 70 billion when these tech companies went bust.

Maureen Farrell (12:53):

Masa has ridden waves.

Aimee Keane (12:56):

Here's another one. He managed to turn a 20 million investment in Alibaba into 60 billion when the e-commerce company IPO’d. This was one of those investments Masa made because of how the founder made him feel. In this case, it was Alibaba's founder Jack Ma.

Masayoshi Son (13:12):

He had no business plan, zero revenue, but his eyes was very strong, strong eyes, strong shining eyes.

Maureen Farrell (13:34):

And he always has spoken in this, like, very grandiose terms of visions, 10, 20, a hundred year visions. But he began to think that, um, he could create the tech companies that would dominate, change the future and win by putting huge amounts of money, never foresee amounts of money in, into tech companies. And so that was sort of the vision of the Vision Fund.

Aimee Keane (14:07):

So it's 2016, Masa is developing his idea of the vision fund just as Saudi Arabia is looking to open up its economy. Masa and Saudi Crown Prince Mohammed bin Salman - MBS, as he's often called, arrange a meeting. And as Masa is preparing for the meeting, he's talking to his deputies about how much of an investment he's gonna ask for.

Maureen Farrell (14:30):

And he says, I think it's about 10 billion, crosses it out, says a hundred billion. And he goes into this meeting with MBS, you know, tells him his grand vision for technology changing the world. He's gonna be in the middle of it. And he likes to say it was a 45 minute meeting,

Masayoshi Son (14:46):

45 minutes, 45 billion.

Maureen Farrell (14:49):

He walks out with $45 billion

Masayoshi Son:

1 billion per minute.

Maureen Farrell:

When you hear these things like 45 billion, 45 minutes and you think, oh, there must be more to the story, there really wasn't, in a lot of ways these were as decisions that were almost as like snap decisions as they were made out to be, which is crazy.

Eliot Brown (15:12):

Suddenly out of kind of nowhere, this guy ends up pulling out a hundred billion dollars almost out of thin air. It was baffling, uh, like  I just didn't understand it. It's like him, you're, you're giving him $45 billion? I mean, the AliBaba investment was, was clearly very good, but, but largely was known for his flops. And so he's the guy who, who you, you give, uh, the largest check ever written for startups to? uh, it was just kind of confusing.

Aimee Keane (15:41):

Regardless, Masa is now at the helm of one of the biggest tech investment funds in the world. He's got money to spend. Money that Adam and WeWork need to keep growing.

Adam Neumann (15:51):

And Masa is one of the most visionary investors in the world. I see Masa as one of the best or the best high-growth investor in the world, and I'm pleased that he chose to invest in us.

Aimee Keane (16:01):

By the time Adam meets Masa in Manhattan, WeWork is expanding at breakneck speed. New locations mean more revenue, and that growth is what's helping him raise money from private investors at record breaking valuations. It's also helping Adam position WeWork as a tech company. He calls it space as a service, a play on the idea of software as a service.

Adam Neumann (16:23):

It's not even about being technology first. In today's world, when you build a company, if you're not technology oriented and you're not letting that lead your information process and your decision-making process, then you're missing out.

Aimee Keane (16:33):

And now that he had Masa's investment, he wanted to take that company even further in this direction.

Maureen Farrell (16:39):

He was incredible at branding and marketing, not just the company and the, um, idea and not just turning a real estate company into a tech or an AI company, but I mean, he was amazing at branding himself as this visionary entrepreneur and, you know, getting himself on magazine covers. And he really became kinda like a rockstar. And he had, um, this swaggery at this image and he was always cultivating it.

Adam Neumann (17:08):

And as much as some people say the we generation or millennials are slightly entitled, it doesn't, you're not entitled, if you really know what you want and you're gonna keep searching until you find that thing that touches you. And when you do find that thing that touches you, you're gonna work harder. You're gonna put more effort into it, you're gonna worry less about salary and more about what impact am I having? And that's WeWork.

Aimee Keane (17:26):

But when it came down to it, WeWork was in the business of subleasing office space. That's it, that's the product.

Eliot Brown (17:34):

Where the world got carried away was trying to see something else in that business than what it was, which was something very simple. This was simply a real estate company.

Aimee Keane (17:43):

The core WeWork business operated a lot like a European company called Regus. Only Regus, which pitched itself as a pure shared office space provider, was valued on the stock market at 4 billion dollars, around the same time, WeWork with 16 billion. But Adam was talking about nothing short of world domination, and that was language that Masayoshi Son could relate to.

Masayoshi Son (18:07):

I still want to invest more and I want to increase. Uh, some of my investors said, Masa, make sure you don’t get too excited. Don't go too far too much. But if I could increase, I would like to increase.

Maureen Farrell (18:22):

First of all, I think he saw Adam Neumann and was really entranced by him and everything Adam was telling him. And that was something that Masa did a lot. He just became very like, obsessed with these entrepreneurs and really listened to them. But Adam was also, you know, very savvy about this. He knew Masa wanted to invest in tech companies that were gonna change the world.

Adam Neumann (18:46):

And something beautiful about Masa and my relationship is how we communicate. So if I have something I need to change or talk about, or he has something he needs to talk about, we call each other. We actually prefer face-to-face meetings. It's a real partnership.

Aimee Keane (18:58):

Well, Adam might have a partnership with Masa, his staff and some of his investors are getting frustrated with the way he's running the company: burning cash, consolidating his power and making investment decisions that don't seem to relate to the core business.

Eliot Brown (19:12):

Like he had bought, uh, 40% of a wave pool company that would make pools that you could surf at in the middle of the country. And he was flying private all the time by renting jets. So it, was not a particularly stellar company, but it had grown very large and at that point was really going to need money from somewhere, and it was going to need probably to IPO because they, they had basically tapped out every other source of, of funding on the planet that, that would go to a company like them.

Aimee Keane (19:42):

Here's the thing about taking a company public though. When you make an initial public offering of shares, you also have to regularly disclose to the market exactly how the company's performing profits, or in this case losses, assets and liabilities and how much the CEO gets paid, just to name a few others. Founders of unicorn companies weren't in the habit of divulging this kind of information.

Maureen Farrell (20:06):

He was gonna, I mean, he never really wanted to go public. He was nervous about what the public markets would put on him, what, you know, what he would be allowed to do, what he wouldn't, all the reporting he would've to do. So this would keep him out of the public markets. He would have sort of an infinite supply of capital.

Aimee Keane (20:22):

Did it feel like something wasn't quite right? Were there any sort of red flags to you as financial reporters in these early days at the Vision Fund?

Maureen Farrell (20:30):

Yeah, I mean, it just, it did start to feel like they, from the early days and as it went forward, I mean, it, it did start to feel like they were literally just throwing money at companies. And in a lot of ways they were, I mean, they were, companies would go in and ask for a certain amount of money. Masa would give them five or 10 times that amount. You never see that in investing. People always have to kind of beg for more, wish they were getting more and it was turning everything on its head, and it seemed like, it always felt like this can't end well.

Aimee Keane (21:08):

We'll be right back.

Aimee Keane

All right, let's get back into the story. In 2017, WeWork received its first injection of cash from the SoftBank Vision Fund, 4.4 billion worth. At 20 billion dollars, it had become one of the most valuable startups in the world.

Eliot Brown (21:38):

You know, Adam gets this enormous investment from SoftBank, and the company then sort of continues to grow very fast. They expand into more areas of the world and become more global. But even then, it's clear it is gonna need a lot more money.

Aimee Keane (21:54):

Here's the problem. The WeWork board wants Adam to raise money by taking the company public. This way it can raise money and early investors can cash out, but Masa tells Adam to do something else.

Eliot Brown (22:06):

But then Adam is sort of pushed by Masa to think even bigger, and Masa keeps telling him to be crazier. And the people around Adam thought this was totally scary because Adam was already the craziest person they knew. So indeed, Adam then starts to act crazier, and he feels a need to make WeWork bigger than Masa originally, you know, had even pitched to him. And so he pitches this idea internally that becomes known as the triangle. He sketches out on a marker board to employees in the room one day that WeWork's business will be three different points of a triangle.

Aimee Keane (22:44):

One will be WeWork, one will be something called ARK, which was a play on Noah's arc, for its real estate investments. And the third will be services and retail.

Eliot Brown (22:55):

Next to each of those points, he writes a one ‘T’ meaning each will be worth a trillion dollars and WeWork will be this 3 trillion dollar business.

Aimee Keane (23:05):

Keep in mind that at this point, not even Apple was a trillion dollar company.

Eliot Brown (23:10):

So he, he's imagining WeWork, he's gonna be the most valuable company in the world. Very quickly, he flies to Japan for one of his sort of periodic meetings with Masa. He wasn't sure if he was gonna present this or not. And then he's trying to read the room and sort of sees an opening and then just kind of blurts it out to Masa that he has this plan for WeWork to go even bigger and pitches this idea.

Aimee Keane (23:34):

Masa's intrigued. The meeting ends up kicking off a series of meetings with senior staff from SoftBank and WeWork throughout the summer of 2018. During one of those meetings, this time in New York, Adam tells Masa how much money he needs.

Eliot Brown (23:49):

And what, what he sort of ultimately asks for is 70 billion dollars.

Aimee Keane (23:57):

70 billion dollars. I'm just gonna pause here for a minute to put this number in context. You'll remember that the Vision Fund was a pot of 100 billion in total. As for the record of what a private company had raised to this point, well, Uber held that for raising $12 billion total since its founding.

Eliot Brown (24:16):

So he's asking what would just be this unheard of amount of capital.

Aimee Keane (24:21):

Adam tells Masa that together, the two of them will take on the entire real estate market, that they'll build a company worth, wait for it, trillions of dollars.

Eliot Brown (24:31):

We're going to own the entire sector. We're going to have companies, uh, we're gonna be buying brokerages, lease space to other companies. We're gonna go into other companies offices and design their, chairs and, and empty their trash. Anytime anything happens in, the commercial real estate sector or anything to do with office space, WeWork will be there.

Aimee Keane (24:53):

This is where the plan, codenamed Project Fortitude, is hatched. Adam first makes his ask of 70 billion dollars, and then he showers Masa with projections of just astounding growth that would come with this investment.

Instead of asking sort of questions about how realistic this was, what did Masa do instead? How did he respond?

Eliot Brown (25:13):

<laugh> Masa was intrigued. He doesn't just laugh him out of the room, which I think would've been the response of most anyone else in the world with money, but he actually says, yeah, let's keep talking.

Aimee Keane (25:23):

Most investors would've been scared off by this point, but not Masa. Masa agrees to a deal, not for 70 billion dollars, but for a still record breaking 20 billion dollars. Half in cash and half to buy out existing investors.

Eliot Brown (25:39):

Project Fortitude was what would've been the largest buyout of a startup ever.

Aimee Keane (25:44):

Making Masa and Adam, the sole owners of a WeWork valued at 47 billion dollars.

Maureen Farrell (25:52):

I mean, emotionally, it was like they were gonna be partners and it represented just this whole new world for Adam Neumann. For Masa, I mean, it represented, having put a lot of money already in WeWork, this is if it had ever worked out this way. I mean, he wanted global domination. He wanted these giant businesses, and this was gonna be a way, you know, potentially to do this.

Aimee Keane (26:19):

In these meetings, Masa keeps daring Adam to think even bigger. A hundred million members by 2028, 500 billion in revenue, a 10 trillion valuation. None of these numbers sound real. And yet to Masa and Adam, they were somehow.

Eliot Brown (26:39):

And so then over the, the course of the summer, they just have, sort of meeting after meeting in New York and Tokyo and San Francisco and London, where they continue to talk about sort of what this thing would look like and how you would structure it, uh, how much money it would actually need, where that money could come from.

Aimee Keane (26:57):

Executives from both sides believe they were close to closing this deal, but Adam keeps returning to specific points, points relating to his role in the company.

Maureen Farrell (27:08):

He wanted all sorts of stipulations in there. I mean, there are things like if he ever committed a felony, they couldn't push him out as CEO, and the negotiations just took longer and it sort of lingered on, the back and forth, until December. But right around then they thought the deal was done. I mean, there were conversations between SoftBank and WeWork’s top people basically saying, okay, we're, you know, we'll sign on the dotted line, things are coming your way. And what wound up happening was a couple of things.

Aimee Keane (27:42):

First, Eliot and Maureen got word about Project Fortitude.

Maureen Farrell (27:45):

We wrote about it and really worried investors in SoftBank. So the stock really took a beating at that point, once it was sort of out there in the Wall Street Journal. Secondly, I mean, I guess this is another critical point, they thought they were gonna get, they would put money from the Vision Fund into this deal, but the Saudis really got cold feet about it. They said, hey, we gave you all this money to invest in technology. We have real estate investments. And so what happened to the stock of SoftBank really mattered.

Aimee Keane (28:21):

Then in October of 2018, news breaks that Washington Post columnist Jamal Khashoggi had been assassinated in the Saudi consulate in Turkey.

News_clip (28:30):

Jamal Khashoggi entered the Saudi consulate in Istanbul and never left. Turkish investigators, allege, a Saudi hit team was waiting for him. They report he was killed almost immediately and that his body was dismembered.

Aimee Keane (28:43):

The Turkish government releases photos and other evidence that point to the Vision Fund's biggest backer as the mastermind behind the murder. Crown Prince Mohammed bin Salman.

News_clip (28:54):

Masa Son is in a super precarious position right now because he has a very close and personal relationship to the Crown Prince.

Aimee Keane (29:01):

Suddenly a lot of the money flowing through Silicon Valley is coming under scrutiny.

News_clip (29:06):

SoftBank is getting rocked here, dropping about 7% in Tokyo on Monday, now down nearly 20% this month. At least part of the pressure here, all the bad news tied to Saudi Arabia.

Aimee Keane (29:21):

And then in December,

Maureen Farrell (29:22):

Well there was a, a larger sell-off in the global tech stock market, and SoftBank also right around that time, had taken one of its companies public. And, um, it had done really poorly. So all those things came together. They were worried that it could cause, like the whole, all of SoftBank to kind of unravel if the stock fell too much.

Aimee Keane (29:43):

Sure enough, SoftBank shares tumble even more, and Masa has to rethink the deal with Adam.

Maureen Farrell (29:50):

His CFO basically told him right around this time, you can't go through with it. Investors are gonna revolt against our stock and we're gonna be in a lot of trouble. So basically Masa calls Adam.

Eliot Brown (30:06):

And Masa just simply tells him the deals off. Uh, I, I can't go through with this.

Aimee Keane (30:12):

This is at Christmas when they're both in Hawaii.

Eliot Brown (30:15):

So, so Masa is in Hawaii and, and he says, oh, you know, Adam's in Hawaii and he's going to fly to a different island to meet Masa. And so he says, I'll come over there. And so he, you know, has his like, puts together a presentation to go try to convince Masa to, you know, still give him money. And, and I think the pitch is essentially along the lines of but this is a once in a lifetime opportunity. These don't come around like, this is your chance and sort of reminding Masa the big fish thinking he likes to do, uh, and it, it doesn't work.

Aimee Keane (30:44):

Adam eventually convinces Masa to give him 2 billion, 1 billion in new cash and another billion to buy out some existing investors.

Eliot Brown (30:53):

So it's this sort of face saving move to give WeWork a little bit of cash.

Aimee Keane (30:57):

A billion dollars of new cash is a lot of money in most contexts, but it wasn't gonna go very far at WeWork. The company would have to go public. But of course, WeWork never did go public with Adam at the helm. After a series of missteps in failures, the company pulled its initial public offering in September, 2019.

News_clip (31:20):

A lot of these companies like to focus on the CEO and Adam Neumann - there was some heat around him.

News_clip (31:25):

This guy Adam Neumann walks away with a billion plus mm-hmm. And now we've got the workers on the street with nothing.

News_clip (31:32):

CEO Masayoshi Son of SoftBank is almost downplaying this massive debacle, almost normalizing the behavior of this controversial CEO.

News_clip (31:42):

They dreamt up ideas for new businesses, startups, and that was the pitch. Of course, you know, we ultimately saw just how hollow it was.

Aimee Keane (31:50):

Adam was pushed out, though he walked away with a 185 million dollar payout and a billion dollars in stock. Meanwhile, 8,000 WeWork jobs disappeared, between attrition, outsourcing and layoffs. And, almost overnight, employees lost most of the value of their WeWork equity. And Masa - well, he had to face his own investors.

Eliot Brown (32:14):

If you, you look at what ended up happening with Masa and SoftBank, he had to, you know, really apologize publicly to his shareholders, to the public for putting 10 billion into WeWork. I mean, just imagine if he had put another 20 billion in on top of that.

Aimee Keane (32:31):

Under new leadership, and at a fraction of its earlier valuations, the company did end up joining the public market. It did so through something called a SPAC or special purpose acquisition vehicle in October, 2021.

Project Fortitude was a turning point in the WeWork story. It changed Adam and Masa's relationship and it triggered a chain of events that ultimately turned the world's highest valued startup into a real estate business worth about a billion dollars. This was all after the deal collapsed.

How shocked were you when you, when you know, any one of your sources shared that this was completely coming to an end?

Eliot Brown (33:14):

I guess we knew it was on the rocks to begin with because we knew that they were having trouble with their own financiers and, and the notion that SoftBank was actually going to spend 20 billion to buy most of WeWork just seemed wildly crazy.

Maureen Farrell (33:30):

It was almost like when we were writing the book, it was almost more surprising to learn how definitive it was and to talk to all the different people in the company and like how a hundred percent sure they were, it was gonna happen when they were like, we basically did everything but sign on the dotted line for it. I don't think we quite realized how much of everything that was going on at the company was predicated on this money coming in and everything that, you know, the hopes and dreams and the projections that Masa and Adam had come up with and sort of made sense in retrospect. And, you know, then we sort of understood the pain and the, um, really terrible position to put the company in.

Aimee Keane (34:13):

You think of all of the billions of dollars that went into the company and now, and all the ideas for what it could become, and now it is a office leasing co-working company that's valued depending on the day at about three or 4 billion. What should we all make of the company that came out of all of this investment?

Eliot Brown (34:33):

WeWork today is actually much bigger, in, in terms of number of desks they have than WeWork under Adam and, and worth far, far less. Uh, so, that was a result of, of sort of expansion that was planned under Adam that they had to grow into. And you know, I think this was sort of inevitable.

Aimee Keane (34:52):

You both have had front seats to this story. What do you make of all of the forces that allowed Adam and Masa to operate this way? I'm thinking, you know, the availability of private money, the lack of scrutiny on both their operations and governance and then the way that Masa enabled Adam.

Maureen Farrell (35:11):

I think he really defined an era that is, I think has really, truly now come to a close.

Aimee Keane (35:19):


Eliot Brown (35:19):

Yeah, I think one of our main takeaways was the power of herd mentality. And you know, what you saw here was a lot of actual smart investors and smart people going to, you know, put money in and work for this company and believe it. And, you know, if you'd really step back to think about it, it never made any sense. But everyone was just sort of looking at everybody else and saying, well, that guy sees something in this company. And so, you know, what ended up happening was just a real emperor's new clothes tale where at some point somebody was like, there's no clothes on that guy. Like, there, there's no, there, there. This is a real estate company.

Aimee Keane (36:05):

A real estate company. A real estate company with a tech valuation all because of the story Adam and his biggest backer Masa were able to sell.

Eliot, is there a way in which both of these guys, Masa and Adam contributed to each other's downfall?

Eliot Brown (36:21):

Yeah, I mean, you know, they contributed to each other’s insanity and sort of fed each other's worst impulses. Like that's what was going on with WeWork in Masa is like had you kept these people separate, you would've still had a lot of craziness of WeWork and still had a lot of craziness and SoftBank. Together, they're both feeding off each other with just promising the totally unachievable to each other, and that makes each of them more excited. And the altitude that went that much higher in the fall was that much more painful.

Aimee Keane (36:52):

That's it for this week. Thanks for listening. If you like this episode, would you please leave us a review on Apple Podcasts, or better yet, share the show with someone who might enjoy it and hit that subscribe button so you'll know every time we have a new episode.

We're bringing you inside deal stories on the closer and now it's your turn. Tell us about a time when you were the closer. We're all involved in low-level dealmaking every now and then, even if we don't realize it. Think about things like negotiating salary, rent, maybe even your kids' allowances, or maybe you snagged a hotel upgrade or a bargain on that thing that's never on sale. Whatever it is, we want to hear about it. Here's how: send us a voice memo with your first name and where you're from, and then in just a few sentences, tell us what the deal was and what it meant to you. You can email your audio file to We'll review all the submissions and we just might play yours on a future episode.

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The Closer is a production of Project Brazen in partnership with PRX. Our show's produced by Isabelle Kirby-McGowan and Ben Walsh. Siddhartha Mahantha is our editor. Mariangel Gonzales is our project manager, and Lucy Woods is our fact checker and head of research. Golda Arthur is our showrunner. And Bradley Hope and Tom Wright are executive producers.

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I'm Aimee Keane. Thanks for listening.