WeWork Part 6: IPO -- Just Kidding

were his favorite. And Andy says the food was really fancy for years, but then things took a turn. Um. It was more of like a sudden drop off, I would say, um. And then by the time I left we Work, there definitely were some cost cuts and we were down to um wonderbread with peanut butter and jelly, which was definitely a disappointment compared to what we had at first. So probably the worst was they decided to be avocado toast day, so they had a bag of

wonderbread and some mushed up avocados. But by the time everyone showed up for if the avocado has got gray, so it's just this like gray avocado bush, and this sudden decline in Andy's Monday breakfast was happening at a dramatic time for We Work. It was around the time the company was trying to go public in September. Andy

started wondering what was going on at we Work. I wasn't really that aware before the I p O happened, but you know, the negative news started piling on um and it kind of became all we talked about at the office because it was unfortunately sort of entertating. I mean, I didn't talk about it with the staff at we Work, but amongst ourselves, like we would constantly share articles and videos that became kind of obsessed by it. And he wasn't the only person who was obsessed with following the

news about We Work. In the span of about a month, We Work went from a triumphant startup to a once in a generation catastrophe. It was a train wreck that people like Andy just couldn't look away from. You're listening to Foundering In this episode, we're talking about the undoing of we Works. Big moment. It's I p O. Behind the scenes of We Works I p O saga. There

was a power struggle between two men. First we have Adam Newman, we Works, brash, ambitious and extravagant CEO, and the second man is we works biggest backer, Massa Yoshi, CEO of soft Bank and an eccentric billionaire investor. Massa was betting big on Adam, and as we Work approached as ip O. He was about to find out if that had been the right call. By the way, we reached out to spokespeople for Adam Newman, we Work and soft Bank, they declined to give us a statement. In

late we Work was in a cash crunch. That year. The company lost two billion dollars. They spent about two dollars for every all are they made in sales, So to get more cash, they were considering an I p O. But here's the thing. My sources tell me that we Work didn't necessarily want to go public because when you go public there's some clear downsides. You have to publish tons of financial information and do quarterly earnings reports. You have a lot of new shareholders to answer to. It

could be a huge pain. So going public was plan B. Plan A was getting more money from soft Bank. Adam was pretty confident that he could get Massa to agree to a huge deal. Soft Bank would invest sixteen billion dollars more in We Work and would own more than half of the company, and that money would be enough cash to keep we were going for a long time, and Massa was interested in doing this deal too because he believed in Adam. Here's my colleague, Sarah McBride, who

has spent years covering soft Bank and Massa. Massa is actually a very loyal, trusting guy. So there are certain people that Massa it just takes two and he thinks the world of like Jack ma for example, and for a while like Adam Human And if you fall into that category, he just assumes you're a stand up person who's just going to do the right thing, run your business really well, and he'll ignore all evidence to the contrary. So I think Adam kind of fell into this bucket.

He basically could do no wrong, and Massa just trusted him. But already there were some bad signs, some hints that all might not be well in We Work land. Sarah told me there was a lot of tension within soft Bank about the amount of money they were pouring into We Work, So internally, people at soft Bank didn't like the Wee Work investment, it was just too much, and nobody internally or very few people internally, whanted we Work to get more money, but Massa kept finding ways to

do it. So Massa had indicated to Adam that he'd be able to make another big soft Bank investment and we Work, and Adam was kind of counting on that cash. But on Christmas Eve, Massa gave Adam a call. He had bad news. Soft Bank stock had taken a tumble, plus his biggest investors had gotten cold feet about investing so much more in We Work, so Massa was stuck. He told Adam he couldn't invest the sixteen billion dollars as planned. Instead, he was able to come up with

only two billion dollars. Now regarding we Works owned fresh to billion dollars in funding from soft Bank announced this week. At one point that was supposed to be as much as sixteen billion dollars. So the Japanese conglomerate announced Monday it's investing and additional two billion dollars in the coworking startup, a step back from the sixteen million dollar investment that would have given soft Bank a controlling steak over late last year. They had floated this plan like what we're

going to take over? We work, We want to be wholly invested in this business. We want an ownership steak. And then the stock market went haywire. SoftBank shares in particular have taken a dive. Massa's decision to back pedal on the investment was a pretty rough setback for Adam. I actually got to speak to Adam about this pivotal moment after Massa had disappointed him, but before the I p O. I asked him how he'd felt when he got that call from Massa. He responded in kind of

an indirect way. He told me his superpower is change, which is a very atom thing to say. He and his wife, Rebecca Newman, really loved the idea of superpowers. Remember the mission of their elementary school, We Grow, was to unleash every human superpowers. Anyway, he said his superpower helped him navigate through his disappointment with Massa. My superpower is change, and change is painful. Change is uncomfortable. You've got to be open to feedback. You gotta admit things

that are working. Yes, say yes. Massa and I spoke and we're not going to do the big deal that we were going to do and be comfort sent. Well, what can I learn from that? Good or bad? But I don't know that. We'll look backwards and half for your adviser. I'm not sure if you caught that, but he said that he and Massa were not going to be able to do the deal they'd agreed to, and now Adam had to adapt and change to move forward.

To him, it was a skill he'd spent a lifetime developing, and as I grew up all of my life, I've had to change a lot, a lot of challenges when I was a kid, and being dyslexic forced me to always change how I tried to solve a problem and try to do things, but mainly embrace it. Change is always slightly painful, but how you change, how you embrace it, how you enjoyed the journey, and being willing to do it again and again. It is what defines an organization

and leader or an individual. What strikes me about this moment is that this is a pretty vulnerable topic for Adam. He's clearly sad that the soft Bank deal didn't happen, but in classic Atom fashion, he didn't want to focus on his disappointment for too long. He wanted to make sure that I understood that his relationship with Massa was still very strong. You can even hear in the tape that he pounded the table for emphasis. Let's my biggest

investor giving ten a half billion. Yeah, very nice week, but so but I mean the thing, I think that's overstated a little bit. That's a huge investment, one of the largest ones in history. Yeah, so very very very very positive. We were contemplating a larger deal and the world crashed for a second and must have felt that things changed. But we're very very happy with where we came to. Both sides feel perfect. Softing is very comfortable

with their total holdings. Were very comfortable with their total holding. So very good. And my relationship with us has never been stronger because we had opened communication and talk this problem and I told him what I wanted. The basis great, it's good for you, and then we executed them. And I think you can measure relationships in time of church.

So Adam didn't get the money from MASSA that he was counting on, but he did get something else out of the deal, a new valuation for we work as part of the Investment, soft Bank and we Work agreed that the company was now worth forty seven billion dollars. It's a wildly high number that comes up again and again, forty seven billion dollars, forty seven billion dollars, forty seven billion dollars, forty seven billion dollars, forty seven billion dollars.

So Adams company now had this flashy new valuation, but they still needed cash. Because MASSA didn't come through, Adam turned to Plan B. He decided to go all in on an i p O, whether his company was ready or not. For a few months, we were kept its planned secret, and then in April, office rental giant we Work is aiming to go public. That initial public offering could take place in September, earlier than many investors had anticipated.

Now they're tech Unicorn has filed to go public. This time it is we Work, now known as the we Company. It has announced that it has confidentially submitted its paperwork to the SEC. Four. An i p O follows several other big money losing companies like Uber and Live but I've also gone public this year as well. The filings reveal some lofty goals. It says its mission is to elevate the world's consciousness. To reporters, that announcement is like

the gun firing at the start of a race. High profile I p O s like we Works are huge news. And once it was clear we Work was definitely planning to go public, big banks like Morgan, Stanley, Goldman, Sachs and JP Morgan were lining up to try to get Adam to pick their bank to lead the deal. To help me explain we worked wild ride to an I p O. I want to introduce my colleague Jillian Tan who covers Wall Street. Yeah, everyone was very up to mistake. A lot of the bankers, you know, it was on

their radar. It was something that was sort of going to happen in later So folks were pretty excited. They knew Adam Newman. He was obviously known to be one of those founders that had a big personality. So folks were very much already talking about we Work. But it was all very much in a positive life. And what do banks get out of doing an I p O for a company? A lot of money? So banks charged these companies or feats, not that they just wanted to

do it out of the kindness. Through their hearts, they're earning millions of dollars. Hundreds of millions of dollars. Each bank wanted Adam to pick them for this deal. So when they pitched themselves to we Work, they told Adam numbers that he would be excited to hear. They said that we Work could go public at huge valuations as just a hundred billion dollars. Those estimates played a big

role in over hyping the We Work. I po to explain this a little more, we talked to Matt Levine, a Bloomberg opinion columnist who used to be one of those bankers who advised companies ongoing public. Yeah, I was. It was an equity capital markets banker, and I would pitch companies on deals, and we would want to pitch

them on deals that they would want to do. And Matt says that because banks are competing to be the lead bank to take We Work public, they're incentivized to throw out bigger and bigger numbers even if they're totally unrealistic. You know, the banker is not on the hook for the amount for the number, they say, like, you can kind of make up any number you want and justify it. So if you go to a company and say we think you could do an IPO at a dollar evaluation.

Then they'll be excited because they want to raise a lot of money at a high price, and they'll hire you. And then things can go wrong and you'll say, oh, things went wrong, that's why we couldn't get you the number we originally promised. So you have a lot of incentives. Just give people the numbers they want to hear. So that summer, we Work was prepping for its I p O and they were really depending on it going well.

The company was counting on getting nine billion dollars from going public by selling stock and borrowing money from banks. And then they released a document called the S one. It's basically a requirement for going public. Reporters love the S one. It's like Christmas. We wake up early and wait for it to be released because the S one is full of new information, profits, losses, expenses, lists of

all the ways things could go wrong. These are things companies don't usually like sharing with reporters, but we Works S one was not normal. It dropped like a bombshell. It detailed so many problems within the company, huge losses, conflicts of interest, weird nepotism. We're going to go through one by one the problems and WE Works S one. I'll start with what will probably be remembered as the most gregious and ridiculous item on the list. Adam owned

the trademark to the word we Well. Technically the trademark was owned by his holding company, and then when WE Work wanted to change its name from WE Worked to the Wei company, Adam sold that trademark to his own company for five point nine million dollars in stock. This blew my mind. Yeah, that was the probably most outrageous item in the whole S one that the CEO had taken money out of the company and put it in

his own pocket. And the reason that's outrageous is because WE Work had rebranded itself to we and he had profited from that rebranding, as opposed to any other normal CEO who would just make the rebranding happen, as opposed to secretly owning the trademark when that rebranding happened. Another thing that came up in the asmen was Adam's succession plan, which is that if Adam dies, his wife Rebecca gets to help pick his successor, which is very strange, hugely strange.

That's something you might expect for like a blueberry farm operation, right, like, not a giant company backed by a huge conglomerate like soft Bank, that the successor is picked by the CEO's wife and two directors who he's close to. Like, it couldn't be more brigged if you'd like. Yeah, usually this is a decision that the board of directors makes independently, that's the standard. This was very surprising. It does not usually involve your wife, even if she is an executive

at the company. Absolutely, So that's already a sign of undue influence. And just to keep adding to the list, Adam personally owned stakes in buildings where we work. Was a tenant, which means that we work his company is paying him Adam Newman rent, which is a total conflict of interest. It means kind of you're on both sides of this transaction and it's just one of these things that people don't do. And it was a huge red flag. Yes, so he was literally buying up these properties and then

immediately leasing them to we work. So another thing that the s one revealed was that Adam had twenty to one super voting shares, which me he owned shares in the company that had twenty votes while all the other shares had one, which means essentially, even if he owns a small portion of the company, he has voting control of every major decision that companies ever going to make.

Investors found the fact that the board had signed off on all of these things, including the twenty to one super voting shares, is super worrisome just because it showed a lack of governance at the top. Yeah, it means no one is saying no to Adam. I was wondering, like, all these things point to the same pattern, right, which is that like Adam looks at his company as a way for him to like grow his prestigion also his

personal wealth. It was sort of strange. I feel like I didn't quite understand why it was all set up this way. Yeah. One thing I think was the word Adam was among the most used words in the whole document. So to excuse the pun, but it's not it's not a way. It's all about an eye, right, This is

about one man. This is his show. Yeah. Yeah, And unlike other s ones, for example, they also refer to Adam by his first name I think the generous interpretation is that his wife was also an executive at the company,

is the same last name. But it certainly struck people that it was this whole document, and so much of it seemed to me about this one person, Adam, who was doing a lot of things outside the company or relating to the company that were not necessarily in his company's best interests, which if you're an investor, you are not excited to hear because you're hoping that the CEO does things to the company's best interests and not to

his own. Absolutely, so the number of things that were not Kosha from an investors point of view, would just, you know, bountiful. When the S one came out, it was supposed to be we works, big debut, but instead it landed like a pile of bricks. Analysts and potential investors were combing through the rubble and they were not thrilled. Pundits started writing blog posts about all the warning signs that they saw detailed in the S one, and maybe what scared investors the most was that it was such

a bad look. It made Adam look greedy, like he wanted to score points for himself against his own company.

Here's Matt Levine again. I like to joke and I think this is kind of true that the actual thing that broke that we were at IPO is the story about Adam Newman selling the trademark for the word we to the company for six million dollars, which is such an absurd story of like of like poor governance and conflict of interest and like not looking at for the shareholders and like short termism and not thinking about the

good of the company and not thinking about optics. It's just like you tell anyone that story and they get offended, and it's such an easy like point to rally around. After the S one came out, a lot of people were wondering what was Adam thinking? For what it's worth. A person close to Adam told me that when Adam sold the trademark to WE Work, he was following advice from his lawyers, and a few months earlier I got to ask Adam about a different conflict of interest him

acting as landlord to WE Work. I asked if he thought that decision was inappropriate, and he gave me a surprising answer. He was a little defensive. Did you think in the end that it was inappropriate to have those whom things for you personally. Do you think it's inappropriate? I think its founders is our job to lead into growth and innovate, and I think we need to struct

an industry. If you don't have to care, if I don't put my own money on it, I would other real estate owners ever have the courage to find final things of an investment. Why would anyone else? Think? Yeah? But it doesn't make it a little different if you're sitting on both sides of the table. If I'm losing money on the side of the real estate, which is fashion, not if what I did was purely for the sake of pushing the business app. Okay, so you hear Adam

saying here that he lost money. That's actually open to debate. But let me explain some of his reasoning. Adam agreed publicly to sell his stakes in the buildings back to we Work at cost, So assuming those buildings rose in value, Adam was losing out on the profits he could have made by selling them. At the same time, Adam was still collecting rent. I spoke to two people close to him who told me that Adam was charging below market rates, but one of them said, Adam also made a profit

on at least one of the buildings he owned. Regardless, Adam acting as a landlord to his own company is a pretty glaring conflict of interest. While I was sitting down with Adam, there was one point he really wanted me to understand. He felt that his actions were justified because he did it to help we work grow. He was a founder, trying to lead. He said that he had to buy those buildings in order to show other landlords it was a good investment work once to develop

cities in the future, but wasn't able to buy anything. Yeah, if funds weren't buy landlords, we were talkings and come to this with us. No one was doing it. Yeah, okay, if no one's going to do it, we'll do it first. Sure, sure, sure, sure, yeah, So that's that's why we did it. Then, I'm very excited that they did it because if I, if I wasn't able to do it, I don't think we wouldn't be today at this stage. I'm excited I did it. If I wasn't able to do it, we wouldn't be

at this stage. It's amazing that Adam said this, even after he had been criticized for this conflict of interest, and after the S one came out and revealed even more conflicts, a lot of people were asking why did we Work think it was a good idea to publish the S one? Well, I heard one theory that we Work had always been running their business this way and it hadn't been a problem for them before. Here's Matt, Why were they comfortable with those conflicts of interest is

an interesting question, right? I mean, part of it is like a lack of self awareness that sort of permeated everything and we Work. So this aligns with what a few different sources have told me over the years that Adam is not a detail oriented guy that he rarely used as a computer. And there's a second part to Matt's theory. I mean, part of it is that a lot of tech companies had gone public with pretty gruesome governance terms and pretty gruesome conflicts of interest, then the

market had crumbled and bought them. Just to give you some more context, Snapchat, for example, had recently sold shares in its I p O that had zero votes. That was unprecedented and seen as a huge power grab by its founders. But Snapchat was such a hot company, so investors held their noses and bought it anyway. And I think if you're we work, you think we're not that much worse in these disclosures than a lot of other companies.

And we're better because where we work in a building community in the where the world's first physical social network. So people who were willing to suck it up and buy snap Um even with bad governance terms, should be willing to suck it up and buy we work with like ridiculous conflicts of interest. All this backlash made its

way over to Masa in Tokyo at soft Bank. Some of his lieutenants had been nervous about we Work doing an I p O. But for a long time they hadn't been able to convey Massa that we Work was headed down the wrong path. Masa had been sure that Adam deserved his trust. Here's my colleague Sarah again. But then when the I p O documents actually became public, and it wasn't just that it didn't go well, people were mocking it. It became a meme. It was just brutal.

And so after that, I think Massa was forced to acknowledge a bunch of things He hadn't wanted to acknowledge before that that he just kind of ignored. Sarah says that Massa also took Adam's bad behavior personally. I think Massa felt betrayed by Adam. I think he'd put a lot of trust in Adam and just expected him to do a good job. And when it turned out Adam hadn't done a good job, it wasn't like, oh, Adam

screwed up. It was a personal betrayal. I think that's just because Adam was in this special category of people that Massa just really believed in, and if you're in that category, you have to live up to it, and if you don't, that's it. So while everyone was freaking out over reworks S one, you might be wondering what was we work doing? They were trying to salvage their I p O. Behind the scenes, the company was scrambling to make some changes to try to reassure potential investors.

They took Rebecca out of the succession plan. They decreased adams super voting shares from twenty to one to ten to one, and eventually all the way down to three to one. Adam had to return the five point nine million dollars in stock that he got by selling the WE trademark, but it was too late. The damage had been done. According to Sarah's source, Massa started to change his thinking after it was clear to him that the S one was being received so poorly that WE Work

I p O still seemed like a joke. Something had to happen, and Massa and Adam met in Tokyo and Massa suggested to Adam that he pulled the I p O and Adam was basically like, that's not going to happen. So Massa told him at that point, it's going to go very badly. And the meeting ended, and as far as I can tell, that's the last time the two of them sigh each other. So Adam left that meeting determined to keep going down the I p O path.

It was after that meeting that Massa probably thought, Okay, we need to figure out a way to get this guy, you know, to get him to resign. Massa wasn't alone. Some members of We Worked board were starting to think the same thing. We'll be right back, okay. So We Work was barreling toward an I p O even though it's S one had been widely criticized, but the company had a big problem. Adam was meeting with investors and they didn't want to buy We Work stock. Here's my

colleague Jillian again, he meets investors. None of them are two enthused with what they hear. A lot of the feedback is negative. Nobody wants to buy the company at evaluation of forty seven billion, So immediately it starts dropping and dropping and dropping. It ends up looking like a falling knife. The valuation targets are continuing to decline. What I'm hearing is the demand is not there at this point.

At even billion, the company's IPO evaluation could be slashed to ten to twelve billion dollars, a huge drop from the forty seven billion. If you're working at we Work, I don't think this is fun at all. Every day now they're trying to come up with something to salvage this I p O, and I don't know if they're gonna do it. Remember just a few months ago, bankers were telling we Work that they could go public at a hundred billion dollars, and now we Work was considering

sad numbers like ten or twelve billion dollars. And this wasn't just hurting Adam. If you think about we work, a lot of the employees had stuck or promised that we promised stock options. They thought they were going to become paper millionaires. So the valuation of the company dropping this much, their wealth is evaporating in their eyes. If you think of Adam, he had, you know, already become a paper billionaire. He was very rapidly becoming a much

less wealthy paper billionaire. Two things happened next. One, the company delayed its I p O a few weeks. That's a sign the company wasn't feeling ready. And then the Wall Street Journal published a really embarrassing story about Adam. It detailed some of his weirder, more reckless behavior. Probably the most memorable anecdote was about Adams smoking weed on a private plane that was headed to Israel and had this great first line, Adam Newman was flying high. Literally.

That's Elliott Brown, the reporter who wrote the story, and he said that Adam hot boxing and jet had gotten the most last. But the significance was that the CEO of a well known company had smuggled a sizeable chunk of weed across international borders, which is illegal. It's not that he was smoking pot on the plane, it's that he was bringing it across an ocean to a different country.

So much so that the owner of the jet was really freaked out about this and uh decided to recall the plane, leaving Adam to find his own way back find his own way back from another continent. The rest of the story had some bizarre details as well. It said Adam had told people he wanted to live forever, to become a trillionaire, and to run for president of

the world. This was definitely within this broader concept of a messiah complex that you know, he had these giant ambitions to put we work around the world and then ex the and into elevating consciousness. Uh. This is one of those those messianic, really expansive visions that has absolutely nothing to do with subleasing real estate or office space. Uh, and sort of flows naturally out of his mouth. The story made Adam sound pretty nuts among certain circles. Everyone

was reading it and laughing about it. But you know who wasn't laughing Massa, here's Sarah again. The pot thing. It doesn't feel that bad here in the US because so many states have legalized pot, and there's this big public debate about whether pot should still be a classified substance.

None of that's happening in Japan. Masa is pretty conservative, and so to have one of his CEOs with an illegal substance on an international flight, that's just something he's going to take much harder than than perhaps a compartable investor would here in the US. So the next week is probably the most momentous week of Adam's professional life. That Wall Street Journal story came out on a Wednesday.

Things were getting tense between we Work and soft Bank, and during this time, Adam was photographed walking barefoot on the sidewalks of Manhattan. The photo was shared widely and mocked on Reddit. People held it up as a sign that Adam was losing it. On Friday, Adam piled Rebecca and their five kids into a car. They drove to

the Hampton's, where the Newman's owned two houses. As soon as the sun set on Friday, they started to observe the Jewish tradition of Shabbat that means spending twenty four hours unplugged, no technology, no phones, no news. Shabbat ended on Saturday night and on Sunday him headed back to New York City. A lot had happened while he was gone. That day, story started trickling out, saying that some of Adam's biggest backers were meeting to discuss how to push

him out as CEO. They were turning against him and wanted him out of the company he'd spent the last decade building, and the most painful part of it might have been that even Massa, Adam's most loyal supporter, wanted him to step down. The story said the plan was to remove Adam, and probably very soon. That afternoon, Adam met with Jamie Diamond, the head of JP Morgan, who was not only an investor but also someone Adam considered

a mentor. He told Adam to step down. That night, Adam had dinner at a restaurant with a board member and an early investor. The message was the same, Adam, you have to go. What happened the next morning on Monday depends on who you ask. Some sources say Adam was calm and spent the day in meetings hammering out the details of his succession plan. Others say Adam was anything but calm, that he started shouting at board members when he realized his time was up, but by Monday

night they had all agreed Adam would go. That evening, Adam returned to his town house near Grammercy Park. Inside there was a group of people waiting for him, friends, co workers, people who wanted to be there for him. Someone described it as sitting shiva, which is the Jewish tradition of grieving. On Tuesday morning, Adam dialed into a conference call. There was no arguing, it was already over. One by one, the board members voted to remove Adam as CEO. When it was his turn, he voted against

himself too. When the company announced it, it was a huge surprise. It's like if you watched Survivor and you know one of the main contestants put their own light out and voted themselves off the island. He was exiting himself from the company he created. So Adam is out. Rebecca resigned as well, and almost immediately it felt like there was a move to wipe the company clean and get rid of everything related to Adam. They closed Rebecca's passion project We Grow, which was the school they had

opened with their own children in mind. Within just a couple of days, several executives who were close to Adam and Rebecca, either through family ties or friendship, left. We Work announced they were going to close down some of their side businesses and sell off some of their acquisitions. Less than a week after Adam stepped down, we Work officially withdrew its I p O office space startup We

Work has officially postponed a plan to go public. The decision came less than a week after controversial co founder Adam Newman stepped aside a CEO. We Work as withdrawing its I p O prospectus. They are saying in a statement, we have decided to postpone our I p O to focus on our core business, the fundamental of which remain strong. Holy Cannoly, has it been a rough quarter for I p O? So how do you say this? Well? I see this as math math wins. That's that's what And

the company was in a dire situation. It turned out that we Work was going to be running out of money in just a month or two. So We Work was planning to do big layoffs, but they were so cash strapped that they couldn't afford to pay the severance. That's really awkward. You need to lay off a bunch of workers in order to cut expenses, but you can't

even afford to do it. Yeah, I don't think we realized how bad it was until that very point, that the company was actually going to run out of cash as soon as Thanksgiving if they didn't seek out some sort of rescue package. And soft Bank came to the rescue. They were going to give the company enough cash to keep We Work from going belly up. But we worked new deal with soft Bank also gave them a new valuation, and it was much much lower than it used to be.

We Work was now valued at just eight billion dollars. Just to put into perspective how insane that turn of fortune is. Just a couple of months earlier, Banker said the company could be worth a hundred billion dollars. The IPO fiasco vaporized an amount of money equivalent to the GDP of Latvia. And to make things even weirder, SoftBank had invested more than ten billion dollars and we Work at this point, So they put in ten billion dollars to help build a company worth eight billion dollars. It's

almost as if they created negative value. Soft Bank used this rescue package. To buy up even more of we work. So in exchange for the rescue package, soft Bank is set to own eighty percent of we work. Remember, they used to only earn less than a third, so right now they've doubled down on their investment. They basically how we work, and they're in. The driver is sayed about the company's future. So Adams out and Masa is in. SoftBank owns a majority of we work at this point.

And the most notable thing about the soft Maank bailout was that it came with an extremely generous exit package for Adam himself. He had already stepped down a CEO, and now he was agreeing to leave the board and give up his influence over the company. In exchange, he was given a lot of money. It made employees pretty angry. One of them even told me they considered it a

platinum parachute. So in exchange for walking away, Adams getting a one point seven billion dollar package, and then probably the most outrageous bit to everyone was a hundred and eighty five million dollar consulting faith that he was just getting cash, straight up cash, straight up cash, and employees were pissed. They felt like Adam was walking away with this chance at more than a billion dollars and they were likely to get laid off. It was just, you know,

they were fuming. On Slack. There was this channel called i PO Talking News where employees had been venting about how everything had been going wrong, and we actually saw some messages of it and ran a story about it. Yeah, we reported that a news article about Adam's golden parachute. True more than a hundred thumbs down emojis from employees and workers were just really unhappy that we Work couldn't

even afford to lay them off. But then this guy, their former CEO, was walking away with such a bundle of cash. One someone posted on Slack, so we're too broke to pay employees severance, but Adam gets two hundred million, And then another posted a photo of the orphan from Oliver Twist with the caption please Massa Yoshi's son, can

I have some severance? You know? To me? After spending years covering we Work, which then became the Wee Company and has all these slogans about being battered together and being part of a team. It was this kind of dark twist at the end that after Adam burned everything and set the company kind of in flames. He walks away with all this, all these rewards just for himself. It really felt like it went against all the things

that he had been talking about on stage for so long. Yeah, he had created such a big, strong sense of community, and then really, instead of it all being about a way, it all became about him. So the We Work I

PO had made a complete one eight. It started out as this exciting, hopeful event that everyone We Work employees, bankers, investors was going to get rich off of, and in just a couple of months it fell to the ground in a fiery crash, and the only person who seemed to walk away with a reward was also the person arguably most at fault, Adam. All of a sudden, Adam had become a legend, someone people recognized and mocked and impersonated. Wanted posters with his face on them, even appeared on

lamp posts around New York City. I went to a Halloween party later that month and there were floor Adam Newman's walking around. So one thing, they all weren't wearing his shoes, because he's pretty well known. Her walking around barefoot. Um three of them had wigs. One just had the Adam head down pat and all of them were wearing these T shirts with the fund made by Weight in different colors that he's been photographed presenting. A couple of them had a cheeky blazer on top, and two had

soft Bank checks stuffed in the top pocket. Oh my god, I remember seeing photos on Twitter of people dressed up as Adam Newman for Halloween. It was just that timing where it was a big news story right in the middle of October. Yeah, I posted a photo on Twitter that Bloomberg TV actually ended up using. Adam had turned into a huge joke. And what about Massa, the person who once believed in him so earnestly? What was he

thinking about all this? About a week later, at an earnings presentation for soft Bank, Massa stood on stage and talked about Adam. He wasn't usually candid. He said he had made a mistake in judgment, that that evil. He has many strengths and flaws all mixed together. I probably focused too much on his strengths. That's something I regret very much. He had many negative sides, and I overlooked

many of them. I regret that, especially the governance problems, so Massa said publicly that he had ignored many of Adam's shortcomings, and he regretted putting so much trust and money in Adam. This was a moment when so many people started asking what kind of person is Adam Newman? Was he an evil genius fooling everyone all along, a failed visionary who couldn't make it work, or just some guy who lucked into becoming a billionaire and who was

to blame for all this wreckage. A lot of people thought it was Adam's fault, but others pointed the finger at banks and investors for giving him boatloads of money and never holding him accountable. In the next episode, will look at the shattered ruins of we works, I p O, disaster layoffs, toxic phone booths, another brutal battle between Adam and Masa, and a worldwide pandemic that cast doubt on the entire concept of coworking. That's next time on Foundering.

Foundering is hosted by me Ellen Hewitt. Sean When is our executive producer, by Aquaba is our associate producer. Ray Mondo makes the show today. Mark Million and Vandermay and Alistrabar are our story editors. Francesco Levi is the head of Bloomberg Podcasts. Be sure to subscribe, and if you like our show, leave a review. Most importantly, tell your friends see you next time.