1 00:00:00,080 --> 00:00:02,960 Speaker 1: A couple of years ago, Andy's Alevski needed an office. 2 00:00:03,520 --> 00:00:05,680 Speaker 1: He works in urban planning and he lived in Boston 3 00:00:05,760 --> 00:00:08,719 Speaker 1: at the time, so he rented a space from we Work, 4 00:00:09,280 --> 00:00:12,159 Speaker 1: and he was really impressed by their perks. One of 5 00:00:12,200 --> 00:00:15,440 Speaker 1: the most exciting things was Monday mornings because they had 6 00:00:15,480 --> 00:00:18,280 Speaker 1: free breakfast, and I remember one of my first weeks. 7 00:00:18,320 --> 00:00:21,400 Speaker 1: It was like egg and cheese breakfast sandwiches on a 8 00:00:21,520 --> 00:00:24,200 Speaker 1: dancy bagel, and it was so good. He wasn't so 9 00:00:24,320 --> 00:00:27,840 Speaker 1: much into the free beer, but the Monday breakfasts those 10 00:00:27,840 --> 00:00:30,600 Speaker 1: were his favorite. And Andy says the food was really 11 00:00:30,600 --> 00:00:35,919 Speaker 1: fancy for years, but then things took a turn. Um. 12 00:00:35,920 --> 00:00:38,120 Speaker 1: It was more of like a sudden drop off, I 13 00:00:38,120 --> 00:00:40,480 Speaker 1: would say, um. And then by the time I left 14 00:00:40,520 --> 00:00:42,559 Speaker 1: we Work, there definitely were some cost cuts and we 15 00:00:42,560 --> 00:00:45,560 Speaker 1: were down to um wonderbread with peanut butter and jelly, 16 00:00:45,600 --> 00:00:48,159 Speaker 1: which was definitely a disappointment compared to what we had 17 00:00:48,159 --> 00:00:51,559 Speaker 1: at first. So probably the worst was they decided to 18 00:00:51,640 --> 00:00:55,279 Speaker 1: be avocado toast day, so they had a bag of 19 00:00:55,280 --> 00:00:58,840 Speaker 1: wonderbread and some mushed up avocados. But by the time 20 00:00:58,880 --> 00:01:01,360 Speaker 1: everyone showed up for if the avocado has got gray, 21 00:01:01,440 --> 00:01:06,640 Speaker 1: so it's just this like gray avocado bush, and this 22 00:01:06,760 --> 00:01:10,280 Speaker 1: sudden decline in Andy's Monday breakfast was happening at a 23 00:01:10,400 --> 00:01:13,520 Speaker 1: dramatic time for We Work. It was around the time 24 00:01:13,560 --> 00:01:18,640 Speaker 1: the company was trying to go public in September. Andy 25 00:01:18,680 --> 00:01:22,520 Speaker 1: started wondering what was going on at we Work. I 26 00:01:22,560 --> 00:01:26,840 Speaker 1: wasn't really that aware before the I p O happened, 27 00:01:26,840 --> 00:01:30,440 Speaker 1: but you know, the negative news started piling on um 28 00:01:30,520 --> 00:01:33,479 Speaker 1: and it kind of became all we talked about at 29 00:01:33,480 --> 00:01:37,880 Speaker 1: the office because it was unfortunately sort of entertating. I mean, 30 00:01:37,920 --> 00:01:39,920 Speaker 1: I didn't talk about it with the staff at we Work, 31 00:01:40,040 --> 00:01:44,560 Speaker 1: but amongst ourselves, like we would constantly share articles and 32 00:01:44,720 --> 00:01:48,840 Speaker 1: videos that became kind of obsessed by it. And he 33 00:01:48,960 --> 00:01:51,520 Speaker 1: wasn't the only person who was obsessed with following the 34 00:01:51,560 --> 00:01:54,480 Speaker 1: news about We Work. In the span of about a month, 35 00:01:54,760 --> 00:01:57,480 Speaker 1: We Work went from a triumphant startup to a once 36 00:01:57,520 --> 00:02:00,800 Speaker 1: in a generation catastrophe. It was a train wreck that 37 00:02:00,960 --> 00:02:05,360 Speaker 1: people like Andy just couldn't look away from. You're listening 38 00:02:05,360 --> 00:02:09,119 Speaker 1: to Foundering In this episode, we're talking about the undoing 39 00:02:09,200 --> 00:02:13,519 Speaker 1: of we Works. Big moment. It's I p O. Behind 40 00:02:13,560 --> 00:02:16,120 Speaker 1: the scenes of We Works I p O saga. There 41 00:02:16,200 --> 00:02:19,720 Speaker 1: was a power struggle between two men. First we have 42 00:02:19,800 --> 00:02:24,720 Speaker 1: Adam Newman, we Works, brash, ambitious and extravagant CEO, and 43 00:02:24,760 --> 00:02:28,200 Speaker 1: the second man is we works biggest backer, Massa Yoshi, 44 00:02:29,080 --> 00:02:33,799 Speaker 1: CEO of soft Bank and an eccentric billionaire investor. Massa 45 00:02:34,080 --> 00:02:37,520 Speaker 1: was betting big on Adam, and as we Work approached 46 00:02:37,560 --> 00:02:40,320 Speaker 1: as ip O. He was about to find out if 47 00:02:40,360 --> 00:02:43,720 Speaker 1: that had been the right call. By the way, we 48 00:02:43,760 --> 00:02:46,520 Speaker 1: reached out to spokespeople for Adam Newman, we Work and 49 00:02:46,600 --> 00:02:50,720 Speaker 1: soft Bank, they declined to give us a statement. In 50 00:02:50,840 --> 00:02:54,720 Speaker 1: late we Work was in a cash crunch. That year. 51 00:02:54,880 --> 00:02:58,880 Speaker 1: The company lost two billion dollars. They spent about two 52 00:02:58,919 --> 00:03:02,000 Speaker 1: dollars for every all are they made in sales, So 53 00:03:02,080 --> 00:03:05,240 Speaker 1: to get more cash, they were considering an I p O. 54 00:03:06,080 --> 00:03:08,560 Speaker 1: But here's the thing. My sources tell me that we 55 00:03:08,600 --> 00:03:11,799 Speaker 1: Work didn't necessarily want to go public because when you 56 00:03:11,880 --> 00:03:15,040 Speaker 1: go public there's some clear downsides. You have to publish 57 00:03:15,080 --> 00:03:18,840 Speaker 1: tons of financial information and do quarterly earnings reports. You 58 00:03:18,880 --> 00:03:21,320 Speaker 1: have a lot of new shareholders to answer to. It 59 00:03:21,360 --> 00:03:24,840 Speaker 1: could be a huge pain. So going public was plan B. 60 00:03:26,280 --> 00:03:29,480 Speaker 1: Plan A was getting more money from soft Bank. Adam 61 00:03:29,560 --> 00:03:31,880 Speaker 1: was pretty confident that he could get Massa to agree 62 00:03:31,880 --> 00:03:35,080 Speaker 1: to a huge deal. Soft Bank would invest sixteen billion 63 00:03:35,080 --> 00:03:37,600 Speaker 1: dollars more in We Work and would own more than 64 00:03:37,600 --> 00:03:40,000 Speaker 1: half of the company, and that money would be enough 65 00:03:40,040 --> 00:03:42,400 Speaker 1: cash to keep we were going for a long time, 66 00:03:43,200 --> 00:03:46,160 Speaker 1: and Massa was interested in doing this deal too because 67 00:03:46,160 --> 00:03:50,360 Speaker 1: he believed in Adam. Here's my colleague, Sarah McBride, who 68 00:03:50,360 --> 00:03:54,040 Speaker 1: has spent years covering soft Bank and Massa. Massa is 69 00:03:54,080 --> 00:03:58,200 Speaker 1: actually a very loyal, trusting guy. So there are certain 70 00:03:58,240 --> 00:04:01,720 Speaker 1: people that Massa it just takes two and he thinks 71 00:04:01,800 --> 00:04:05,200 Speaker 1: the world of like Jack ma for example, and for 72 00:04:05,240 --> 00:04:07,960 Speaker 1: a while like Adam Human And if you fall into 73 00:04:08,040 --> 00:04:13,000 Speaker 1: that category, he just assumes you're a stand up person 74 00:04:13,040 --> 00:04:16,320 Speaker 1: who's just going to do the right thing, run your 75 00:04:16,360 --> 00:04:23,040 Speaker 1: business really well, and he'll ignore all evidence to the contrary. 76 00:04:23,120 --> 00:04:26,719 Speaker 1: So I think Adam kind of fell into this bucket. 77 00:04:26,839 --> 00:04:33,840 Speaker 1: He basically could do no wrong, and Massa just trusted him. 78 00:04:33,880 --> 00:04:37,159 Speaker 1: But already there were some bad signs, some hints that 79 00:04:37,279 --> 00:04:40,599 Speaker 1: all might not be well in We Work land. Sarah 80 00:04:40,680 --> 00:04:43,159 Speaker 1: told me there was a lot of tension within soft 81 00:04:43,160 --> 00:04:46,000 Speaker 1: Bank about the amount of money they were pouring into 82 00:04:46,080 --> 00:04:52,520 Speaker 1: We Work, So internally, people at soft Bank didn't like 83 00:04:52,640 --> 00:04:55,720 Speaker 1: the Wee Work investment, it was just too much, and 84 00:04:56,279 --> 00:05:01,480 Speaker 1: nobody internally or very few people internally, whanted we Work 85 00:05:01,600 --> 00:05:05,479 Speaker 1: to get more money, but Massa kept finding ways to 86 00:05:05,560 --> 00:05:10,080 Speaker 1: do it. So Massa had indicated to Adam that he'd 87 00:05:10,120 --> 00:05:12,920 Speaker 1: be able to make another big soft Bank investment and 88 00:05:13,040 --> 00:05:17,320 Speaker 1: we Work, and Adam was kind of counting on that cash. 89 00:05:17,640 --> 00:05:22,200 Speaker 1: But on Christmas Eve, Massa gave Adam a call. He 90 00:05:22,240 --> 00:05:26,040 Speaker 1: had bad news. Soft Bank stock had taken a tumble, 91 00:05:26,720 --> 00:05:30,320 Speaker 1: plus his biggest investors had gotten cold feet about investing 92 00:05:30,440 --> 00:05:33,479 Speaker 1: so much more in We Work, so Massa was stuck. 93 00:05:34,279 --> 00:05:37,640 Speaker 1: He told Adam he couldn't invest the sixteen billion dollars 94 00:05:37,680 --> 00:05:41,040 Speaker 1: as planned. Instead, he was able to come up with 95 00:05:41,279 --> 00:05:44,839 Speaker 1: only two billion dollars. Now regarding we Works owned fresh 96 00:05:44,920 --> 00:05:47,760 Speaker 1: to billion dollars in funding from soft Bank announced this week. 97 00:05:47,960 --> 00:05:50,000 Speaker 1: At one point that was supposed to be as much 98 00:05:50,040 --> 00:05:53,679 Speaker 1: as sixteen billion dollars. So the Japanese conglomerate announced Monday 99 00:05:53,680 --> 00:05:57,799 Speaker 1: it's investing and additional two billion dollars in the coworking startup, 100 00:05:57,800 --> 00:06:00,919 Speaker 1: a step back from the sixteen million dollar investment that 101 00:06:00,960 --> 00:06:04,280 Speaker 1: would have given soft Bank a controlling steak over late 102 00:06:04,320 --> 00:06:06,360 Speaker 1: last year. They had floated this plan like what we're 103 00:06:06,360 --> 00:06:08,479 Speaker 1: going to take over? We work, We want to be 104 00:06:08,640 --> 00:06:11,960 Speaker 1: wholly invested in this business. We want an ownership steak. 105 00:06:12,279 --> 00:06:15,960 Speaker 1: And then the stock market went haywire. SoftBank shares in 106 00:06:16,000 --> 00:06:19,960 Speaker 1: particular have taken a dive. Massa's decision to back pedal 107 00:06:20,040 --> 00:06:23,320 Speaker 1: on the investment was a pretty rough setback for Adam. 108 00:06:23,360 --> 00:06:25,720 Speaker 1: I actually got to speak to Adam about this pivotal 109 00:06:25,720 --> 00:06:29,479 Speaker 1: moment after Massa had disappointed him, but before the I 110 00:06:29,560 --> 00:06:32,640 Speaker 1: p O. I asked him how he'd felt when he 111 00:06:32,720 --> 00:06:36,120 Speaker 1: got that call from Massa. He responded in kind of 112 00:06:36,160 --> 00:06:40,280 Speaker 1: an indirect way. He told me his superpower is change, 113 00:06:40,640 --> 00:06:43,760 Speaker 1: which is a very atom thing to say. He and 114 00:06:43,800 --> 00:06:47,200 Speaker 1: his wife, Rebecca Newman, really loved the idea of superpowers. 115 00:06:47,800 --> 00:06:51,240 Speaker 1: Remember the mission of their elementary school, We Grow, was 116 00:06:51,360 --> 00:06:56,960 Speaker 1: to unleash every human superpowers. Anyway, he said his superpower 117 00:06:57,040 --> 00:07:00,960 Speaker 1: helped him navigate through his disappointment with Massa. My superpower 118 00:07:01,160 --> 00:07:06,360 Speaker 1: is change, and change is painful. Change is uncomfortable. You've 119 00:07:06,360 --> 00:07:08,480 Speaker 1: got to be open to feedback. You gotta admit things 120 00:07:08,520 --> 00:07:11,280 Speaker 1: that are working. Yes, say yes. Massa and I spoke 121 00:07:11,360 --> 00:07:12,560 Speaker 1: and we're not going to do the big deal that 122 00:07:12,600 --> 00:07:14,160 Speaker 1: we were going to do and be comfort sent. Well, 123 00:07:14,160 --> 00:07:15,960 Speaker 1: what can I learn from that? Good or bad? But 124 00:07:16,080 --> 00:07:17,840 Speaker 1: I don't know that. We'll look backwards and half for 125 00:07:17,920 --> 00:07:20,760 Speaker 1: your adviser. I'm not sure if you caught that, but 126 00:07:20,800 --> 00:07:23,120 Speaker 1: he said that he and Massa were not going to 127 00:07:23,120 --> 00:07:25,680 Speaker 1: be able to do the deal they'd agreed to, and 128 00:07:25,760 --> 00:07:29,280 Speaker 1: now Adam had to adapt and change to move forward. 129 00:07:30,160 --> 00:07:33,360 Speaker 1: To him, it was a skill he'd spent a lifetime developing, 130 00:07:34,280 --> 00:07:36,440 Speaker 1: and as I grew up all of my life, I've 131 00:07:36,440 --> 00:07:38,680 Speaker 1: had to change a lot, a lot of challenges when 132 00:07:38,680 --> 00:07:41,400 Speaker 1: I was a kid, and being dyslexic forced me to 133 00:07:41,560 --> 00:07:43,800 Speaker 1: always change how I tried to solve a problem and 134 00:07:43,960 --> 00:07:47,520 Speaker 1: try to do things, but mainly embrace it. Change is 135 00:07:47,640 --> 00:07:51,840 Speaker 1: always slightly painful, but how you change, how you embrace it, 136 00:07:51,880 --> 00:07:54,000 Speaker 1: how you enjoyed the journey, and being willing to do 137 00:07:54,040 --> 00:07:56,440 Speaker 1: it again and again. It is what defines an organization 138 00:07:56,880 --> 00:08:01,000 Speaker 1: and leader or an individual. What strikes me about this 139 00:08:01,040 --> 00:08:04,480 Speaker 1: moment is that this is a pretty vulnerable topic for Adam. 140 00:08:04,480 --> 00:08:07,320 Speaker 1: He's clearly sad that the soft Bank deal didn't happen, 141 00:08:08,560 --> 00:08:11,880 Speaker 1: but in classic Atom fashion, he didn't want to focus 142 00:08:11,880 --> 00:08:14,840 Speaker 1: on his disappointment for too long. He wanted to make 143 00:08:14,880 --> 00:08:17,920 Speaker 1: sure that I understood that his relationship with Massa was 144 00:08:17,960 --> 00:08:20,920 Speaker 1: still very strong. You can even hear in the tape 145 00:08:20,960 --> 00:08:26,480 Speaker 1: that he pounded the table for emphasis. Let's my biggest 146 00:08:26,520 --> 00:08:29,680 Speaker 1: investor giving ten a half billion. Yeah, very nice week, 147 00:08:31,560 --> 00:08:34,040 Speaker 1: but so but I mean the thing, I think that's 148 00:08:34,080 --> 00:08:36,480 Speaker 1: overstated a little bit. That's a huge investment, one of 149 00:08:36,480 --> 00:08:41,120 Speaker 1: the largest ones in history. Yeah, so very very very 150 00:08:41,200 --> 00:08:44,760 Speaker 1: very positive. We were contemplating a larger deal and the 151 00:08:44,800 --> 00:08:47,120 Speaker 1: world crashed for a second and must have felt that 152 00:08:47,240 --> 00:08:51,160 Speaker 1: things changed. But we're very very happy with where we 153 00:08:51,200 --> 00:08:54,720 Speaker 1: came to. Both sides feel perfect. Softing is very comfortable 154 00:08:54,720 --> 00:08:58,080 Speaker 1: with their total holdings. Were very comfortable with their total holding. 155 00:08:58,679 --> 00:09:01,320 Speaker 1: So very good. And my relationship with us has never 156 00:09:01,360 --> 00:09:03,679 Speaker 1: been stronger because we had opened communication and talk this 157 00:09:03,840 --> 00:09:06,240 Speaker 1: problem and I told him what I wanted. The basis great, 158 00:09:06,240 --> 00:09:10,040 Speaker 1: it's good for you, and then we executed them. And 159 00:09:10,080 --> 00:09:13,640 Speaker 1: I think you can measure relationships in time of church. 160 00:09:15,720 --> 00:09:18,000 Speaker 1: So Adam didn't get the money from MASSA that he 161 00:09:18,040 --> 00:09:20,959 Speaker 1: was counting on, but he did get something else out 162 00:09:21,000 --> 00:09:24,719 Speaker 1: of the deal, a new valuation for we work as 163 00:09:24,760 --> 00:09:27,400 Speaker 1: part of the Investment, soft Bank and we Work agreed 164 00:09:27,440 --> 00:09:30,520 Speaker 1: that the company was now worth forty seven billion dollars. 165 00:09:30,920 --> 00:09:33,840 Speaker 1: It's a wildly high number that comes up again and again, 166 00:09:34,600 --> 00:09:38,720 Speaker 1: forty seven billion dollars, forty seven billion dollars, forty seven 167 00:09:38,720 --> 00:09:43,760 Speaker 1: billion dollars, forty seven billion dollars, forty seven billion dollars. 168 00:09:45,240 --> 00:09:48,960 Speaker 1: So Adams company now had this flashy new valuation, but 169 00:09:49,120 --> 00:09:53,360 Speaker 1: they still needed cash. Because MASSA didn't come through, Adam 170 00:09:53,400 --> 00:09:56,680 Speaker 1: turned to Plan B. He decided to go all in 171 00:09:56,840 --> 00:09:59,680 Speaker 1: on an i p O, whether his company was ready 172 00:10:00,240 --> 00:10:09,880 Speaker 1: or not. For a few months, we were kept its 173 00:10:09,880 --> 00:10:13,640 Speaker 1: planned secret, and then in April, office rental giant we 174 00:10:13,720 --> 00:10:16,280 Speaker 1: Work is aiming to go public. That initial public offering 175 00:10:16,280 --> 00:10:19,880 Speaker 1: could take place in September, earlier than many investors had anticipated. 176 00:10:19,920 --> 00:10:22,120 Speaker 1: Now they're tech Unicorn has filed to go public. This 177 00:10:22,200 --> 00:10:25,240 Speaker 1: time it is we Work, now known as the we Company. 178 00:10:25,280 --> 00:10:28,520 Speaker 1: It has announced that it has confidentially submitted its paperwork 179 00:10:28,640 --> 00:10:32,160 Speaker 1: to the SEC. Four. An i p O follows several 180 00:10:32,160 --> 00:10:35,280 Speaker 1: other big money losing companies like Uber and Live but 181 00:10:35,280 --> 00:10:37,840 Speaker 1: I've also gone public this year as well. The filings 182 00:10:37,840 --> 00:10:40,760 Speaker 1: reveal some lofty goals. It says its mission is to 183 00:10:40,920 --> 00:10:45,679 Speaker 1: elevate the world's consciousness. To reporters, that announcement is like 184 00:10:45,720 --> 00:10:48,920 Speaker 1: the gun firing at the start of a race. High 185 00:10:48,920 --> 00:10:51,480 Speaker 1: profile I p O s like we Works are huge news. 186 00:10:52,280 --> 00:10:54,840 Speaker 1: And once it was clear we Work was definitely planning 187 00:10:54,840 --> 00:10:58,640 Speaker 1: to go public, big banks like Morgan, Stanley, Goldman, Sachs 188 00:10:58,679 --> 00:11:01,280 Speaker 1: and JP Morgan were lining up to try to get 189 00:11:01,360 --> 00:11:05,840 Speaker 1: Adam to pick their bank to lead the deal. To 190 00:11:05,880 --> 00:11:08,000 Speaker 1: help me explain we worked wild ride to an I 191 00:11:08,080 --> 00:11:10,679 Speaker 1: p O. I want to introduce my colleague Jillian Tan 192 00:11:11,080 --> 00:11:14,280 Speaker 1: who covers Wall Street. Yeah, everyone was very up to mistake. 193 00:11:14,320 --> 00:11:16,200 Speaker 1: A lot of the bankers, you know, it was on 194 00:11:16,240 --> 00:11:18,600 Speaker 1: their radar. It was something that was sort of going 195 00:11:18,600 --> 00:11:22,880 Speaker 1: to happen in later So folks were pretty excited. They 196 00:11:23,120 --> 00:11:26,040 Speaker 1: knew Adam Newman. He was obviously known to be one 197 00:11:26,080 --> 00:11:28,840 Speaker 1: of those founders that had a big personality. So folks 198 00:11:29,120 --> 00:11:31,480 Speaker 1: were very much already talking about we Work. But it 199 00:11:31,520 --> 00:11:33,920 Speaker 1: was all very much in a positive life. And what 200 00:11:33,960 --> 00:11:37,079 Speaker 1: do banks get out of doing an I p O 201 00:11:37,160 --> 00:11:39,920 Speaker 1: for a company? A lot of money? So banks charged 202 00:11:39,960 --> 00:11:41,920 Speaker 1: these companies or feats, not that they just wanted to 203 00:11:41,920 --> 00:11:43,640 Speaker 1: do it out of the kindness. Through their hearts, they're 204 00:11:43,640 --> 00:11:47,200 Speaker 1: earning millions of dollars. Hundreds of millions of dollars. Each 205 00:11:47,240 --> 00:11:50,480 Speaker 1: bank wanted Adam to pick them for this deal. So 206 00:11:50,520 --> 00:11:53,199 Speaker 1: when they pitched themselves to we Work, they told Adam 207 00:11:53,320 --> 00:11:56,480 Speaker 1: numbers that he would be excited to hear. They said 208 00:11:56,520 --> 00:11:59,880 Speaker 1: that we Work could go public at huge valuations as 209 00:12:00,160 --> 00:12:04,080 Speaker 1: just a hundred billion dollars. Those estimates played a big 210 00:12:04,200 --> 00:12:07,320 Speaker 1: role in over hyping the We Work. I po to 211 00:12:07,400 --> 00:12:10,040 Speaker 1: explain this a little more, we talked to Matt Levine, 212 00:12:10,120 --> 00:12:12,680 Speaker 1: a Bloomberg opinion columnist who used to be one of 213 00:12:12,720 --> 00:12:16,840 Speaker 1: those bankers who advised companies ongoing public. Yeah, I was. 214 00:12:17,280 --> 00:12:20,000 Speaker 1: It was an equity capital markets banker, and I would 215 00:12:20,000 --> 00:12:22,240 Speaker 1: pitch companies on deals, and we would want to pitch 216 00:12:22,280 --> 00:12:24,160 Speaker 1: them on deals that they would want to do. And 217 00:12:24,200 --> 00:12:27,000 Speaker 1: Matt says that because banks are competing to be the 218 00:12:27,120 --> 00:12:30,319 Speaker 1: lead bank to take We Work public, they're incentivized to 219 00:12:30,360 --> 00:12:34,480 Speaker 1: throw out bigger and bigger numbers even if they're totally unrealistic. 220 00:12:34,800 --> 00:12:36,440 Speaker 1: You know, the banker is not on the hook for 221 00:12:36,480 --> 00:12:38,600 Speaker 1: the amount for the number, they say, like, you can 222 00:12:38,679 --> 00:12:41,000 Speaker 1: kind of make up any number you want and justify it. 223 00:12:41,280 --> 00:12:42,679 Speaker 1: So if you go to a company and say we 224 00:12:42,720 --> 00:12:45,720 Speaker 1: think you could do an IPO at a dollar evaluation. 225 00:12:46,360 --> 00:12:49,319 Speaker 1: Then they'll be excited because they want to raise a 226 00:12:49,360 --> 00:12:51,960 Speaker 1: lot of money at a high price, and they'll hire you. 227 00:12:52,440 --> 00:12:54,920 Speaker 1: And then things can go wrong and you'll say, oh, 228 00:12:55,000 --> 00:12:56,839 Speaker 1: things went wrong, that's why we couldn't get you the 229 00:12:56,920 --> 00:13:00,599 Speaker 1: number we originally promised. So you have a lot of incentives. 230 00:13:00,640 --> 00:13:03,559 Speaker 1: Just give people the numbers they want to hear. So 231 00:13:03,600 --> 00:13:05,840 Speaker 1: that summer, we Work was prepping for its I p 232 00:13:05,920 --> 00:13:08,520 Speaker 1: O and they were really depending on it going well. 233 00:13:08,960 --> 00:13:11,959 Speaker 1: The company was counting on getting nine billion dollars from 234 00:13:11,960 --> 00:13:15,600 Speaker 1: going public by selling stock and borrowing money from banks. 235 00:13:16,320 --> 00:13:19,160 Speaker 1: And then they released a document called the S one. 236 00:13:19,360 --> 00:13:22,920 Speaker 1: It's basically a requirement for going public. Reporters love the 237 00:13:23,120 --> 00:13:26,120 Speaker 1: S one. It's like Christmas. We wake up early and 238 00:13:26,160 --> 00:13:28,920 Speaker 1: wait for it to be released because the S one 239 00:13:29,000 --> 00:13:34,240 Speaker 1: is full of new information, profits, losses, expenses, lists of 240 00:13:34,320 --> 00:13:36,959 Speaker 1: all the ways things could go wrong. These are things 241 00:13:37,040 --> 00:13:41,440 Speaker 1: companies don't usually like sharing with reporters, but we Works 242 00:13:41,559 --> 00:13:44,920 Speaker 1: S one was not normal. It dropped like a bombshell. 243 00:13:45,520 --> 00:13:49,319 Speaker 1: It detailed so many problems within the company, huge losses, 244 00:13:49,480 --> 00:13:53,360 Speaker 1: conflicts of interest, weird nepotism. We're going to go through 245 00:13:53,480 --> 00:13:56,559 Speaker 1: one by one the problems and WE Works S one. 246 00:13:57,000 --> 00:13:59,560 Speaker 1: I'll start with what will probably be remembered as the 247 00:13:59,559 --> 00:14:04,400 Speaker 1: most gregious and ridiculous item on the list. Adam owned 248 00:14:04,440 --> 00:14:08,520 Speaker 1: the trademark to the word we Well. Technically the trademark 249 00:14:08,600 --> 00:14:11,640 Speaker 1: was owned by his holding company, and then when WE 250 00:14:11,679 --> 00:14:13,920 Speaker 1: Work wanted to change its name from WE Worked to 251 00:14:14,360 --> 00:14:18,000 Speaker 1: the Wei company, Adam sold that trademark to his own 252 00:14:18,040 --> 00:14:22,480 Speaker 1: company for five point nine million dollars in stock. This 253 00:14:22,640 --> 00:14:26,720 Speaker 1: blew my mind. Yeah, that was the probably most outrageous 254 00:14:27,160 --> 00:14:30,080 Speaker 1: item in the whole S one that the CEO had 255 00:14:30,120 --> 00:14:32,120 Speaker 1: taken money out of the company and put it in 256 00:14:32,240 --> 00:14:35,400 Speaker 1: his own pocket. And the reason that's outrageous is because 257 00:14:35,400 --> 00:14:37,880 Speaker 1: WE Work had rebranded itself to we and he had 258 00:14:37,920 --> 00:14:41,400 Speaker 1: profited from that rebranding, as opposed to any other normal 259 00:14:41,440 --> 00:14:45,000 Speaker 1: CEO who would just make the rebranding happen, as opposed 260 00:14:45,040 --> 00:14:48,880 Speaker 1: to secretly owning the trademark when that rebranding happened. Another 261 00:14:48,920 --> 00:14:51,800 Speaker 1: thing that came up in the asmen was Adam's succession plan, 262 00:14:51,840 --> 00:14:55,440 Speaker 1: which is that if Adam dies, his wife Rebecca gets 263 00:14:55,440 --> 00:14:59,120 Speaker 1: to help pick his successor, which is very strange, hugely strange. 264 00:14:59,200 --> 00:15:02,800 Speaker 1: That's something you might expect for like a blueberry farm operation, right, like, 265 00:15:03,000 --> 00:15:06,640 Speaker 1: not a giant company backed by a huge conglomerate like 266 00:15:06,760 --> 00:15:10,200 Speaker 1: soft Bank, that the successor is picked by the CEO's 267 00:15:10,280 --> 00:15:12,960 Speaker 1: wife and two directors who he's close to. Like, it 268 00:15:13,000 --> 00:15:16,800 Speaker 1: couldn't be more brigged if you'd like. Yeah, usually this 269 00:15:16,880 --> 00:15:19,240 Speaker 1: is a decision that the board of directors makes independently, 270 00:15:20,000 --> 00:15:22,720 Speaker 1: that's the standard. This was very surprising. It does not 271 00:15:22,800 --> 00:15:25,160 Speaker 1: usually involve your wife, even if she is an executive 272 00:15:25,160 --> 00:15:27,640 Speaker 1: at the company. Absolutely, So that's already a sign of 273 00:15:27,720 --> 00:15:31,920 Speaker 1: undue influence. And just to keep adding to the list, 274 00:15:32,040 --> 00:15:36,040 Speaker 1: Adam personally owned stakes in buildings where we work. Was 275 00:15:36,080 --> 00:15:38,760 Speaker 1: a tenant, which means that we work his company is 276 00:15:38,800 --> 00:15:42,240 Speaker 1: paying him Adam Newman rent, which is a total conflict 277 00:15:42,240 --> 00:15:44,440 Speaker 1: of interest. It means kind of you're on both sides 278 00:15:44,480 --> 00:15:46,720 Speaker 1: of this transaction and it's just one of these things 279 00:15:46,760 --> 00:15:49,920 Speaker 1: that people don't do. And it was a huge red flag. Yes, 280 00:15:50,040 --> 00:15:52,400 Speaker 1: so he was literally buying up these properties and then 281 00:15:52,440 --> 00:15:55,320 Speaker 1: immediately leasing them to we work. So another thing that 282 00:15:55,360 --> 00:15:58,040 Speaker 1: the s one revealed was that Adam had twenty to 283 00:15:58,200 --> 00:16:01,000 Speaker 1: one super voting shares, which me he owned shares in 284 00:16:01,040 --> 00:16:02,960 Speaker 1: the company that had twenty votes while all the other 285 00:16:03,000 --> 00:16:06,200 Speaker 1: shares had one, which means essentially, even if he owns 286 00:16:06,240 --> 00:16:09,800 Speaker 1: a small portion of the company, he has voting control 287 00:16:10,080 --> 00:16:12,480 Speaker 1: of every major decision that companies ever going to make. 288 00:16:12,560 --> 00:16:14,720 Speaker 1: Investors found the fact that the board had signed off 289 00:16:14,720 --> 00:16:16,880 Speaker 1: on all of these things, including the twenty to one 290 00:16:16,920 --> 00:16:19,960 Speaker 1: super voting shares, is super worrisome just because it showed 291 00:16:20,000 --> 00:16:22,200 Speaker 1: a lack of governance at the top. Yeah, it means 292 00:16:22,200 --> 00:16:25,320 Speaker 1: no one is saying no to Adam. I was wondering, like, 293 00:16:25,520 --> 00:16:28,400 Speaker 1: all these things point to the same pattern, right, which 294 00:16:28,440 --> 00:16:30,920 Speaker 1: is that like Adam looks at his company as a 295 00:16:30,960 --> 00:16:34,720 Speaker 1: way for him to like grow his prestigion also his 296 00:16:34,920 --> 00:16:36,880 Speaker 1: personal wealth. It was sort of strange. I feel like 297 00:16:36,880 --> 00:16:38,960 Speaker 1: I didn't quite understand why it was all set up 298 00:16:38,960 --> 00:16:41,720 Speaker 1: this way. Yeah. One thing I think was the word 299 00:16:41,760 --> 00:16:44,840 Speaker 1: Adam was among the most used words in the whole document. 300 00:16:44,960 --> 00:16:48,560 Speaker 1: So to excuse the pun, but it's not it's not 301 00:16:48,600 --> 00:16:50,640 Speaker 1: a way. It's all about an eye, right, This is 302 00:16:50,680 --> 00:16:53,960 Speaker 1: about one man. This is his show. Yeah. Yeah, And 303 00:16:54,240 --> 00:16:56,360 Speaker 1: unlike other s ones, for example, they also refer to 304 00:16:56,360 --> 00:16:59,000 Speaker 1: Adam by his first name I think the generous interpretation 305 00:16:59,080 --> 00:17:01,240 Speaker 1: is that his wife was also an executive at the company, 306 00:17:01,320 --> 00:17:04,080 Speaker 1: is the same last name. But it certainly struck people 307 00:17:04,320 --> 00:17:06,960 Speaker 1: that it was this whole document, and so much of 308 00:17:06,960 --> 00:17:09,640 Speaker 1: it seemed to me about this one person, Adam, who 309 00:17:09,720 --> 00:17:12,760 Speaker 1: was doing a lot of things outside the company or 310 00:17:12,800 --> 00:17:15,840 Speaker 1: relating to the company that were not necessarily in his 311 00:17:15,960 --> 00:17:18,760 Speaker 1: company's best interests, which if you're an investor, you are 312 00:17:18,800 --> 00:17:21,479 Speaker 1: not excited to hear because you're hoping that the CEO 313 00:17:21,600 --> 00:17:24,840 Speaker 1: does things to the company's best interests and not to 314 00:17:24,960 --> 00:17:27,880 Speaker 1: his own. Absolutely, so the number of things that were 315 00:17:27,960 --> 00:17:30,760 Speaker 1: not Kosha from an investors point of view, would just, 316 00:17:31,240 --> 00:17:36,359 Speaker 1: you know, bountiful. When the S one came out, it 317 00:17:36,480 --> 00:17:40,000 Speaker 1: was supposed to be we works, big debut, but instead 318 00:17:40,359 --> 00:17:44,160 Speaker 1: it landed like a pile of bricks. Analysts and potential 319 00:17:44,160 --> 00:17:47,280 Speaker 1: investors were combing through the rubble and they were not thrilled. 320 00:17:47,960 --> 00:17:51,159 Speaker 1: Pundits started writing blog posts about all the warning signs 321 00:17:51,160 --> 00:17:54,080 Speaker 1: that they saw detailed in the S one, and maybe 322 00:17:54,080 --> 00:17:56,720 Speaker 1: what scared investors the most was that it was such 323 00:17:56,720 --> 00:18:00,560 Speaker 1: a bad look. It made Adam look greedy, like he 324 00:18:00,600 --> 00:18:03,639 Speaker 1: wanted to score points for himself against his own company. 325 00:18:04,400 --> 00:18:07,119 Speaker 1: Here's Matt Levine again. I like to joke and I 326 00:18:07,119 --> 00:18:10,080 Speaker 1: think this is kind of true that the actual thing 327 00:18:10,160 --> 00:18:13,520 Speaker 1: that broke that we were at IPO is the story 328 00:18:13,560 --> 00:18:16,639 Speaker 1: about Adam Newman selling the trademark for the word we 329 00:18:17,400 --> 00:18:19,960 Speaker 1: to the company for six million dollars, which is such 330 00:18:19,960 --> 00:18:24,000 Speaker 1: an absurd story of like of like poor governance and 331 00:18:24,040 --> 00:18:27,439 Speaker 1: conflict of interest and like not looking at for the 332 00:18:27,480 --> 00:18:30,840 Speaker 1: shareholders and like short termism and not thinking about the 333 00:18:30,840 --> 00:18:33,160 Speaker 1: good of the company and not thinking about optics. It's 334 00:18:33,200 --> 00:18:36,280 Speaker 1: just like you tell anyone that story and they get offended, 335 00:18:36,480 --> 00:18:39,600 Speaker 1: and it's such an easy like point to rally around. 336 00:18:40,600 --> 00:18:43,080 Speaker 1: After the S one came out, a lot of people 337 00:18:43,119 --> 00:18:48,280 Speaker 1: were wondering what was Adam thinking? For what it's worth. 338 00:18:48,600 --> 00:18:50,800 Speaker 1: A person close to Adam told me that when Adam 339 00:18:50,840 --> 00:18:53,679 Speaker 1: sold the trademark to WE Work, he was following advice 340 00:18:53,680 --> 00:18:57,240 Speaker 1: from his lawyers, and a few months earlier I got 341 00:18:57,280 --> 00:19:00,360 Speaker 1: to ask Adam about a different conflict of interest him 342 00:19:00,400 --> 00:19:03,520 Speaker 1: acting as landlord to WE Work. I asked if he 343 00:19:03,560 --> 00:19:06,399 Speaker 1: thought that decision was inappropriate, and he gave me a 344 00:19:06,440 --> 00:19:10,760 Speaker 1: surprising answer. He was a little defensive. Did you think 345 00:19:10,760 --> 00:19:12,880 Speaker 1: in the end that it was inappropriate to have those 346 00:19:12,880 --> 00:19:15,639 Speaker 1: whom things for you personally. Do you think it's inappropriate? 347 00:19:15,720 --> 00:19:18,520 Speaker 1: I think its founders is our job to lead into 348 00:19:18,800 --> 00:19:21,320 Speaker 1: growth and innovate, and I think we need to struct 349 00:19:21,359 --> 00:19:23,360 Speaker 1: an industry. If you don't have to care, if I 350 00:19:23,359 --> 00:19:25,480 Speaker 1: don't put my own money on it, I would other 351 00:19:25,520 --> 00:19:28,119 Speaker 1: real estate owners ever have the courage to find final 352 00:19:28,160 --> 00:19:32,280 Speaker 1: things of an investment. Why would anyone else? Think? Yeah? 353 00:19:32,280 --> 00:19:33,920 Speaker 1: But it doesn't make it a little different if you're 354 00:19:33,920 --> 00:19:35,840 Speaker 1: sitting on both sides of the table. If I'm losing 355 00:19:35,840 --> 00:19:38,360 Speaker 1: money on the side of the real estate, which is fashion, 356 00:19:39,520 --> 00:19:41,879 Speaker 1: not if what I did was purely for the sake 357 00:19:41,880 --> 00:19:47,600 Speaker 1: of pushing the business app. Okay, so you hear Adam 358 00:19:47,680 --> 00:19:51,240 Speaker 1: saying here that he lost money. That's actually open to debate. 359 00:19:51,680 --> 00:19:55,199 Speaker 1: But let me explain some of his reasoning. Adam agreed 360 00:19:55,240 --> 00:19:57,760 Speaker 1: publicly to sell his stakes in the buildings back to 361 00:19:57,840 --> 00:20:01,800 Speaker 1: we Work at cost, So assuming those buildings rose in value, 362 00:20:02,200 --> 00:20:04,320 Speaker 1: Adam was losing out on the profits he could have 363 00:20:04,400 --> 00:20:08,040 Speaker 1: made by selling them. At the same time, Adam was 364 00:20:08,080 --> 00:20:11,240 Speaker 1: still collecting rent. I spoke to two people close to 365 00:20:11,320 --> 00:20:14,359 Speaker 1: him who told me that Adam was charging below market rates, 366 00:20:14,880 --> 00:20:17,440 Speaker 1: but one of them said, Adam also made a profit 367 00:20:17,520 --> 00:20:20,920 Speaker 1: on at least one of the buildings he owned. Regardless, 368 00:20:21,320 --> 00:20:23,879 Speaker 1: Adam acting as a landlord to his own company is 369 00:20:23,920 --> 00:20:27,480 Speaker 1: a pretty glaring conflict of interest. While I was sitting 370 00:20:27,520 --> 00:20:29,920 Speaker 1: down with Adam, there was one point he really wanted 371 00:20:29,960 --> 00:20:33,440 Speaker 1: me to understand. He felt that his actions were justified 372 00:20:33,560 --> 00:20:36,000 Speaker 1: because he did it to help we work grow. He 373 00:20:36,119 --> 00:20:39,080 Speaker 1: was a founder, trying to lead. He said that he 374 00:20:39,200 --> 00:20:41,440 Speaker 1: had to buy those buildings in order to show other 375 00:20:41,560 --> 00:20:45,000 Speaker 1: landlords it was a good investment work once to develop 376 00:20:46,160 --> 00:20:50,159 Speaker 1: cities in the future, but wasn't able to buy anything. Yeah, 377 00:20:50,840 --> 00:20:54,000 Speaker 1: if funds weren't buy landlords, we were talkings and come 378 00:20:54,040 --> 00:20:56,160 Speaker 1: to this with us. No one was doing it. Yeah, okay, 379 00:20:56,160 --> 00:21:00,480 Speaker 1: if no one's going to do it, we'll do it first. Sure, sure, sure, sure, yeah, 380 00:21:00,640 --> 00:21:02,359 Speaker 1: So that's that's why we did it. Then, I'm very 381 00:21:02,359 --> 00:21:03,879 Speaker 1: excited that they did it because if I, if I 382 00:21:03,920 --> 00:21:05,639 Speaker 1: wasn't able to do it, I don't think we wouldn't 383 00:21:05,640 --> 00:21:09,199 Speaker 1: be today at this stage. I'm excited I did it. 384 00:21:09,640 --> 00:21:11,480 Speaker 1: If I wasn't able to do it, we wouldn't be 385 00:21:11,520 --> 00:21:15,639 Speaker 1: at this stage. It's amazing that Adam said this, even 386 00:21:15,680 --> 00:21:18,240 Speaker 1: after he had been criticized for this conflict of interest, 387 00:21:18,920 --> 00:21:21,040 Speaker 1: and after the S one came out and revealed even 388 00:21:21,080 --> 00:21:24,880 Speaker 1: more conflicts, a lot of people were asking why did 389 00:21:24,920 --> 00:21:27,120 Speaker 1: we Work think it was a good idea to publish 390 00:21:27,119 --> 00:21:30,800 Speaker 1: the S one? Well, I heard one theory that we 391 00:21:30,880 --> 00:21:33,639 Speaker 1: Work had always been running their business this way and 392 00:21:33,760 --> 00:21:36,400 Speaker 1: it hadn't been a problem for them before. Here's Matt, 393 00:21:36,880 --> 00:21:40,120 Speaker 1: Why were they comfortable with those conflicts of interest is 394 00:21:40,160 --> 00:21:42,280 Speaker 1: an interesting question, right? I mean, part of it is 395 00:21:42,320 --> 00:21:44,760 Speaker 1: like a lack of self awareness that sort of permeated 396 00:21:44,800 --> 00:21:47,080 Speaker 1: everything and we Work. So this aligns with what a 397 00:21:47,119 --> 00:21:49,520 Speaker 1: few different sources have told me over the years that 398 00:21:49,640 --> 00:21:53,080 Speaker 1: Adam is not a detail oriented guy that he rarely 399 00:21:53,160 --> 00:21:55,680 Speaker 1: used as a computer. And there's a second part to 400 00:21:55,760 --> 00:21:57,800 Speaker 1: Matt's theory. I mean, part of it is that a 401 00:21:57,800 --> 00:22:01,960 Speaker 1: lot of tech companies had gone public with pretty gruesome 402 00:22:02,119 --> 00:22:04,760 Speaker 1: governance terms and pretty gruesome conflicts of interest, then the 403 00:22:04,800 --> 00:22:07,800 Speaker 1: market had crumbled and bought them. Just to give you 404 00:22:07,840 --> 00:22:11,639 Speaker 1: some more context, Snapchat, for example, had recently sold shares 405 00:22:11,680 --> 00:22:14,320 Speaker 1: in its I p O that had zero votes. That 406 00:22:14,440 --> 00:22:17,639 Speaker 1: was unprecedented and seen as a huge power grab by 407 00:22:17,640 --> 00:22:21,320 Speaker 1: its founders. But Snapchat was such a hot company, so 408 00:22:21,440 --> 00:22:24,520 Speaker 1: investors held their noses and bought it anyway. And I 409 00:22:24,560 --> 00:22:27,960 Speaker 1: think if you're we work, you think we're not that 410 00:22:28,080 --> 00:22:31,680 Speaker 1: much worse in these disclosures than a lot of other companies. 411 00:22:32,119 --> 00:22:34,800 Speaker 1: And we're better because where we work in a building 412 00:22:34,800 --> 00:22:37,479 Speaker 1: community in the where the world's first physical social network. 413 00:22:37,880 --> 00:22:40,639 Speaker 1: So people who were willing to suck it up and 414 00:22:40,680 --> 00:22:44,240 Speaker 1: buy snap Um even with bad governance terms, should be 415 00:22:44,280 --> 00:22:46,440 Speaker 1: willing to suck it up and buy we work with 416 00:22:46,480 --> 00:22:50,159 Speaker 1: like ridiculous conflicts of interest. All this backlash made its 417 00:22:50,200 --> 00:22:53,639 Speaker 1: way over to Masa in Tokyo at soft Bank. Some 418 00:22:53,760 --> 00:22:56,440 Speaker 1: of his lieutenants had been nervous about we Work doing 419 00:22:56,440 --> 00:22:58,959 Speaker 1: an I p O. But for a long time they 420 00:22:59,000 --> 00:23:01,439 Speaker 1: hadn't been able to convey Massa that we Work was 421 00:23:01,480 --> 00:23:05,040 Speaker 1: headed down the wrong path. Masa had been sure that 422 00:23:05,119 --> 00:23:09,280 Speaker 1: Adam deserved his trust. Here's my colleague Sarah again. But 423 00:23:09,440 --> 00:23:13,280 Speaker 1: then when the I p O documents actually became public, 424 00:23:14,200 --> 00:23:16,960 Speaker 1: and it wasn't just that it didn't go well, people 425 00:23:17,080 --> 00:23:21,359 Speaker 1: were mocking it. It became a meme. It was just brutal. 426 00:23:22,200 --> 00:23:27,679 Speaker 1: And so after that, I think Massa was forced to 427 00:23:27,880 --> 00:23:31,760 Speaker 1: acknowledge a bunch of things He hadn't wanted to acknowledge 428 00:23:32,040 --> 00:23:35,680 Speaker 1: before that that he just kind of ignored. Sarah says 429 00:23:35,760 --> 00:23:40,040 Speaker 1: that Massa also took Adam's bad behavior personally. I think 430 00:23:40,160 --> 00:23:44,280 Speaker 1: Massa felt betrayed by Adam. I think he'd put a 431 00:23:44,320 --> 00:23:47,040 Speaker 1: lot of trust in Adam and just expected him to 432 00:23:47,080 --> 00:23:50,399 Speaker 1: do a good job. And when it turned out Adam 433 00:23:50,520 --> 00:23:54,119 Speaker 1: hadn't done a good job, it wasn't like, oh, Adam 434 00:23:54,200 --> 00:23:57,240 Speaker 1: screwed up. It was a personal betrayal. I think that's 435 00:23:57,280 --> 00:24:00,720 Speaker 1: just because Adam was in this special category of people 436 00:24:00,800 --> 00:24:03,919 Speaker 1: that Massa just really believed in, and if you're in 437 00:24:03,960 --> 00:24:06,520 Speaker 1: that category, you have to live up to it, and 438 00:24:06,560 --> 00:24:11,080 Speaker 1: if you don't, that's it. So while everyone was freaking 439 00:24:11,080 --> 00:24:14,440 Speaker 1: out over reworks S one, you might be wondering what 440 00:24:14,560 --> 00:24:17,640 Speaker 1: was we work doing? They were trying to salvage their 441 00:24:17,640 --> 00:24:21,240 Speaker 1: I p O. Behind the scenes, the company was scrambling 442 00:24:21,280 --> 00:24:24,359 Speaker 1: to make some changes to try to reassure potential investors. 443 00:24:24,840 --> 00:24:28,320 Speaker 1: They took Rebecca out of the succession plan. They decreased 444 00:24:28,359 --> 00:24:31,440 Speaker 1: adams super voting shares from twenty to one to ten 445 00:24:31,480 --> 00:24:34,080 Speaker 1: to one, and eventually all the way down to three 446 00:24:34,119 --> 00:24:37,680 Speaker 1: to one. Adam had to return the five point nine 447 00:24:37,720 --> 00:24:40,679 Speaker 1: million dollars in stock that he got by selling the 448 00:24:40,760 --> 00:24:44,679 Speaker 1: WE trademark, but it was too late. The damage had 449 00:24:44,720 --> 00:24:48,919 Speaker 1: been done. According to Sarah's source, Massa started to change 450 00:24:48,960 --> 00:24:51,439 Speaker 1: his thinking after it was clear to him that the 451 00:24:51,600 --> 00:24:55,320 Speaker 1: S one was being received so poorly that WE Work 452 00:24:55,359 --> 00:24:59,440 Speaker 1: I p O still seemed like a joke. Something had 453 00:24:59,480 --> 00:25:05,879 Speaker 1: to happen, and Massa and Adam met in Tokyo and 454 00:25:06,000 --> 00:25:10,600 Speaker 1: Massa suggested to Adam that he pulled the I p 455 00:25:10,760 --> 00:25:15,879 Speaker 1: O and Adam was basically like, that's not going to happen. 456 00:25:17,040 --> 00:25:20,480 Speaker 1: So Massa told him at that point, it's going to 457 00:25:20,520 --> 00:25:23,760 Speaker 1: go very badly. And the meeting ended, and as far 458 00:25:23,800 --> 00:25:26,640 Speaker 1: as I can tell, that's the last time the two 459 00:25:26,640 --> 00:25:31,679 Speaker 1: of them sigh each other. So Adam left that meeting 460 00:25:31,760 --> 00:25:34,000 Speaker 1: determined to keep going down the I p O path. 461 00:25:35,000 --> 00:25:40,119 Speaker 1: It was after that meeting that Massa probably thought, Okay, 462 00:25:40,240 --> 00:25:44,520 Speaker 1: we need to figure out a way to get this guy, 463 00:25:44,680 --> 00:25:48,280 Speaker 1: you know, to get him to resign. Massa wasn't alone. 464 00:25:48,880 --> 00:25:51,520 Speaker 1: Some members of We Worked board were starting to think 465 00:25:51,600 --> 00:25:59,920 Speaker 1: the same thing. We'll be right back, okay. So We 466 00:26:00,000 --> 00:26:02,720 Speaker 1: Work was barreling toward an I p O even though 467 00:26:02,760 --> 00:26:06,119 Speaker 1: it's S one had been widely criticized, but the company 468 00:26:06,160 --> 00:26:09,719 Speaker 1: had a big problem. Adam was meeting with investors and 469 00:26:09,720 --> 00:26:12,600 Speaker 1: they didn't want to buy We Work stock. Here's my 470 00:26:12,640 --> 00:26:16,040 Speaker 1: colleague Jillian again, he meets investors. None of them are 471 00:26:16,080 --> 00:26:18,480 Speaker 1: two enthused with what they hear. A lot of the 472 00:26:18,600 --> 00:26:22,040 Speaker 1: feedback is negative. Nobody wants to buy the company at 473 00:26:22,080 --> 00:26:25,879 Speaker 1: evaluation of forty seven billion, So immediately it starts dropping 474 00:26:25,920 --> 00:26:28,320 Speaker 1: and dropping and dropping. It ends up looking like a 475 00:26:28,359 --> 00:26:33,000 Speaker 1: falling knife. The valuation targets are continuing to decline. What 476 00:26:33,080 --> 00:26:36,320 Speaker 1: I'm hearing is the demand is not there at this point. 477 00:26:36,720 --> 00:26:41,200 Speaker 1: At even billion, the company's IPO evaluation could be slashed 478 00:26:41,200 --> 00:26:44,720 Speaker 1: to ten to twelve billion dollars, a huge drop from 479 00:26:44,720 --> 00:26:47,560 Speaker 1: the forty seven billion. If you're working at we Work, 480 00:26:47,600 --> 00:26:49,280 Speaker 1: I don't think this is fun at all. Every day 481 00:26:49,320 --> 00:26:51,040 Speaker 1: now they're trying to come up with something to salvage 482 00:26:51,040 --> 00:26:52,480 Speaker 1: this I p O, and I don't know if they're 483 00:26:52,480 --> 00:26:56,000 Speaker 1: gonna do it. Remember just a few months ago, bankers 484 00:26:56,040 --> 00:26:58,159 Speaker 1: were telling we Work that they could go public at 485 00:26:58,200 --> 00:27:01,800 Speaker 1: a hundred billion dollars, and now we Work was considering 486 00:27:01,880 --> 00:27:05,840 Speaker 1: sad numbers like ten or twelve billion dollars. And this 487 00:27:05,960 --> 00:27:08,760 Speaker 1: wasn't just hurting Adam. If you think about we work, 488 00:27:08,800 --> 00:27:11,480 Speaker 1: a lot of the employees had stuck or promised that 489 00:27:11,560 --> 00:27:13,840 Speaker 1: we promised stock options. They thought they were going to 490 00:27:13,880 --> 00:27:17,200 Speaker 1: become paper millionaires. So the valuation of the company dropping 491 00:27:17,280 --> 00:27:19,960 Speaker 1: this much, their wealth is evaporating in their eyes. If 492 00:27:19,960 --> 00:27:22,960 Speaker 1: you think of Adam, he had, you know, already become 493 00:27:23,000 --> 00:27:26,520 Speaker 1: a paper billionaire. He was very rapidly becoming a much 494 00:27:26,720 --> 00:27:31,560 Speaker 1: less wealthy paper billionaire. Two things happened next. One, the 495 00:27:31,600 --> 00:27:34,400 Speaker 1: company delayed its I p O a few weeks. That's 496 00:27:34,400 --> 00:27:38,119 Speaker 1: a sign the company wasn't feeling ready. And then the 497 00:27:38,160 --> 00:27:42,240 Speaker 1: Wall Street Journal published a really embarrassing story about Adam. 498 00:27:42,280 --> 00:27:46,840 Speaker 1: It detailed some of his weirder, more reckless behavior. Probably 499 00:27:46,880 --> 00:27:50,760 Speaker 1: the most memorable anecdote was about Adams smoking weed on 500 00:27:50,800 --> 00:27:53,360 Speaker 1: a private plane that was headed to Israel and had 501 00:27:53,400 --> 00:27:57,400 Speaker 1: this great first line, Adam Newman was flying high. Literally. 502 00:27:58,200 --> 00:28:01,320 Speaker 1: That's Elliott Brown, the reporter who wrote the story, and 503 00:28:01,400 --> 00:28:04,119 Speaker 1: he said that Adam hot boxing and jet had gotten 504 00:28:04,119 --> 00:28:07,520 Speaker 1: the most last. But the significance was that the CEO 505 00:28:07,680 --> 00:28:10,879 Speaker 1: of a well known company had smuggled a sizeable chunk 506 00:28:10,880 --> 00:28:15,560 Speaker 1: of weed across international borders, which is illegal. It's not 507 00:28:15,600 --> 00:28:18,400 Speaker 1: that he was smoking pot on the plane, it's that 508 00:28:18,920 --> 00:28:22,760 Speaker 1: he was bringing it across an ocean to a different country. 509 00:28:22,800 --> 00:28:24,520 Speaker 1: So much so that the owner of the jet was 510 00:28:24,560 --> 00:28:28,480 Speaker 1: really freaked out about this and uh decided to recall 511 00:28:28,560 --> 00:28:30,920 Speaker 1: the plane, leaving Adam to find his own way back 512 00:28:31,560 --> 00:28:35,240 Speaker 1: find his own way back from another continent. The rest 513 00:28:35,280 --> 00:28:38,040 Speaker 1: of the story had some bizarre details as well. It 514 00:28:38,160 --> 00:28:40,959 Speaker 1: said Adam had told people he wanted to live forever, 515 00:28:41,400 --> 00:28:45,040 Speaker 1: to become a trillionaire, and to run for president of 516 00:28:45,080 --> 00:28:50,840 Speaker 1: the world. This was definitely within this broader concept of 517 00:28:50,840 --> 00:28:56,040 Speaker 1: a messiah complex that you know, he had these giant 518 00:28:56,120 --> 00:28:59,240 Speaker 1: ambitions to put we work around the world and then 519 00:28:59,240 --> 00:29:03,440 Speaker 1: ex the and into elevating consciousness. Uh. This is one 520 00:29:03,480 --> 00:29:08,600 Speaker 1: of those those messianic, really expansive visions that has absolutely 521 00:29:08,640 --> 00:29:12,200 Speaker 1: nothing to do with subleasing real estate or office space. Uh, 522 00:29:12,240 --> 00:29:15,720 Speaker 1: and sort of flows naturally out of his mouth. The 523 00:29:15,760 --> 00:29:20,160 Speaker 1: story made Adam sound pretty nuts among certain circles. Everyone 524 00:29:20,280 --> 00:29:23,120 Speaker 1: was reading it and laughing about it. But you know 525 00:29:23,160 --> 00:29:30,360 Speaker 1: who wasn't laughing Massa, here's Sarah again. The pot thing. 526 00:29:31,120 --> 00:29:34,680 Speaker 1: It doesn't feel that bad here in the US because 527 00:29:34,720 --> 00:29:37,680 Speaker 1: so many states have legalized pot, and there's this big 528 00:29:37,720 --> 00:29:42,440 Speaker 1: public debate about whether pot should still be a classified substance. 529 00:29:43,000 --> 00:29:47,400 Speaker 1: None of that's happening in Japan. Masa is pretty conservative, 530 00:29:48,040 --> 00:29:55,240 Speaker 1: and so to have one of his CEOs with an 531 00:29:55,240 --> 00:30:02,040 Speaker 1: illegal substance on an international flight, that's just something he's 532 00:30:02,040 --> 00:30:06,920 Speaker 1: going to take much harder than than perhaps a compartable 533 00:30:06,960 --> 00:30:10,520 Speaker 1: investor would here in the US. So the next week 534 00:30:10,680 --> 00:30:14,640 Speaker 1: is probably the most momentous week of Adam's professional life. 535 00:30:15,400 --> 00:30:18,240 Speaker 1: That Wall Street Journal story came out on a Wednesday. 536 00:30:18,440 --> 00:30:21,360 Speaker 1: Things were getting tense between we Work and soft Bank, 537 00:30:22,000 --> 00:30:25,960 Speaker 1: and during this time, Adam was photographed walking barefoot on 538 00:30:26,000 --> 00:30:29,760 Speaker 1: the sidewalks of Manhattan. The photo was shared widely and 539 00:30:29,880 --> 00:30:32,800 Speaker 1: mocked on Reddit. People held it up as a sign 540 00:30:32,960 --> 00:30:37,960 Speaker 1: that Adam was losing it. On Friday, Adam piled Rebecca 541 00:30:38,080 --> 00:30:41,000 Speaker 1: and their five kids into a car. They drove to 542 00:30:41,040 --> 00:30:44,720 Speaker 1: the Hampton's, where the Newman's owned two houses. As soon 543 00:30:44,760 --> 00:30:47,600 Speaker 1: as the sun set on Friday, they started to observe 544 00:30:47,640 --> 00:30:51,240 Speaker 1: the Jewish tradition of Shabbat that means spending twenty four 545 00:30:51,280 --> 00:30:57,560 Speaker 1: hours unplugged, no technology, no phones, no news. Shabbat ended 546 00:30:57,600 --> 00:31:00,680 Speaker 1: on Saturday night and on Sunday him headed back to 547 00:31:00,720 --> 00:31:03,920 Speaker 1: New York City. A lot had happened while he was gone. 548 00:31:04,760 --> 00:31:08,160 Speaker 1: That day, story started trickling out, saying that some of 549 00:31:08,200 --> 00:31:11,680 Speaker 1: Adam's biggest backers were meeting to discuss how to push 550 00:31:11,760 --> 00:31:15,239 Speaker 1: him out as CEO. They were turning against him and 551 00:31:15,320 --> 00:31:17,800 Speaker 1: wanted him out of the company he'd spent the last 552 00:31:17,840 --> 00:31:21,240 Speaker 1: decade building, and the most painful part of it might 553 00:31:21,280 --> 00:31:25,640 Speaker 1: have been that even Massa, Adam's most loyal supporter, wanted 554 00:31:25,680 --> 00:31:28,880 Speaker 1: him to step down. The story said the plan was 555 00:31:28,920 --> 00:31:34,200 Speaker 1: to remove Adam, and probably very soon. That afternoon, Adam 556 00:31:34,240 --> 00:31:37,240 Speaker 1: met with Jamie Diamond, the head of JP Morgan, who 557 00:31:37,320 --> 00:31:40,480 Speaker 1: was not only an investor but also someone Adam considered 558 00:31:40,520 --> 00:31:44,720 Speaker 1: a mentor. He told Adam to step down. That night, 559 00:31:45,040 --> 00:31:47,320 Speaker 1: Adam had dinner at a restaurant with a board member 560 00:31:47,320 --> 00:31:51,360 Speaker 1: and an early investor. The message was the same, Adam, 561 00:31:51,440 --> 00:31:59,560 Speaker 1: you have to go. What happened the next morning on 562 00:31:59,600 --> 00:32:03,640 Speaker 1: Monday depends on who you ask. Some sources say Adam 563 00:32:03,720 --> 00:32:06,239 Speaker 1: was calm and spent the day in meetings hammering out 564 00:32:06,280 --> 00:32:09,720 Speaker 1: the details of his succession plan. Others say Adam was 565 00:32:09,800 --> 00:32:12,960 Speaker 1: anything but calm, that he started shouting at board members 566 00:32:12,960 --> 00:32:15,800 Speaker 1: when he realized his time was up, but by Monday 567 00:32:15,880 --> 00:32:19,920 Speaker 1: night they had all agreed Adam would go. That evening, 568 00:32:20,200 --> 00:32:23,840 Speaker 1: Adam returned to his town house near Grammercy Park. Inside 569 00:32:24,080 --> 00:32:26,680 Speaker 1: there was a group of people waiting for him, friends, 570 00:32:26,840 --> 00:32:29,880 Speaker 1: co workers, people who wanted to be there for him. 571 00:32:30,000 --> 00:32:32,880 Speaker 1: Someone described it as sitting shiva, which is the Jewish 572 00:32:32,920 --> 00:32:37,400 Speaker 1: tradition of grieving. On Tuesday morning, Adam dialed into a 573 00:32:37,400 --> 00:32:41,120 Speaker 1: conference call. There was no arguing, it was already over. 574 00:32:42,040 --> 00:32:44,960 Speaker 1: One by one, the board members voted to remove Adam 575 00:32:45,000 --> 00:32:48,520 Speaker 1: as CEO. When it was his turn, he voted against 576 00:32:48,600 --> 00:32:52,080 Speaker 1: himself too. When the company announced it, it was a 577 00:32:52,160 --> 00:32:55,760 Speaker 1: huge surprise. It's like if you watched Survivor and you 578 00:32:55,800 --> 00:32:58,360 Speaker 1: know one of the main contestants put their own light 579 00:32:58,400 --> 00:33:01,760 Speaker 1: out and voted themselves off the island. He was exiting 580 00:33:01,840 --> 00:33:05,720 Speaker 1: himself from the company he created. So Adam is out. 581 00:33:06,200 --> 00:33:09,880 Speaker 1: Rebecca resigned as well, and almost immediately it felt like 582 00:33:09,920 --> 00:33:12,360 Speaker 1: there was a move to wipe the company clean and 583 00:33:12,400 --> 00:33:16,000 Speaker 1: get rid of everything related to Adam. They closed Rebecca's 584 00:33:16,000 --> 00:33:18,920 Speaker 1: passion project We Grow, which was the school they had 585 00:33:18,960 --> 00:33:21,920 Speaker 1: opened with their own children in mind. Within just a 586 00:33:21,960 --> 00:33:24,840 Speaker 1: couple of days, several executives who were close to Adam 587 00:33:24,880 --> 00:33:29,520 Speaker 1: and Rebecca, either through family ties or friendship, left. We 588 00:33:29,560 --> 00:33:31,600 Speaker 1: Work announced they were going to close down some of 589 00:33:31,600 --> 00:33:34,800 Speaker 1: their side businesses and sell off some of their acquisitions. 590 00:33:35,760 --> 00:33:38,320 Speaker 1: Less than a week after Adam stepped down, we Work 591 00:33:38,400 --> 00:33:41,800 Speaker 1: officially withdrew its I p O office space startup We 592 00:33:41,920 --> 00:33:44,800 Speaker 1: Work has officially postponed a plan to go public. The 593 00:33:44,880 --> 00:33:47,959 Speaker 1: decision came less than a week after controversial co founder 594 00:33:48,000 --> 00:33:51,520 Speaker 1: Adam Newman stepped aside a CEO. We Work as withdrawing 595 00:33:51,560 --> 00:33:55,360 Speaker 1: its I p O prospectus. They are saying in a statement, 596 00:33:55,480 --> 00:33:57,520 Speaker 1: we have decided to postpone our I p O to 597 00:33:57,600 --> 00:34:02,040 Speaker 1: focus on our core business, the fundamental of which remain strong. 598 00:34:02,360 --> 00:34:05,640 Speaker 1: Holy Cannoly, has it been a rough quarter for I 599 00:34:05,760 --> 00:34:07,480 Speaker 1: p O? So how do you say this? Well? I 600 00:34:07,520 --> 00:34:10,080 Speaker 1: see this as math math wins. That's that's what And 601 00:34:10,120 --> 00:34:13,719 Speaker 1: the company was in a dire situation. It turned out 602 00:34:13,880 --> 00:34:15,719 Speaker 1: that we Work was going to be running out of 603 00:34:15,760 --> 00:34:19,560 Speaker 1: money in just a month or two. So We Work 604 00:34:19,640 --> 00:34:22,359 Speaker 1: was planning to do big layoffs, but they were so 605 00:34:22,520 --> 00:34:25,120 Speaker 1: cash strapped that they couldn't afford to pay the severance. 606 00:34:25,960 --> 00:34:29,120 Speaker 1: That's really awkward. You need to lay off a bunch 607 00:34:29,160 --> 00:34:32,520 Speaker 1: of workers in order to cut expenses, but you can't 608 00:34:32,520 --> 00:34:34,800 Speaker 1: even afford to do it. Yeah, I don't think we 609 00:34:34,920 --> 00:34:37,239 Speaker 1: realized how bad it was until that very point, that 610 00:34:37,280 --> 00:34:39,320 Speaker 1: the company was actually going to run out of cash 611 00:34:39,360 --> 00:34:42,319 Speaker 1: as soon as Thanksgiving if they didn't seek out some 612 00:34:42,400 --> 00:34:46,760 Speaker 1: sort of rescue package. And soft Bank came to the rescue. 613 00:34:47,280 --> 00:34:49,759 Speaker 1: They were going to give the company enough cash to 614 00:34:49,840 --> 00:34:53,399 Speaker 1: keep We Work from going belly up. But we worked 615 00:34:53,520 --> 00:34:56,799 Speaker 1: new deal with soft Bank also gave them a new valuation, 616 00:34:57,320 --> 00:34:59,920 Speaker 1: and it was much much lower than it used to be. 617 00:35:00,520 --> 00:35:03,760 Speaker 1: We Work was now valued at just eight billion dollars. 618 00:35:04,880 --> 00:35:07,520 Speaker 1: Just to put into perspective how insane that turn of 619 00:35:07,560 --> 00:35:10,919 Speaker 1: fortune is. Just a couple of months earlier, Banker said 620 00:35:10,920 --> 00:35:14,239 Speaker 1: the company could be worth a hundred billion dollars. The 621 00:35:14,280 --> 00:35:17,799 Speaker 1: IPO fiasco vaporized an amount of money equivalent to the 622 00:35:17,840 --> 00:35:23,160 Speaker 1: GDP of Latvia. And to make things even weirder, SoftBank 623 00:35:23,200 --> 00:35:25,879 Speaker 1: had invested more than ten billion dollars and we Work 624 00:35:25,920 --> 00:35:29,280 Speaker 1: at this point, So they put in ten billion dollars 625 00:35:29,680 --> 00:35:33,560 Speaker 1: to help build a company worth eight billion dollars. It's 626 00:35:33,560 --> 00:35:38,000 Speaker 1: almost as if they created negative value. Soft Bank used 627 00:35:38,080 --> 00:35:41,320 Speaker 1: this rescue package. To buy up even more of we work. 628 00:35:42,000 --> 00:35:44,320 Speaker 1: So in exchange for the rescue package, soft Bank is 629 00:35:44,360 --> 00:35:47,520 Speaker 1: set to own eighty percent of we work. Remember, they 630 00:35:47,600 --> 00:35:49,680 Speaker 1: used to only earn less than a third, so right 631 00:35:49,719 --> 00:35:52,640 Speaker 1: now they've doubled down on their investment. They basically how 632 00:35:52,760 --> 00:35:54,680 Speaker 1: we work, and they're in. The driver is sayed about 633 00:35:54,680 --> 00:35:58,600 Speaker 1: the company's future. So Adams out and Masa is in. 634 00:35:59,400 --> 00:36:02,120 Speaker 1: SoftBank owns a majority of we work at this point. 635 00:36:02,719 --> 00:36:05,280 Speaker 1: And the most notable thing about the soft Maank bailout 636 00:36:05,600 --> 00:36:08,760 Speaker 1: was that it came with an extremely generous exit package 637 00:36:08,840 --> 00:36:12,440 Speaker 1: for Adam himself. He had already stepped down a CEO, 638 00:36:12,640 --> 00:36:15,000 Speaker 1: and now he was agreeing to leave the board and 639 00:36:15,080 --> 00:36:18,600 Speaker 1: give up his influence over the company. In exchange, he 640 00:36:18,680 --> 00:36:23,360 Speaker 1: was given a lot of money. It made employees pretty angry. 641 00:36:23,520 --> 00:36:25,359 Speaker 1: One of them even told me they considered it a 642 00:36:25,440 --> 00:36:29,320 Speaker 1: platinum parachute. So in exchange for walking away, Adams getting 643 00:36:29,320 --> 00:36:32,640 Speaker 1: a one point seven billion dollar package, and then probably 644 00:36:32,680 --> 00:36:35,279 Speaker 1: the most outrageous bit to everyone was a hundred and 645 00:36:35,360 --> 00:36:38,400 Speaker 1: eighty five million dollar consulting faith that he was just 646 00:36:38,520 --> 00:36:42,000 Speaker 1: getting cash, straight up cash, straight up cash, and employees 647 00:36:42,000 --> 00:36:46,120 Speaker 1: were pissed. They felt like Adam was walking away with 648 00:36:46,120 --> 00:36:49,520 Speaker 1: this chance at more than a billion dollars and they 649 00:36:49,640 --> 00:36:52,279 Speaker 1: were likely to get laid off. It was just, you know, 650 00:36:52,320 --> 00:36:55,120 Speaker 1: they were fuming. On Slack. There was this channel called 651 00:36:55,160 --> 00:36:58,120 Speaker 1: i PO Talking News where employees had been venting about 652 00:36:58,120 --> 00:37:00,919 Speaker 1: how everything had been going wrong, and we actually saw 653 00:37:01,000 --> 00:37:03,439 Speaker 1: some messages of it and ran a story about it. Yeah, 654 00:37:03,440 --> 00:37:07,560 Speaker 1: we reported that a news article about Adam's golden parachute. 655 00:37:07,640 --> 00:37:10,839 Speaker 1: True more than a hundred thumbs down emojis from employees 656 00:37:11,280 --> 00:37:14,040 Speaker 1: and workers were just really unhappy that we Work couldn't 657 00:37:14,120 --> 00:37:16,359 Speaker 1: even afford to lay them off. But then this guy, 658 00:37:16,520 --> 00:37:19,480 Speaker 1: their former CEO, was walking away with such a bundle 659 00:37:19,560 --> 00:37:23,080 Speaker 1: of cash. One someone posted on Slack, so we're too 660 00:37:23,080 --> 00:37:26,040 Speaker 1: broke to pay employees severance, but Adam gets two hundred million, 661 00:37:26,400 --> 00:37:28,839 Speaker 1: And then another posted a photo of the orphan from 662 00:37:28,840 --> 00:37:31,920 Speaker 1: Oliver Twist with the caption please Massa Yoshi's son, can 663 00:37:31,960 --> 00:37:35,560 Speaker 1: I have some severance? You know? To me? After spending 664 00:37:35,640 --> 00:37:38,680 Speaker 1: years covering we Work, which then became the Wee Company 665 00:37:38,719 --> 00:37:41,360 Speaker 1: and has all these slogans about being battered together and 666 00:37:41,400 --> 00:37:43,920 Speaker 1: being part of a team. It was this kind of 667 00:37:44,000 --> 00:37:47,920 Speaker 1: dark twist at the end that after Adam burned everything 668 00:37:48,000 --> 00:37:50,680 Speaker 1: and set the company kind of in flames. He walks 669 00:37:50,719 --> 00:37:53,720 Speaker 1: away with all this, all these rewards just for himself. 670 00:37:53,960 --> 00:37:56,279 Speaker 1: It really felt like it went against all the things 671 00:37:56,320 --> 00:37:59,120 Speaker 1: that he had been talking about on stage for so long. Yeah, 672 00:37:59,160 --> 00:38:02,400 Speaker 1: he had created such a big, strong sense of community, 673 00:38:02,800 --> 00:38:05,759 Speaker 1: and then really, instead of it all being about a way, 674 00:38:05,760 --> 00:38:09,520 Speaker 1: it all became about him. So the We Work I 675 00:38:09,600 --> 00:38:13,000 Speaker 1: PO had made a complete one eight. It started out 676 00:38:13,040 --> 00:38:18,759 Speaker 1: as this exciting, hopeful event that everyone We Work employees, bankers, 677 00:38:18,920 --> 00:38:21,839 Speaker 1: investors was going to get rich off of, and in 678 00:38:21,920 --> 00:38:24,400 Speaker 1: just a couple of months it fell to the ground 679 00:38:24,440 --> 00:38:28,120 Speaker 1: in a fiery crash, and the only person who seemed 680 00:38:28,160 --> 00:38:31,240 Speaker 1: to walk away with a reward was also the person 681 00:38:31,600 --> 00:38:36,560 Speaker 1: arguably most at fault, Adam. All of a sudden, Adam 682 00:38:36,600 --> 00:38:41,680 Speaker 1: had become a legend, someone people recognized and mocked and impersonated. 683 00:38:42,360 --> 00:38:45,360 Speaker 1: Wanted posters with his face on them, even appeared on 684 00:38:45,480 --> 00:38:48,120 Speaker 1: lamp posts around New York City. I went to a 685 00:38:48,120 --> 00:38:50,399 Speaker 1: Halloween party later that month and there were floor Adam 686 00:38:50,440 --> 00:38:53,360 Speaker 1: Newman's walking around. So one thing, they all weren't wearing 687 00:38:53,400 --> 00:38:56,840 Speaker 1: his shoes, because he's pretty well known. Her walking around barefoot. 688 00:38:57,320 --> 00:38:59,719 Speaker 1: Um three of them had wigs. One just had the 689 00:38:59,760 --> 00:39:02,240 Speaker 1: Adam head down pat and all of them were wearing 690 00:39:02,280 --> 00:39:04,799 Speaker 1: these T shirts with the fund made by Weight in 691 00:39:04,840 --> 00:39:08,279 Speaker 1: different colors that he's been photographed presenting. A couple of 692 00:39:08,320 --> 00:39:11,000 Speaker 1: them had a cheeky blazer on top, and two had 693 00:39:11,520 --> 00:39:14,200 Speaker 1: soft Bank checks stuffed in the top pocket. Oh my god, 694 00:39:14,239 --> 00:39:17,000 Speaker 1: I remember seeing photos on Twitter of people dressed up 695 00:39:17,000 --> 00:39:19,120 Speaker 1: as Adam Newman for Halloween. It was just that timing 696 00:39:19,120 --> 00:39:21,319 Speaker 1: where it was a big news story right in the 697 00:39:21,320 --> 00:39:24,000 Speaker 1: middle of October. Yeah, I posted a photo on Twitter 698 00:39:24,040 --> 00:39:28,480 Speaker 1: that Bloomberg TV actually ended up using. Adam had turned 699 00:39:28,520 --> 00:39:32,280 Speaker 1: into a huge joke. And what about Massa, the person 700 00:39:32,320 --> 00:39:35,680 Speaker 1: who once believed in him so earnestly? What was he 701 00:39:35,760 --> 00:39:39,920 Speaker 1: thinking about all this? About a week later, at an 702 00:39:39,920 --> 00:39:43,680 Speaker 1: earnings presentation for soft Bank, Massa stood on stage and 703 00:39:43,719 --> 00:39:48,200 Speaker 1: talked about Adam. He wasn't usually candid. He said he 704 00:39:48,239 --> 00:40:00,400 Speaker 1: had made a mistake in judgment, that that evil. He 705 00:40:00,480 --> 00:40:04,520 Speaker 1: has many strengths and flaws all mixed together. I probably 706 00:40:04,560 --> 00:40:07,800 Speaker 1: focused too much on his strengths. That's something I regret 707 00:40:07,920 --> 00:40:11,440 Speaker 1: very much. He had many negative sides, and I overlooked 708 00:40:11,480 --> 00:40:15,360 Speaker 1: many of them. I regret that, especially the governance problems, 709 00:40:15,840 --> 00:40:18,480 Speaker 1: so Massa said publicly that he had ignored many of 710 00:40:18,520 --> 00:40:22,520 Speaker 1: Adam's shortcomings, and he regretted putting so much trust and 711 00:40:22,600 --> 00:40:26,680 Speaker 1: money in Adam. This was a moment when so many 712 00:40:26,680 --> 00:40:30,560 Speaker 1: people started asking what kind of person is Adam Newman? 713 00:40:31,239 --> 00:40:35,080 Speaker 1: Was he an evil genius fooling everyone all along, a 714 00:40:35,160 --> 00:40:38,680 Speaker 1: failed visionary who couldn't make it work, or just some 715 00:40:38,840 --> 00:40:43,000 Speaker 1: guy who lucked into becoming a billionaire and who was 716 00:40:43,040 --> 00:40:45,800 Speaker 1: to blame for all this wreckage. A lot of people 717 00:40:45,800 --> 00:40:48,759 Speaker 1: thought it was Adam's fault, but others pointed the finger 718 00:40:48,840 --> 00:40:51,800 Speaker 1: at banks and investors for giving him boatloads of money 719 00:40:51,880 --> 00:40:56,439 Speaker 1: and never holding him accountable. In the next episode, will 720 00:40:56,520 --> 00:40:59,080 Speaker 1: look at the shattered ruins of we works, I p O, 721 00:40:59,280 --> 00:41:05,080 Speaker 1: disaster layoffs, toxic phone booths, another brutal battle between Adam 722 00:41:05,160 --> 00:41:09,440 Speaker 1: and Masa, and a worldwide pandemic that cast doubt on 723 00:41:09,520 --> 00:41:20,920 Speaker 1: the entire concept of coworking. That's next time on Foundering. 724 00:41:28,360 --> 00:41:31,880 Speaker 1: Foundering is hosted by me Ellen Hewitt. Sean When is 725 00:41:31,920 --> 00:41:35,960 Speaker 1: our executive producer, by Aquaba is our associate producer. Ray 726 00:41:36,080 --> 00:41:39,680 Speaker 1: Mondo makes the show today. Mark Million and Vandermay and 727 00:41:39,760 --> 00:41:43,479 Speaker 1: Alistrabar are our story editors. Francesco Levi is the head 728 00:41:43,520 --> 00:41:46,640 Speaker 1: of Bloomberg Podcasts. Be sure to subscribe, and if you 729 00:41:46,640 --> 00:41:50,000 Speaker 1: like our show, leave a review. Most importantly, tell your 730 00:41:50,000 --> 00:41:51,520 Speaker 1: friends see you next time.