Speaker 1: Let me take you back to spring. It was a
Speaker 1: simpler time in Silicon Valley when the world's most valuable
Speaker 1: startups seemed poised to make it big. Uber Lift and
Speaker 1: Pinterest We're all going public, and next in line was
Speaker 1: we Work. We Work was valued at forty seven billion dollars,
Speaker 1: and investment banks were saying that the price tag could
Speaker 1: go even higher during the I p O. That meant
Speaker 1: that on paper, we Works co founder and CEO Adam
Speaker 1: Newman could be worth as much as ten billion dollars.
Speaker 1: His company was the most valuable startup in America. Another
Speaker 1: tech unicorn has filed to go public. This time it
Speaker 1: is we Work, now known as the we Company. It
Speaker 1: has announced that it has confidentially submitted its paperwork to
Speaker 1: the SEC for an I p O. We Worked has
Speaker 1: revolutionized the leasing of office space. Co founder and CEO
Speaker 1: Adam Newman, as well as strategic partner who else but
Speaker 1: actor Ashton Kutcher ten billion dollars invest in this company.
Speaker 1: It's the second largest venture capital investment of all time.
Speaker 1: These may have been some of the best times of
Speaker 1: Adam's adult life. He was getting photographed for magazine covers,
Speaker 1: grinning at the camera posing on office furniture and bounding
Speaker 1: up flights of stairs. In TV interviews, he talked about
Speaker 1: how we Work had made billions in revenue and was
Speaker 1: doubling in size every year. They were helping Fortune five
Speaker 1: companies make their employees happier by building them better, beautiful
Speaker 1: and inspiring offices. If the I p O went off
Speaker 1: as planned, Adam We Works employees and we Works bankers
Speaker 1: would become rich, very rich. And for a startup, going
Speaker 1: public is the ultimate milestone. Very few companies make it,
Speaker 1: and it can take years to get there. And IPO
Speaker 1: means you're established, You've arrived in the halls of global business.
Speaker 1: That August, it looked like Adam Newman was about to
Speaker 1: make it very soon. But then in the span of
Speaker 1: one month, everything changed. The scrutiny that fall in the
Speaker 1: lead up to we Works I p O quickly turned
Speaker 1: the company into a laughing stock exhibit a of the
Speaker 1: over hyped money losing, conflict of interest written stereotype of
Speaker 1: tech startups. Suddenly, a few investors were willing to buy
Speaker 1: a stock and we Work had no choice but to
Speaker 1: cancel its I p O office space startup. We Work
Speaker 1: has officially postponed a plan to go public. We work
Speaker 1: as having trouble finding investor demand at one third of
Speaker 1: the forties seven billion dollar price tag that soft bank
Speaker 1: assigned in its latest funding round. That big markdown could
Speaker 1: spell big trouble for soft banks that work a potential
Speaker 1: investor in and we work. We think this thing is
Speaker 1: an absolute mess. I don't want work. I wish they
Speaker 1: would just go away. The real concern is Adam Newman,
Speaker 1: the CEO. Everything is on him. His performance will determine this.
Speaker 1: It was a disaster and almost everyone was blaming it
Speaker 1: on Adam. People started saying that his biggest investors wanted
Speaker 1: him gone, and we're meeting without him to plan his exit.
Speaker 1: And in the midst of all this chaos, someone snapped
Speaker 1: a photo of Adam walking down the street in Manhattan.
Speaker 1: We know this because it was posted on Reddit. In
Speaker 1: the photo, he's outside on the sidewalk. He's wearing a
Speaker 1: gray T shirt and black jeans. He's tall six ft five,
Speaker 1: His long brown hair is blowing in the wind. Bizarrely,
Speaker 1: he's barefoot, and remember he's walking on a sidewalk in Manhattan.
Speaker 1: It all looks a little unhinged, but I guess you
Speaker 1: could also say it's on brand with his unconventional ways.
Speaker 1: More on that later anyway. In the photo, he's midstride
Speaker 1: holding a cell phone up to his ear. It's hard
Speaker 1: to tell if he's angry or smiling. Was he trying
Speaker 1: to sweet talk an investor into letting him keep his job.
Speaker 1: Was he venting to a friend. According to someone who
Speaker 1: spoke to him the day that photo was taken, Adam
Speaker 1: found the prospect of leaving WE Work unimaginable. He was
Speaker 1: determined to stay on at the company he had spent
Speaker 1: the last decade building into a global empire. That day
Speaker 1: was a Friday. Over the weekend, Adam and his board
Speaker 1: members debated whether he should step down, a move that
Speaker 1: would cut him off from his company but just might
Speaker 1: save It's I p O. Depending on who you ask,
Speaker 1: Adam either agreed calmly that he should go, or he
Speaker 1: shouted at his investors when he realized he was being
Speaker 1: forced out. What's clear is that by Monday night, the
Speaker 1: debate was over. The Next morning, Adam dialed into a
Speaker 1: conference call with his board of directors. At this point
Speaker 1: it was just a formality. One by one, the board
Speaker 1: members voted to remove Adam as CEO. When it was
Speaker 1: his turn, he voted against himself too. So what happened
Speaker 1: with We Work? How did Adam Newman get to the
Speaker 1: top of the world and how did he fall so
Speaker 1: quickly to the point where he was roaming the streets
Speaker 1: of Manhattan barefoot? Then, as if he were in some
Speaker 1: Shakespearean drama, he voted to oust himself from the job
Speaker 1: he loved. I'm Ellen Hewitt, and you're listening to Foundering,
Speaker 1: a new podcast from Bloomberg Technology. In this series, we're
Speaker 1: going in depth to chronicle the most memorable dramas in
Speaker 1: Silicon Valley. This season, we're telling the legendary story of
Speaker 1: Adam Newman and his controversial company We Work. You might
Speaker 1: have read the news describing how it all went wrong.
Speaker 1: I wrote a lot of those stories for the past
Speaker 1: four years I've been reporting on We Work for Bloomberg News,
Speaker 1: and in the blur of it all, I think I
Speaker 1: forgot how crazy this all was, how crazy it all
Speaker 1: still is. Remember we Work as just a company that
Speaker 1: rents out short term office space. You pay to access
Speaker 1: at desk and we work inside. You sit next to
Speaker 1: people who work at sock companies or pr agencies or
Speaker 1: AI startups. Maybe you discuss the weather with each other
Speaker 1: by the keg at the office happy hours. How this
Speaker 1: turned into the buzziest technology startup of our time, only
Speaker 1: to come crashing down in a matter of weeks. You've
Speaker 1: all heard about other famous corporate collapses like Lehman Brothers
Speaker 1: and Enron. In the tech world we work might very
Speaker 1: well be remembered the same way. It's a story that
Speaker 1: captures the last decade of the global economy, free money,
Speaker 1: unrelenting growth, and few consequences for bad behavior. I've gone
Speaker 1: back and re reported this story from scratch. Over the
Speaker 1: course of the season, you'll hear from people who lived, worked,
Speaker 1: and partied with Adam. Will play you past interviews with
Speaker 1: the man himself, who sat down with me on multiple occasions,
Speaker 1: including one that took place just a few months before
Speaker 1: it all collapsed. And you'll hear recordings of internal staff
Speaker 1: meetings that we work that were never meant to be
Speaker 1: heard outside the company. Over the course of the show,
Speaker 1: I think you're going to find that the real story
Speaker 1: is a little different from what you think it is.
Speaker 1: But first, I want to tell you about Adam's life
Speaker 1: right up until the founding of We Work. Let me
Speaker 1: start from the very beginning, when Adam Newman was just
Speaker 1: another kid at a kibbutz in Israel, dreaming of the
Speaker 1: day he'd get rich in America. So you know, first
Speaker 1: of all, guys, thank you for having us, and for
Speaker 1: all of you have ever been to Rework. Thank you.
Speaker 1: So I actually grew up in a kibbutz. Who here
Speaker 1: knows what the kibbutz is raise your hand. Wow, very
Speaker 1: educated in crowd. So there's a few things to know
Speaker 1: about Adam Newman as a kid. Adam was born in Israel.
Speaker 1: He struggled with dyslexia. His parents divorced when he was seven.
Speaker 1: By his count, he moved thirteen times growing up. He
Speaker 1: says he had a pretty scattered childhood, and when he
Speaker 1: was eleven, his family moved to kibbutz near arm in
Speaker 1: southern Israel, and he points at this as the thing
Speaker 1: that originally inspired We Work. So for those of you
Speaker 1: who don't know what kibbutch is a failed social experiment
Speaker 1: that happened in Israel. As a teenager and as a child,
Speaker 1: it was the most unbelievable place to grow up. I
Speaker 1: was with all my friends from morning till night. We
Speaker 1: ate in the same dining hall, which of to the
Speaker 1: same school, and then we all did a homework together,
Speaker 1: or we didn't do a homework together. Was awesome. A
Speaker 1: kibbuttz is a collective community in Israel. Usually they have
Speaker 1: a few hundred members. Everyone lives on the same compound. Traditionally,
Speaker 1: the members pool their money, so for example, if you're
Speaker 1: a doctor who works in town, you donate your entire
Speaker 1: salary to the kibbutz. Hundreds of these communities have been
Speaker 1: built in Israel in the last century. They were part
Speaker 1: of a movement, a movement to settle Israel with these socialist,
Speaker 1: utopian communities. Adam likes to call we work it kibbutz
Speaker 1: two point oh or a capitalist kibbutz. So if you're
Speaker 1: a wee Work member, you've got to work every day
Speaker 1: alongside other entrepreneurs and small businesses. Sure, you might be
Speaker 1: trying to get rich, but you're also part of a movement,
Speaker 1: the we generation. If you squint hard enough at a
Speaker 1: wee Work I guess you can see a reflection of
Speaker 1: kibbutz life. When you walk into a we Work office,
Speaker 1: you notice all these communal resources. The brightly lit common
Speaker 1: spaces with couches, plants, and coffee tape ables. There's kimbucha
Speaker 1: and beer on tap. All of this is shared, much
Speaker 1: like a kibbutz might have a swimming pool, a mess hall,
Speaker 1: a pantry, daycare available for all its members. I've covered
Speaker 1: we work for the last four years, so I've heard
Speaker 1: Adam emphasize his kibbutz roots again and again. He says
Speaker 1: it on stage, He's quoted in magazines talking about it,
Speaker 1: and I always wondered if it really did inspire we
Speaker 1: work or if it was just a convenient talking point. Recently,
Speaker 1: I was at a party and I met someone who
Speaker 1: also grew up on kibbutz near Arm. She was a
Speaker 1: few years younger than Adam. She described him as a
Speaker 1: kid who served and had long hair that he sometimes
Speaker 1: wore in a ponytail. She told me that she remembered
Speaker 1: him as part of this group of older, rowdy boys
Speaker 1: who often caused trouble on the Kibbutz. She recalls them
Speaker 1: sneaking snacks out of the dining hall and making mess.
Speaker 1: She said that they would break into the swimming pool
Speaker 1: and go skinny dipping. Of course, this made me even
Speaker 1: more curious about Adam's kibbutz life. I wanted to know
Speaker 1: what was he like as a kid. Was he like
Speaker 1: the Adam Newman portrayed and all those headlines last year, reckless, aggressive, charming,
Speaker 1: maybe a little delusional. And was the kibbutz he lived
Speaker 1: on anything like a wee work? So I called my
Speaker 1: colleague Kobe ben Miller, who's based in Tel Aviv, and
Speaker 1: I asked him to drive a couple hours south to
Speaker 1: visit Adam's childhood kibbutz. So we're pulling up now to
Speaker 1: it's uh winter in southern Israel, so blue sky is
Speaker 1: a bit of clouds, but a light sweater will do. Um.
Speaker 1: We're pulling up through here in the entrance there's um
Speaker 1: some palm trees. The terrain is a desert, doesn't rocky
Speaker 1: desert um Today Kibbutz near arm is right on the
Speaker 1: border with Gaza. There was rocket fire just a week
Speaker 1: before our reporter Kobe came in. Traditionally, every kibbutz has
Speaker 1: a few ways of making money, like growing crops or
Speaker 1: selling goods. Well, the main income is really the factory,
Speaker 1: so silvero and agriculture. We have mainly wheat. We have potatoes.
Speaker 1: We have a nice orchard. Now we're we have planted avocados.
Speaker 1: Sooner we're going to plant bananas. Cob We met up
Speaker 1: with a former school teacher who was his tour guide
Speaker 1: for the day. Well, my name is Micha Benny Little.
Speaker 1: I've been a member of the Ski Boots for over
Speaker 1: fifty fifty five years and the vivid. Adam's mother lived
Speaker 1: in one of these buildings here one of their partments.
Speaker 1: Adam's mother was an oncologist and she worked at a
Speaker 1: nearby hospital. She also did shifts as an on call
Speaker 1: doctor for the Kibbutz. And in a crazy coincidence, not
Speaker 1: only did me have remember Adam, he actually taught him
Speaker 1: in school. I was his home room teacher for three
Speaker 1: months before they left, so he was in my class.
Speaker 1: He was always the center of attention. He was very restless.
Speaker 1: It was very I mean the girls in his class
Speaker 1: with the was right, but he was a guy with
Speaker 1: the already that age, very tall. Yes he was good.
Speaker 1: Look yes, So miha to Kobe around the Kibbutz, and
Speaker 1: they asked the residents what they thought about we work.
Speaker 1: Shout out Bloomberg, Bloomberg, Kiloomberg, podcasting, we were okay, did
Speaker 1: you hear that? It's a little subtle, But when Kobe
Speaker 1: said we work the Kibbutz resident kind of scoffed. Many
Speaker 1: of the people of near Arm were sick of talking
Speaker 1: about the kibbutz is most famous resident in their minds.
Speaker 1: He hadn't even lived there that long for for about
Speaker 1: two hours, he said. To be fair, Adam's family actually
Speaker 1: lived on Kibbutz near Arm for about four years in
Speaker 1: the nineties, so more than two hours and at a
Speaker 1: pretty formative age for Adam. But to the Kibbutz members,
Speaker 1: most of whom have spent their whole lives living and
Speaker 1: working on the Kibbutz, Adam was an outsider. Here's Kobe
Speaker 1: meeting another woman who remembers Adam from when she was younger. Kobe,
Speaker 1: why ask your question? She asked Kobe to stop recording,
Speaker 1: and she told him that other kids from the school
Speaker 1: used to beat Adam up. In her words, the kids
Speaker 1: used to smack him around because he was an outsider
Speaker 1: coming in from the city who thought of himself as
Speaker 1: a big shot on the Kibbutz. Then Miha, Kobe's guide
Speaker 1: cuts in. He tells Kobe Cee, I told you it's
Speaker 1: not easy to break into the Kibbutz. This feels poignant
Speaker 1: to me. Whenever Adam talks about his childhood years on
Speaker 1: the Kibbutz, he describes it as a happy time. But
Speaker 1: the people who live on the Kibbutz remember how he
Speaker 1: stuck out and how he got beat up. Here's me
Speaker 1: Hi again. I think it took time, I think for
Speaker 1: him to to integrate into very conservative place. Very why
Speaker 1: do you say conservatives in general? Kibbutz kids were not
Speaker 1: very open to people who came from from outside. I mean,
Speaker 1: but but basically to have somebody enter their society, entered
Speaker 1: there in a group, you know, it was I think
Speaker 1: it took him time to to integrate. There's another reason
Speaker 1: that Adam's family stuck out at the Kibbutz. They were renters. Basically,
Speaker 1: there are two kinds of people who lived on the Kibbutz,
Speaker 1: members and renters. If you were a member, you put
Speaker 1: of your salary into the kibbutz, and you were probably
Speaker 1: a lifetime resident, maybe even born on the Kibbuttz itself.
Speaker 1: Adam's family, on the other hand, were renters. As a renter,
Speaker 1: you paid in order to live on the land and
Speaker 1: take part in the kibbutz offerings like childcare and meals
Speaker 1: at the dining hall, a model kind of similar to
Speaker 1: a we work actually, but more importantly to Adam experience,
Speaker 1: renters on the kibbutz were seen as temporary and that
Speaker 1: would have marked Adam socially. Renters were almost seen as outsiders.
Speaker 1: This reminded me of something Adam told me last year
Speaker 1: when I was interviewing him from a magazine story. I
Speaker 1: was writing many different cities, so I grew up in
Speaker 1: thirteen different places. Growing up as a child. When you
Speaker 1: moved to the place, it's very difficult because child are tough.
Speaker 1: It's always hard fitting it. So there's always a big
Speaker 1: craving for community. This is a surprisingly vulnerable thing for
Speaker 1: him to say that as a kid he had this
Speaker 1: big craving for community and that he struggled sometimes to
Speaker 1: find it. Anyway, let's go back to the Kibbutz. On
Speaker 1: this tour, Kobe stopped in to look at the old
Speaker 1: dining hall, and that's the dining room of the kot.
Speaker 1: That's where Adam, that's where he ate his meals and
Speaker 1: in this in this dinue. So now we're walking into
Speaker 1: the coworking space. Yeah, the coworking place. Yeah. I hope
Speaker 1: it's somebody can open it for me, because there's this
Speaker 1: dining hall isn't serving food anymore, in part because at
Speaker 1: this Kibbutz and others it's been more and more difficult
Speaker 1: economically to keep offering shared meals. So a few years
Speaker 1: ago they converted the hall into a coworking space. It
Speaker 1: does actually kind of resemble that we work, doesn't it.
Speaker 1: They could have turned it into anything, and they decided
Speaker 1: to make it a coworking space. We went to the
Speaker 1: Kibbutz for two reasons. We wanted to understand how strong
Speaker 1: Adam's connection was to the Kibbutz. People definitely remembered him,
Speaker 1: but to some he was an interloper, someone just passing through.
Speaker 1: And the second reason we went to the Kibbutz was
Speaker 1: to learn how a place like that actually works, to
Speaker 1: see if it could be shaped into a fast growing
Speaker 1: tech startup without losing its core values. Parts of traditional
Speaker 1: Kibbutz life seemed pretty extreme by American standards. There was
Speaker 1: no personal ownership. You can't show off with a new
Speaker 1: car because no one owned a car. You could borrow
Speaker 1: one of the kibbutz cars by signing up on a sheet.
Speaker 1: Even clothing circulated. Kids wore hand me downs distributed by
Speaker 1: the Kibbutz, and when they outgrew them, they'd give them
Speaker 1: back to be passed on to other kids. And remember,
Speaker 1: members gave all their income to the Kibbutz. That money
Speaker 1: was redistributed to everyone equally, no matter what you earned.
Speaker 1: This part of the system seemed to bother Adam as adults, though,
Speaker 1: I remember looking at the kibbutz and saying, so in
Speaker 1: the kiboats, everybody makes the same amount of money. So
Speaker 1: one of my friend's dad's was the head of the factory.
Speaker 1: He worked sixteen hours a day, and other friend's dad
Speaker 1: was the head of the gardening, he worked six hours
Speaker 1: a day. They both made the same amount of money.
Speaker 1: And it's interesting because later when he builds we work.
Speaker 1: This is the part of kibbutt's life that Adam ultimately rejects.
Speaker 1: So even though for us as kids it was amazing,
Speaker 1: I always remember thinking that it's not fair that someone's
Speaker 1: effort is not getting rewarded based on what he puts in.
Speaker 1: Because remember that clip earlier, So for those of you
Speaker 1: who don't know what kibuch is a failed social experiment
Speaker 1: that happened in Israel. In Adam's mind, the kibbutz was
Speaker 1: a failed social experiment, but we work was not going
Speaker 1: to fail because he would change the broken economic model
Speaker 1: of kibbutz life to make it more fair so that
Speaker 1: people doing more work got more money. But I think
Speaker 1: a little bit of a capitalistic kiboats on the one hand.
Speaker 1: Community on the other hand, still you you eat what
Speaker 1: you kill, and you get what it is that you did,
Speaker 1: and every person is allowed to have a different level
Speaker 1: of a desire and a different level of of what
Speaker 1: they want to put effort into whatever it is they're doing.
Speaker 1: So that's how kibbutz two point oh and capitalist kibbutzs
Speaker 1: get coined. Adam uses these terms all the time when
Speaker 1: explaining what we work is. It's funny because people who
Speaker 1: grew up on kibbutz has told me that those communities
Speaker 1: are so socialist that a capitalist kibbutz just doesn't make sense.
Speaker 1: Here's what struck me about this notion though it kibbutz
Speaker 1: is more than just a plot of land. It's this
Speaker 1: powerful vision, this myth of utopia for decades, volunteers from
Speaker 1: around the world traveled to Israel to work on a
Speaker 1: kibbutz and bring those values back home with them. It
Speaker 1: has this meaning bigger than itself, a set of beliefs
Speaker 1: and values and purpose to make we work. Adam took
Speaker 1: the most romantic parts of the kibbutz and reshaped them
Speaker 1: for a millennia audience. You can hear it when he
Speaker 1: talks about the so called We Generation. The members might
Speaker 1: speak a different language and dress a little differently, but
Speaker 1: inside they're all parts of the Switch generation. They're all
Speaker 1: part of the awakening, and they they all feel the same.
Speaker 1: They're global citizens of the world. They want to work
Speaker 1: to create their life's work. In his mind, we work
Speaker 1: as a place that values community but also entrepreneurship, where
Speaker 1: people hold onto their own money and don't share it
Speaker 1: around too much. He had that idea early on. Maybe
Speaker 1: the seed was already planted when he was a kid
Speaker 1: watching his friends dad's it's that eat what you kill
Speaker 1: policy that years later will make Adam much wealthier than
Speaker 1: any of his employees. And at the end of it all,
Speaker 1: when Adam is set to walk away with more than
Speaker 1: a billion dollars, while thousands of we Work staff are
Speaker 1: laid off. It'll leave everyone questioning whether he ever believed
Speaker 1: in the power of we, of being better together, or
Speaker 1: if he just wanted to get rich. We'll be right back.
Speaker 1: A few years after leaving the Kibbutz Adam moved to
Speaker 1: New York City. He started as a student at Baruke College.
Speaker 1: He was twenty two years old, a little older than
Speaker 1: his American classmates, but he embraced all that college had
Speaker 1: to offer. I spent my first two years in Baruq,
Speaker 1: studying a little bit and partying a lot. I majored
Speaker 1: in entrepreneurship and marketing, and I thought the best way
Speaker 1: to practice what I learned at school, because we talked
Speaker 1: a lot about mentorship, was to practice with every bouncer,
Speaker 1: convincing him to let me in the club, every promoter,
Speaker 1: convincing him to give me free drinks, and basically hitting
Speaker 1: on every girl in the city. It was while Adam
Speaker 1: was in college that he dreamed of his first business.
Speaker 1: I came up with a genius idea. Was gonna be
Speaker 1: a women's high il shoe with a collapsible hill. And
Speaker 1: the point was that as the women of New York
Speaker 1: City navigate through the urban jungle. They can walk on
Speaker 1: flat still be comfortable, and then go to hills and
Speaker 1: be fashionable. I thought it was sort of a Hunger
Speaker 1: Games meet sex in the city come together. So he's
Speaker 1: describing a high heel shoe where the heel folds down
Speaker 1: and the shoe becomes flat. It doesn't totally make sense
Speaker 1: to me, because obviously a two with a heel has
Speaker 1: a completely different shape from a shoe that's flat. The
Speaker 1: first sample came in and to our astonishment, one of
Speaker 1: our employees fingers almost got cut off when that hill collapse.
Speaker 1: Very quickly, I realized I know nothing about this category
Speaker 1: and this is definitely not my passion. Okay, so not
Speaker 1: passionate about women's shoes. Also probably no firsthand knowledge there.
Speaker 1: Adam then founded his second company. It's a baby clothing
Speaker 1: company that still exists called Crawlers spelled with the K.
Speaker 1: This one I knew was gonna make it big. Crawlers
Speaker 1: was baby pants with kneepads on them to protect the
Speaker 1: baby's knees for the crawling age. The tagline is pretty funny.
Speaker 1: Just because they don't tell you doesn't mean they don't hurt.
Speaker 1: And Adam dropped out of college during his last year
Speaker 1: to work on crawlers. All this tape that I've played
Speaker 1: for you over the last few minutes, it's actually from
Speaker 1: a speech Adam gave at Brute College in ten He
Speaker 1: was the commencement speaker. He was also his own graduation.
Speaker 1: He got his diploma more than a decade after he
Speaker 1: dropped out to pursue this baby clothing business. Of course,
Speaker 1: the business was a tremendous failure. For the next five years,
Speaker 1: I slaved. I worked so hard. I thought it was
Speaker 1: smart to drop out of school when I only had
Speaker 1: four credits left. Not a smart move, and I left
Speaker 1: to follow up business that I wasn't passionate about. At
Speaker 1: the peak of our success, we did two million sales,
Speaker 1: but we had three million in expenses, and every single
Speaker 1: month I didn't know how we're gonna make payroll m
Speaker 1: spending more than you make. This won't be the last
Speaker 1: time Adam has this problem, but he chalks it up
Speaker 1: to a lack of passion for baby clothing. To be clear,
Speaker 1: he also didn't have any babies yet. The crawlers business
Speaker 1: wasn't having much success, but around this time he would
Speaker 1: meet the two people who would become his move most
Speaker 1: important partners for the next decade. The first one is
Speaker 1: Rebecca Paltrow. She's Gwyneth Paltrow's cousin. She was an aspiring
Speaker 1: actress at the time and had studied Buddhism and been
Speaker 1: a trader on Wall Street. By the time I was
Speaker 1: twenty eight, five years after I arrived to New York City,
Speaker 1: I was thirty pounds lighter than today. I was smoking
Speaker 1: a pack of cigarettes a day. My hands were shaking violently,
Speaker 1: and I was confused and lost. Thank God, at this moment,
Speaker 1: the universe intervened and introduced me to Rebecca. Rebecca, wait
Speaker 1: till you're here. Wait till you're here. Rebecca told him
Speaker 1: one thing. If you're working on something you're not passionate about,
Speaker 1: you're wasting your time. Rebecca went on the first stage
Speaker 1: with me, and within five minutes. Now I say five
Speaker 1: minutes to be nice, but it truly took ten seconds.
Speaker 1: She looked me straight in the eye and she said, you,
Speaker 1: my friend, are full of ship. It's funny because Adam
Speaker 1: is implying in this speech that he's changed. But all
Speaker 1: these years after Rebecca supposedly said this to Adam, I
Speaker 1: wonder is he still full of shit? Did he mean
Speaker 1: it when he gave speeches about the value of community,
Speaker 1: the value of sharing, the importance of being part of
Speaker 1: something greater than yourself, all these values that he supposedly
Speaker 1: learned from the Kibbutz and has now applied to his company.
Speaker 1: I asked several people who worked with Adam whether they
Speaker 1: think he believes what he says, and even they can't
Speaker 1: come to a consensus. Some of them say absolutely, he
Speaker 1: believed every word of it. Others think that it was
Speaker 1: all for show. Here are a couple of them talking
Speaker 1: about this quality, this ability of his to say just
Speaker 1: the right thing. These people asked us not to broadcast
Speaker 1: their voices because they signed nondisclosure agreements related to we work.
Speaker 1: So we had some Bloomberg colleagues read them out loud
Speaker 1: for us. Adam is a great salesman, and so you're
Speaker 1: always skeptical when you leave the room with Adam as
Speaker 1: how much of what he said is belief or not.
Speaker 1: He understands what drives people, and everyone's different. He just
Speaker 1: knew what to harp on and each meaning differently. He
Speaker 1: would tailor a meeting to what he thought the listener
Speaker 1: thought was the most important thing. Here's another person who
Speaker 1: worked closely with him. I think Adam is the most savvy,
Speaker 1: manipulative person I've ever met in my life. Manipulative in
Speaker 1: both good ways and bad. He knows how to read
Speaker 1: a situation. He was able to use his charisma and
Speaker 1: his ability to figure out what it is you want
Speaker 1: to hear and then say that, but also make it
Speaker 1: benefit him. It's an amazing skill. And as for Rebecca,
Speaker 1: she saw right through him on their first date. She
Speaker 1: then said, every single word that comes out of your
Speaker 1: mouth is fake. You talk about the business, but you
Speaker 1: have no passion. You talk about money, but I know
Speaker 1: you're broke. And worst of all, she said, everything you
Speaker 1: do and everything it's it's without meaning. It's harsh. Every
Speaker 1: word is fake. Everything you do is without meaning. And
Speaker 1: I did two things. Number One, I immediately proposed to
Speaker 1: this amazing woman. We only dated for a few months.
Speaker 1: And Rebecca, I just wanted to say thank you for
Speaker 1: agreeing to marry me, thank you for seeing my potential
Speaker 1: when no one else did. I told you that while
Speaker 1: Adam is at Crawlers, he makes two important connections. The
Speaker 1: first is with Rebecca. His wife. The second is with
Speaker 1: this guy, Miguel McKelvey. He's the most important business partner
Speaker 1: Adam is going to have, the co founder of We Work.
Speaker 1: Miguel is an architect. On the day he meets Adam,
Speaker 1: Miguel is going over to his coworkers apartment building to
Speaker 1: hang out on the weekend. And as they're taking the
Speaker 1: elevator up, this guy walks in long hair tall here's
Speaker 1: Miguel in an interview with Guy ros and here is
Speaker 1: how I built this in waltks this other dude and
Speaker 1: we get introduced and it's Adam. I think it's a
Speaker 1: hot summer day, and he Adam Newman, you're at your
Speaker 1: partner now we work? Yeah, Adam Newman. And he's got
Speaker 1: his shirt off. I think, which just to walk into
Speaker 1: a New York, you know, condo building, rental building, elevator
Speaker 1: with no shirt is one kind of statement. And then too,
Speaker 1: I remember, as we're like, you know, going up in
Speaker 1: the elevator, he's starting conversations with people who are on
Speaker 1: the elevator and then he's like holding the door as
Speaker 1: the person get off, and then continuing the conversation. Turns
Speaker 1: out Miguel's coworker shares an apartment with Adam, and from
Speaker 1: the start, Miguel says that he was drawn to Adam's brashness,
Speaker 1: this intensity of personality. He had never met anyone like
Speaker 1: Adam before you heard Adam's voice earlier. Notice how in comparison,
Speaker 1: Miguel sounds a lot more subdued. Over the years covering
Speaker 1: we work, I've almost felt bad for Miguel because in
Speaker 1: so many of his interviews, ostensibly about himself and his
Speaker 1: own work, he ends up talking about Adam. Here's Miguel
Speaker 1: on a podcast called Behind the Brand with Brian Elliott.
Speaker 1: For whatever reason, we just had a connection. It was like,
Speaker 1: no clear reason for it, but just one of those
Speaker 1: people that as soon as you engage you find a
Speaker 1: reason to continue the conversation. And it just like I
Speaker 1: think that we knew that we were quite different, and
Speaker 1: therefore perhaps there was something that we complimented each other,
Speaker 1: and we could both see that. Not that we ever
Speaker 1: said it out loud, but but it felt that way
Speaker 1: at the time. Miguel grew up on a commune in Oregon.
Speaker 1: It's a nice parallel to Adam's years on the Kibbutz.
Speaker 1: It's interesting that this is how Miguel sees himself as
Speaker 1: the yin to Adam's yang. They were complimentary opposites. In fact,
Speaker 1: someone pulled me an interesting fact that Miguel is six
Speaker 1: eight actually a few inches taller than Adam, though you'd
Speaker 1: never know it. Miguel just doesn't carry himself with the
Speaker 1: same stature. Here's Miguel describing Adam. You know, he's Asraeli.
Speaker 1: He's very outspoken, he has tons of energy. He is
Speaker 1: kind of like, at least at the time, he was
Speaker 1: much more sort of bouncing off the walls with with energy.
Speaker 1: And so I think just in that regard, I was
Speaker 1: attracted and interested in him because he was bringing energy
Speaker 1: to the room and perhaps for him I could be
Speaker 1: a calming element in some way, or at least someone
Speaker 1: who um could could hear and listen and take in
Speaker 1: some of that energy that he had and reflected back
Speaker 1: at him in an interesting way. Okay, So Adam and
Speaker 1: Miguel meet and they have the idea to create their
Speaker 1: first coworking space. This was during the recession around two
Speaker 1: thousand eight. Businesses were folding, Entire floors of office space
Speaker 1: were sitting empty. Landlords were desperate for tenants, so Adam
Speaker 1: had this idea to lease some office space and break
Speaker 1: it up into individual desks, which he could then rent out.
Speaker 1: He went to his office landlord, but the landlords had no.
Speaker 1: For weeks, Adam kept pressing on. The landlords had no, no, no,
Speaker 1: until Adam warmed down. The landlord relented and showed them
Speaker 1: a space that they could lease across the street. Apparently,
Speaker 1: at night mcgell went home, he came up with the
Speaker 1: name Green Desk. He bought the domain and sketched up
Speaker 1: some floor plants, and so this initial business, sort of
Speaker 1: proto we work, was born. The building was this exposed
Speaker 1: brick Brooklyn warehouse with bigwood beams, big windows and columns.
Speaker 1: Mcgellan Adams told memberships starting at three a month. A
Speaker 1: year later, Adam and mcguell were itching to expand. They
Speaker 1: wanted to explore Manhattan or San Francisco. Their landlord, on
Speaker 1: the other hand, wanted to keep using the buildings he
Speaker 1: already owned. They couldn't agree, so Adam and mcguell sold
Speaker 1: their share of the company to the landlord and pocketed
Speaker 1: a couple million dollars. This was They wanted to use
Speaker 1: the seed money to start something else, something bigger that
Speaker 1: would connect people all around the globe to a new community.
Speaker 1: They wanted to reinvent the workplace, which used to be
Speaker 1: a boring place you would dread. Mcguell and Adams sat
Speaker 1: together and sketched out ideas for this new company. Work
Speaker 1: would be the beginning, but it could be so much more.
Speaker 1: To your home, a place to eat, a way to travel.
Speaker 1: They wanted a name that aptured this sense of togetherness
Speaker 1: without sounding to Kumbayat. That wasn't easy until literally, in
Speaker 1: the middle of the night, Adam's friend Andrew just literally
Speaker 1: came out with it and he said, it's we work.
Speaker 1: It's we live, as we sleep, as we eat, as
Speaker 1: we like just flowed with this whole thing that just
Speaker 1: happened in a moment for him in the middle of
Speaker 1: the night. As soon as we heard it, We're like,
Speaker 1: that's it, and they ran with it. You can hear
Speaker 1: the excitement in Miguel's voice even years later, how passionate
Speaker 1: he is about the idea of we work, and same
Speaker 1: with Adam. Remember when Adam spoke about his earlier companies,
Speaker 1: the women's shoe line and his baby clothing company, he
Speaker 1: said that both of them failed because he lacked passion.
Speaker 1: But now with we Work the coworking space, he can
Speaker 1: point to something from his authentic past. Those teenage years
Speaker 1: on the Kibbutz make for a great story. He can
Speaker 1: say that he had this vision ever since he was
Speaker 1: a kid. Maybe we Work was a way to build
Speaker 1: and sell this sense of community that he yearned for
Speaker 1: or when he was young. So Adam starts signing leases,
Speaker 1: he brings on his first customers, and he hires young,
Speaker 1: passionate people to work for him. These are recent college grads,
Speaker 1: many from top schools. They joined an exciting tech startup
Speaker 1: on the promise of Adam's vision, and once they walk
Speaker 1: in the door, some of them discover the reality is
Speaker 1: very different from the promise. They find themselves mopping up
Speaker 1: spilt beer and catching mice and trying to find a
Speaker 1: bathroom for five d customers. At the last minute, we
Speaker 1: didn't have a functioning bathroom on the first day. There's
Speaker 1: the saying, you know, you've got three options, fast, cheap
Speaker 1: and right, but you only get to pick two. What
Speaker 1: are you gonna pick? You know, when we work, it
Speaker 1: was always fast and cheap. That's next time on Foundering.
Speaker 1: Foundering is hosted by me Ellen Hewitt. Sean When is
Speaker 1: our executive producer. My Aquava is our associate producer. Raymondo
Speaker 1: mixed the show Today special thanks to Kobe ben Men,
Speaker 1: Gnam Door, Tony Palladino and Alex Patali. Mark Million and
Speaker 1: Vandermay and Alistair Barr are our story editors. Francesco Levi
Speaker 1: is the head of Bloomberg Podcasts. Be sure to subscribe
Speaker 1: and if you like our show, leave a review. Most importantly,
Speaker 1: tell your friends see you next time.