Twelve Minutes, an iPad, 4.2 Billion

Adam Neumann co-founded the company WeWork in New York in 2010. The company leased entire office buildings, divided them into small workspaces with shared kitchens and meeting areas, and rented these spaces out. Nine years later WeWork was worth 47 billion dollars on paper. A few weeks after that, its stock market listing failed and Neumann stepped down as CEO. With Steven Bartlett, the British entrepreneur and host of the podcast The Diary of a CEO, he spends a good two hours telling his version of this story. Watch from 0:02:57 At its center is a car ride with the Japanese investor Masayoshi Son, after which, by his own account, he forgot what his company was actually for. Watch from 1:09:03

The GuestWho is talking, and what he does today

Neumann does not introduce himself as a businessman first. Above all he is a husband, he says, then a father of six, then a friend, and only after that a founder. Watch from 0:02:57 He grew up in Israel and, for a few years, in the United States, with a mother who worked as a doctor and suffered from bipolar disorder, an illness marked by severe mood swings. Watch from 0:04:53 He talks very openly about this childhood in the conversation, and the video description warns of descriptions of violence and abuse. We don’t reproduce these passages here. What matters to Neumann is what he learned from it: you don’t decide what happens to you, but you do decide how you respond to it. Watch from 0:15:40

Today his company Flow builds apartment buildings in which tenants are meant to find community. According to Neumann, the investment firm Andreessen Horowitz, one of the best-known backers of young tech companies in Silicon Valley, has put 470 million dollars into Flow, and his family another 350 million. Watch from 0:51:05

The BeginningHow a half-empty building became WeWork

At 21, Neumann says, he wanted to become a billionaire. He believed money would fill the gap his childhood had left. Watch from 0:20:12 Three companies failed. Then he met Rebecca, who is now his wife. After a week she told him he wasn’t the right man for her, because he only chased material things. Watch from 0:07:13 Chasing money doesn’t work, she told him. He should find out what he is especially good at and connect it with something that matters to the world. Watch from 0:21:01 Three months later he proposed to her. Watch from 0:22:06

In 2008, in the middle of the financial crisis, Neumann was running a baby clothing company out of a New York building that stood mostly empty. The landlord regularly told him his baby clothes were no good. Neumann replied that the landlord’s buildings were no good either, since they were standing empty. Watch from 0:23:35 This led to the company Green Desk. Neumann and the architect Miguel McKelvey divided a floor into small offices, hired a receptionist and rented out the spaces one by one. After a week the building was 92 percent occupied, and for the first time one of his companies earned more money than it spent. Watch from 0:24:51

They sold Green Desk to their partner for 1.5 million dollars. At first only 300,000 dollars was paid out in cash, and that was exactly the amount the landlord demanded as a check before he let them have the first building for WeWork. Watch from 0:22:58 Back then they drew a large circle made up of many small circles on a glass wall, with work, friends, travel and health inside it. It was never about desks and chairs, Neumann says, but about people building a life and not just making a living. Watch from 0:19:51

The MethodDream big and pick up the broom yourself

Anyone who starts something, he says, should first dream as big as possible, then take a deep breath and begin with the first step. The two belong together: the distant goal and the work that needs to be done today. Watch from 0:27:12 A story from the second WeWork building shows what he means. The quotes for the wooden floors ranged from 30,000 to 45,000 dollars per floor, and there wasn’t that much money. Neumann had the costs of wood, nails, glue and working hours broken down one by one and offered the tradespeople a 15 percent markup on those costs. After that, the first floor cost 12,000 dollars, and the tradespeople later became WeWork’s own construction company. Watch from 0:38:40 Bartlett compares this with what Elon Musk calls first-principles thinking: tracing every assumption back to its individual building blocks. Watch from 0:39:10

The pace became enormous. In its first year WeWork opened one building, and in its ninth year, according to Neumann, it opened two buildings a day. Watch from 0:42:06 With growth like that, technology helps today, he says, and artificial intelligence is especially exciting here because it can shorten many processes. Watch from 0:43:07 Then comes a sentence he keeps coming back to in the conversation: the company grew faster than he did. When a company grows faster than its founder, it either falls apart, or the founder holds it together and is unhappy doing so. Watch from 0:43:55

The Car RideTwelve minutes, an iPad, 4.2 billion

In late 2016, Masayoshi Son, the founder of the Japanese technology group SoftBank, announces a visit to WeWork. At the time, Son is raising the Vision Fund, which at around one hundred billion dollars is the largest fund for investing in young companies the world has seen so far. Watch from 1:00:28 The evening before, Neumann and his board had decided to raise 300 to 400 million dollars, slow down growth, turn a profit and then go public. Watch from 1:00:01

The planned 90 minutes shrink to twelve, because Son is meeting the newly elected President Donald Trump afterward. Watch from 1:01:24 Neumann asks whether Jared Kushner, Trump’s son-in-law and a close friend of Neumann’s, is introducing him, and immediately sends Kushner a message. Watch from 1:01:48 In the lobby, Son says that it smells of dreams here and that WeWork is a dream factory. Watch from 1:02:43 Because time is short, he invites Neumann to ride along in his car.

In the car, Son asks about the valuation and the amount. Three or four hundred million is not enough, Son says. Doesn’t Neumann want a global business, in Japan and Southeast Asia as well? He suggests three billion. Watch from 1:05:14 By the end of the ride, the figure stands at 4.2 billion dollars for WeWork and for its offshoots in China, Japan and Southeast Asia. Watch from 1:06:21 Son writes everything down on an iPad, signs, hands Neumann the pen and gets out for his appointment. Watch from 1:07:56

Afterward, Neumann walks from 54th Street to 18th Street, where WeWork has its headquarters. With every step, he says, his ego grew. He calculated a valuation of 20 billion dollars, his stake of about a quarter and his own fortune, and by the time he reached the office he had forgotten what it was all about. Watch from 1:09:03 For him, ego and desire are the same word. You need a big ego to build something big, but you have to keep it in check. Watch from 1:10:24 Because a company is led from the top, his mistake spread to everyone: “When I lost it, everyone lost it.” Watch from 1:11:16

He had been warned, he says. Marc Benioff, the founder of the software company Salesforce, called him and advised him to fly to Japan and turn Son down. Watch from 1:11:51 Instead, Benioff told him to take WeWork public at a valuation of five billion dollars and learn how to run a listed company. Watch from 1:12:14 Neumann didn’t listen, because at that point they hadn’t known each other for long.

The FallHow Neumann tells the end of WeWork

From here on, Neumann describes a chain of events that has mostly been told differently in public. In March 2018, he says, Son offered to take over WeWork for 20 billion dollars in cash, ten billion for the existing investors and ten billion for the company’s own coffers. Neumann and his executives would have kept 30 percent. Watch from 1:40:44 Because Neumann himself was part of the deal, a committee of two board members did the negotiating, among them a representative of the investment firm Benchmark. According to Neumann, they wanted to get up to 32 billion. Watch from 1:45:11 When everything was ready to be signed in December 2018, SoftBank’s share price had fallen, and Son called the deal off. Watch from 1:46:20 Because WeWork had long since signed leases for the planned growth, he says, the only option left was going public, and the company was not ready for that. Watch from 1:47:46 And then comes the sentence: “I, Adam, was not ready.” Watch from 1:48:45

He names the flaw in the business model himself. WeWork tied itself to long leases and rented the spaces out only on short terms. Watch from 1:07:13 At Flow he does it differently, he says, and the software there is a connected system that knows for every floor, and even for every corner of a building, whether it makes money. WeWork’s technology could never do that. Watch from 0:59:15

In August 2019 WeWork published its IPO prospectus, and in September the stock market listing was postponed. Neumann says he stepped down as CEO voluntarily, since he held the majority of the votes. Watch from 1:51:17 A major bank had promised to support WeWork with two billion dollars if he left, and to take care of his personal loan of 460 million dollars. Watch from 1:52:32 A few minutes after he stepped down, he says, a letter arrived from the bank. It said he had breached the contract and had to repay the loan within 15 days, or else his shares, and with them control of WeWork, would go to the bank. Watch from 1:53:53 He puts the lesson he drew from this bluntly: if you attack the king, you have to finish him off, or he will come back. Watch from 1:54:48 In the end, he says, Son paid off the debts to the banks and got control of the company in return. Watch from 1:55:51

The AnchorThe night he cried

A few days later, Neumann wakes up at night next to his wife and cries, for the first time since she has known him. He tells her they have lost everything. Watch from 1:58:01 He had never set aside the hundred million dollars he was supposed to put away in her name for emergencies, and he had signed a personal guarantee after all, even though he never wanted to. Rebecca replies that her mother has a paid-off house in upstate New York, where they could live for the time being. Watch from 1:59:30 And if he no longer wanted to start companies, they would move to Costa Rica, she would homeschool the children, and they would go surfing in the morning and in the evening. Watch from 1:59:42

In that moment, Neumann says, he became a grown-up for the first time. At six o’clock the next morning he went, smiling, to the three people who had stayed by his side out of what had once been 13,000 employees. Watch from 0:31:42 He told them something his spiritual teacher had said to him on the phone the evening before: the darkest moment of the night comes just before dawn. Watch from 0:30:43

The story has a sequel. On April 1, 2020, SoftBank was supposed to buy shares worth three billion dollars from Neumann and other shareholders. At the end of March, according to Neumann, SoftBank called it off. Watch from 2:04:53 After a legal dispute, the two sides agreed on roughly half. Neumann recounts that Rebecca rejected the negotiated settlement a few days before the birth of their son, because the money was not supposed to arrive until two months later. Either it would be in the account by Friday morning, or they would see each other in court on Monday. Watch from 2:07:16 The money arrived at half past four on Friday morning, and their son was born at eight. Watch from 2:10:08

The TechnologyWhat Neumann says about AI and the phone

Artificial intelligence is a side topic in this conversation. The clearest passage comes when Bartlett asks for advice for young founders. Neumann says that with the arrival of AI, everyone is now becoming a founder and can start a company, and that this applies to twelve-year-olds as much as to sixty-year-olds. Watch from 1:19:29 Even so, his first piece of advice is about looking inward rather than about speed. You should find out what you need to work on in yourself and take on one single thing instead of many. Watch from 1:19:44

He talks at greater length about the phone. For about ten years he has kept the Sabbath, the Jewish day of rest, and from Friday evening he spends 25 hours without technology, with family and friends. Watch from 1:30:08 To everyone else he recommends a tech-free day, explicitly without religion: once a week, lock your phone away or give it to a friend. In the first two hours your hand keeps reaching for your pocket, and that shows it is a real addiction. Watch from 1:30:57 At the end of the day you feel great, and ten minutes after switching the phone back on you are on the wrong frequency again. Watch from 1:31:22 Bartlett admits that even the thought of it makes him uncomfortable, and promises on camera to try it once in September. Watch from 1:34:26

Community instead of isolation is also Flow’s business model. The video description says the company’s goal is to do something about the loneliness of our time. In the conversation, however, the words come from someone else. Marcelo Claure, at the time one of the top executives at SoftBank, told Rebecca in 2020, as Neumann tells it, that the world was lonely and disconnected, that people needed community, and that the Neumanns had been ahead of their time. Watch from 2:09:27

The LessonsWhat Neumann has written down at the end

At the end, Bartlett has his guest record five lessons on cards. Neumann dictates them because he is dyslexic. Watch from 2:10:37 You should choose your life partner, friends and business partners by how they stand by you on your worst day, not by how they are at their best. Watch from 2:10:54 What matters in life is not how you fall but how you get back up. Watch from 2:11:05 You should choose the partner who makes you the best version of yourself. Control comes from influence rather than power, and you have to earn that influence anew every day. Watch from 2:11:20 And everyone should get to know themselves in order to follow their own path. Watch from 2:11:37

To close, Bartlett reads from a letter by Ben Horowitz, the co-founder of the investment firm Andreessen Horowitz. You should never judge a founder by their worst moment, Horowitz writes, and in Neumann’s case that was easy. Watch from 2:12:25

The Cross-CheckWhere Neumann’s version differs from the record

When Bartlett brings up the claim that he secured the “We” trademark and sold it to his own company, Neumann says: “That’s not true.” Watch from 1:50:14 The IPO prospectus from August 2019 lists a payment of 5.9 million dollars for the rights to the name to an entity that Neumann co-controlled. After public criticism, Neumann paid the money back to WeWork in September 2019, as the American business news channel CNBC reported.

Neumann calls the cancellation of the three billion in April 2020 force majeure caused by the pandemic. On April 2, 2020, SoftBank gave as its reason that agreed conditions had not been met, and WeWork and Neumann then sued. In the settlement of February 2021, SoftBank paid around 1.6 billion dollars, according to its own announcement.

Neumann rounds some figures generously. SoftBank announced an investment of 4.4 billion dollars in August 2017. According to the IPO prospectus, WeWork had 528 locations in 111 cities and 29 countries in mid-2019, while Neumann speaks of 130 cities and 50 countries. According to the prospectus, his shares carried twenty votes each, while he himself names a ratio of five to one. Revenue was 886 million dollars in 2017 and 1.8 billion in 2018, and the loss in 2018 came to 1.6 billion dollars.

What the conversation leaves out: in November 2023, WeWork filed for bankruptcy in the United States under Chapter 11, a procedure in which a company reorganizes under the supervision of a court. By then Neumann had already been gone from the company for four years.

One of the video’s thumbnails talks about AI as a loneliness trap. No one in the conversation expresses this idea. What Neumann says concerns the phone as an addiction and the loneliness of our time in general. He talks about artificial intelligence only in the passages mentioned above.

Summary and context by kipode.de. The text is our own; statements from the original are timestamped. The video is from The Diary of a CEO and is embedded via the official YouTube player. Not an official translation, no connection to the podcast.