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I must say, I am on Twitter a lot right now. Every day, a new executive order, a new melodrama regarding Trump’s cabinet picks, and another Elon gaff. But I must say, for all the craziness in the world today, hearing Senator Bernie Sanders yell; “Are you supportive of these onesies” at RFK Jr. today really took the cake. What a world are living in.

I really enjoy reading about Adam Neumann for today’s post. There are a lot of things he did that I am inspired by to be honest, and obviously a lot that I am not. I hope you enjoy this one. It was a fun one to write.

LEADER DEEP DIVE 🕵🏻

Adam Neumann - Co-Founder & Ex-CEO at WeWork

Adam Neumann (Hebrew: אדם נוימן; born April 25, 1979) is an Israeli-American billionaire, businessman and investor. In 2010, he co-founded WeWork with Miguel McKelvey, where he was CEO from 2010 to 2019. In 2019, he co-founded a family office dubbed 166 2nd Financial Services with his wife, Rebekah Neumann, to manage their personal wealth, investing over a billion dollars in real estate and other startups.

Following mounting pressure from investors based on disclosures made in a public offering filing, Neumann resigned as CEO of WeWork and gave up majority voting control as of September 26, 2019. Forbes estimated his net worth to be around US$2.2 billion as of February 2024.

To the world at large Adam Neumann is a failure, but to a small few he remains a legend of Silicon Valley folklore. I sit somewhere in between. This has been my hardest deep dive to date because Adam Neumann is quite literally Superman by day, Lex Luthor by night.

He might be the best brand builder of the last 100 years, while also being the most delusional, selfish, maniacal, nut-bag at the same time. If nothing else, I hope to highlight both Adam’s incredible skills and his major downfalls.

And I aim to do it in the fairest way possible. This is the story of a man who drank so much of his own bathwater, he could no longer see the forest from the trees. This is the Adam Neumann story.

Early years

Adam spent time living on a kibbutz in Israel during his youth. He cited this as the reason he loves walking around barefoot today. He also accredits the experience with instilling him a sense of community and collective responsibility, principles he later tried to incorporate into WeWork's culture.

Something I have always found fascinating is how many Israeli founders have had their companies IPO. People refer Israel as ‘Startup Nation’ and it’s no wonder. Israeli founders are second only to US born founders in successfully going public. An incredibly statistic for a country of six million people.

When speaking to Israeli founders, I have often heard compulsory military service—and the dedication it instils—as a reason for their success. I am not sure what the real reason is, but no one can doubt Israel is a major player in tech.

New York, GreenDesk, WeWork

After finishing in the military, Adam and his sister Adi moved to New York City. The year was 2001, and Adi was building her modelling career after winning Miss Teen Israel. Adam on the other hand was busy launching and failing multiple startup ideas from their Tribeca apartment.

The most famous which, the aptly name Krawlers, was a line of baby clothes with sewn-in knee pads, designed to protect crawling babies' knees. Elon Musk once said; “You get paid in direct proportion to the difficulty of problems you solve.” No offence to all the 1-year olds with bad knees out there, but Adam in this case was solving the world lowest value problem.

But you can’t keep a good man down too long. Through a mutual friend, Adam was introduced to his future business partner Miguel McKelvey. Shortly after the pair began working on Green Desk, a shared-workspace startup focusing on sustainability—the precursor to WeWork. The pair would eventually sell GreenDesk and in early 2011 launch the first ever WeWork in a 3,000-square-foot space at 154 Grand Street in the SoHo neighbourhood of Manhattan.

Meanwhile, a world away, technology investor Masayoshi Son, was focusing on renewable energy initiatives in response to the Fukushima Daiichi nuclear disaster. Neither party knew it but their works would soon collide, providing the catalyst for one the wildest startup stories known to man.

‘This seems to be working’

The early years of WeWork were exciting. For Miguel and Adam, for employees, and for the first backers of their dream. The dream—budding from their shared experience growing up in a kibbutz—was to build a community they believed the world needed. “We thought that if we created a community that helped people live life with purpose, we could have a meaningful impact on the world", Adam would reflect on in 2019.

And there were countless backers who were buying in to the dream. It’s not difficult to see why. Commercial real estate is one of the largest asset classes in the world, estimated at a cool $33.3 trillion in 2017. With a market like that, and a visionary founder, the early capital came pouring in.

These figures above are impressive alone, but what is more stunning is the valuation Adam and WeWork were beginning to command throughout the process. By the time their 2013 round rolled around they were valued at $1.5 billion. This however would pale in comparison to what would come next.

BLITZSCALING

The term ‘blitzscaling’ was popularised by Reid Hoffman, the co-founder of LinkedIn, alongside entrepreneur and writer Chris Yeh. The term—as you probably guess—was inspired by the German ‘blitzkrieg,’ which means ‘lightning war’ and was used to describe the rapid and intense military tactics used by Germany during World War II.

Today, blitzscaling has totally fallen out of vogue, with many pundits talking about how irresponsible this type of growth is. But Reid wrote the book for a reason. In the right market conditions—it works. A current example is Deel’s rapid ascension in the market.

Rewind to 2014, and it was WeWork’s turn to fire up the engines of blitzscaling. Look at the list of investors that would join their Series D and on. Goldman Sachs investing in your round is the equivalent to the coolest girls in school asking you to the prom. It means you have finally made it.

To put it into perspective, through these rounds, WeWork’s valuation kept rising. Their Series D was at $5 billion, but by the time they raised their Series G only two years later it had ballooned to a whopping $20 billion.

That’s twenty thousand million dollars. Twenty thousand million dollars, for a service-dressed-as-SaaS, real estate company, with 26-28% margins (ick), doing $886 million in revenue and nearly $1 billion in losses ($931M).

By this stage, one thing was absolutely clear—if originally it was only Adam sniffing his own farts—then by now the entire tech ecosystem had jumped aboard this circle-jerkular extravaganza.

How to *not* build culture

Although the investment community were whetting their lips at the idea of buying into Adam’s story, the employees were beginning to see through the thinly veiled community WeWork had created. The entire thing had begun to smell fishy.

Let me preface this by saying that I believe WeWork did wonderful things for community. I really do. They created a real Third Place for people, which is more important than ever today. But a fish rots from the head. And the community of WeWork employees were, put simply—starting to see through the kombucha—beginning with behaviour of Adam and his wife Rebekah.

One of my favourite examples of this was in June 2016. Although the company had just successfully raised $430 million only months earlier, Adam and the team at WeWork decided to make layoffs to 7% of their staff. Although that is interesting, the incredible part was moments after the announcement … they seemed to want to party.

The atmosphere Adam had created, one of extreme partying, was beginning to wear thin on their employee base. Even the once famed WeWork annual Summer Camp for employees had come under fire.

Quoting a piece in New York Magazine; “One employee told me she knew it was time to leave the company in 2017, when she woke in her teepee to find an unknown colleague urinating on the canvas just above her head. Talk to Tony the community manager under 24, and it’s the greatest weekend of your life. But I am not here to get peed on.”

Controversy aside, WeWork seemed to be a freight train that would be hard to stop. And that speed was about to accelerate. Their next investment would be through the world’s largest technology-focused investment fund—the $100 billion dollar SoftBank Vision Fund.

 Fun fact: My startup Athyna has on average, 92% engagement (culture) scores. 80% is considered excellent. No reason for sharing aside from pride. That is all.

BLITZSCALING 2.0 - Adam meets Masa

Masayoshi Son (Japanese: 孫 正義, romanized: Son Masayoshi, Korean: 손정의, romanized: Son Jeong-ui; born 11 August 1957) is a Japanese billionaire technology entrepreneur, investor and philanthropist.

Masa, as he is more commonly known, is a controversial figure in investing. His strategy, some would say, relieves heavily on the Greater Fool Theory. The theory that you can in fact make money on bad investment if someone dumber or more reckless than you will come in and buy your slice at an inflated price.

Masa is known as a gambler. He is mocked through respected circles and has been infamously dubbed as the worst tech investor in history. And although positing some positive results lately from Vision Fund’s investment in Arm—the jury is still well and truly out on the man they call Masa.

So, the year is 2016, and WeWork needs money. His usual US investors were beginning to tighten up their purse strings, concerned the company was not quite the scalable unicorn Adam sold it as. Luckily, Masa was just putting the finishing touches on SoftBank’s first Vision Fund. A $100B mega-fund designed to invest in the most blue chip opportunities in Silicon Valley, and around the world.

The meeting of Adam and Masa was two world colliding in the most beautiful way. You see, it’s not easy to deploy $100 billion big ones. To put it into perspective, a Series A fund writing $10M lead investments would need to write ten thousand checks to deploy the entire fund.

The story goes that during their first meeting Masa would ask Adam; "In a fight, who wins—the smart guy or the crazy guy?" The question alone, gives you a small glimpse into his investment philosophy. This is the perfect storm that led to SoftBank investing into WeWork in 2017. 

And the subsequent that had SoftBank investing into WeWork again in 2019 at the ill-famed $47 billion valuation.

Shockingly, in this interview from as recently as 2019, you can hear Masa compare WeWork to Netflix and Facebook when referring to WeWork’s ability to turn profitable. “Initial investment is only initial investment. Basic cost of customer acquisition, or innovation is not growing exponentially, it’s almost flat.” Masa would say.

It seemed either Masa doesn’t understands at all how WeWork’s business model worked, or he was indeed try to execute the next stage of the Greater Fool Theory.

Peak WeWork / Live / Grow

Fresh with the SoftBank investment, and with Adam’s ego at all time highs, what happened next will be talked about for decades to come in Silicon Valley folklore. Adam, Rebekah, WeWork and Masa would truly lose all grip on reality.

It started with wild investment and spending. In 2017 WeWork would inexplicably acquire coding academy, Flatiron School. In 2018 it was Teem, an office management software company, they acquired for $100 million. That same year the company bought a Gulfstream—costing $60 million dollars—for Adam and Rebekah to travel around on.

But it gets better. Their tagline was changed to; “Elevating the world’s consciousness”, they acquired a 42% stake in Wavegarden, maker of wave pool technology, and even their acquisitions were making acquisitions, with Flatiron School purchasing design school Designation.

But the ultimate folly was Rebekah’s passion project, WeGrow. WeWork’s 2017 report states WeGrow’s vision was; “a conscious entrepreneurial approach to early childhood education to unleash every child’s superpowers.” I harbour no ill-will towards Rebekah Neumann but, I challenge you to make it through this interview with popular podcaster, Lewis Howes.

Funnily enough, alongside all the absurdity of investing in wave pools and buying $60 million dollar jets, I do think an incredible idea was uncovered in WeLive. I believe in WeLive. I believe that in today’s culture we spend too much time in cities, office blocks, public transport, and studio apartments. Our community is eroding.

I remember exactly where I was sitting—the window couch on L4 of the South Melbourne Commons co-work—when an American visitor I was chatting with told me about WeLive. I couldn’t wait. I genuinely thought this startup, if executed well, could be a spark that could reignite community around the world.

Unfortunately WeLive, like most everything else throughout this period was put to rest in the restructure once the house of cards came tumbling down.

Playbook - In defence of Adam

Carrie Fisher once said; “Resentment is like drinking poison and waiting to the other person to die.” And to be fair (sometimes) when I think about Adam and his story, I think some of the vitriol directed at him is resentment. The snake-oil salesman who beat the market and won.

But for all his faults—of which there are obviously many—I do believe Adam thought WeWork was making the world a better place. Whether you love Adam or despise him, let’s put judgement aside for a moment, and look at the many strengths that Adam Neumann does have.

• Visionary approach. Adam's ability to envision a new future for the workplace, one that focussed on community and collaboration, was great. His vision was not just renting office space but about creating a global network of entrepreneurs and businesses that could thrive together.

• Charisma. Founders need to be charismatic storytellers and charisma certainly played a crucial role in Adam’s success. He was able to inspire employees, attract a community of followers, and persuade investors to support his vision.

• Ability to attract capital. Raising money, in my opinion, is one of the five core tenants in the role of a CEO—and Adam was brilliant at it. This ability to secure capital was crucial for WeWork's expansion and—for better or worse—helped the company scale at an unprecedented rate.

• Risk-taking and ambition. If you want to build something that people will love across the globe you need to be willing to take risks. To swing for the fences. Something Adam did over and over in his time at WeWork.

• Brand building prowess. And finally brand building. WeWork is a brand that consumers absolutely love, all across the globe. Adam’s fingerprints are all over that.

While we are focussed on the good things Adam did in this section, I’d like to highlight this interview with Andrew Ross-Sorkin. It’s the first post-collapse interview and addresses a lot of the things that Adam did wrong during his time at WeWork. I think it paints him in a fair light and is worth watching for anyone wanting to go deeper on his story.

Now that was the good sides. Let’s take a look at how this absolute cluster-fuck all came tumbling down, and what we can learn from the bad side of Adam.

Community … adjusted

With an immense and ever-growing burn rate—estimates say as high as $700M per quarter—and a weakening appetite from investors, WeWork was left without any other option than to go public.

What we were about to see is what The New York Times would later refer to as; “an implosion unlike any other in the history of start-ups".

The first major media figure to lay the steel-toes into WeWork was Scott Galloway. ‘Prof G’, a well respectful entrepreneur, investor, lecturer, and author of the blog No Mercy / No Malice, wrote the scaling WeWTF piece in August of 2019, followed by a Part Deux only a month later.

But it wasn’t just Scott Galloway. It was the entire business community at large, from Sam Zell, to The Verge. People felt the delayed pain of Adam Neumann’s proverbial bitch slap and it really, really stung. The world felt duped.

The jig was up. Adam had to go. In late September 2019, The Wall Street Journal reported that Neumann would receive close to $1.7 billion from stakeholder SoftBank for stepping down from WeWork's board and severing most of his ties to the company. The $1.7 billion included $970 million for his remaining shares, a $185 million consulting fee, and a $500 million credit to assist him to repay his loans to J.P. Morgan Chase. He was retained as a consultant with an annual salary of $46 million.

Today, five years on, WeWork has gone public without Adam. But the shit-snowball-hurtling-down-a-mountain structure he left the company with could not be undone fast enough.

WeWork, even after shedding all of the extra curricular opportunities, hiring a real management team, driving more investment and finally going public, sits today at 99.97% off it’s peak when it went public.

A precipitous fall from grace rarely seen in the non-fiction section of any good bookstore. Here are a few of the major themes in where they failed, and the places I bet they wish they did differently.

Playbook - The bad stuff

• Overvaluation and over-expansion. The aggressive growth strategy, fuelled by massive investments, meant unsustainable operating costs and a business model that struggled to prove its could pull it’s weight long-term.

• Leadership style and maturity. Adam’s leadership style was somewhat befit a fast-growing, early-stage startup but could not stack up as a mature company. Even some of things he was loved for early, turned very toxic over time.

• Arrogance, hubris and a lack of focus. There is a tipping point as to how many wave parks you can and have people still take you seriously. That tipping point is 0.5.

Playbook - Where he totally kooked it

• Self-dealing. Neumann engaged in transactions that benefited him personally at the expense of the company. Like when he trademarked the ‘We’ name and sold it back to WeWork for $5.9 million (which he later returned).

• Creating a toxic company culture. This is the part that makes me the saddest of all. For a product so loved, and an employee base that was so passionate, Adam and Rebekah constantly did things to destroy the culture and the community they claimed to be so passionate about.

• Lack of financial discipline. WeWork's financial management under Adam meant by rapid burn on expansion, lavish offices, and high-profile marketing efforts. This lack of discipline became a critical as the company came up to its IPO, with potential investors and the public becoming skeptical of its path to profitability.

• Handling of the IPO. The IPO filing revealed not just losses but also unusual governance structures and an outsized CEO influence. The public scrutiny led to a dramatic decrease in valuation, withdrawal of the IPO, and ultimately, Adam’s resignation.

• Overall public relations. It’s natural that when you walk away with billions from a failed venture, so heavy in the cultural zeitgeist, you might make a few enemies. In this case it’s more than a few. It might have helped if he had owned the missteps more publicly and taken a humble approach to acknowledge the lessons learned.

Future

Adam & Rebekah Neumann were surprisingly quiet in the post-WeWork years. It took Adam some time before speaking to the media, and even then, he was rarely cited. It makes sense considering all that went down. That was of course until August 2022 when a16z announced they were writing their biggest check in their history—a $350 million dollar investment into Neumann’s startup, Flow.

This investment—which followed investments into a confusingly named startup of Adam’s, Flow Carbon—sent the tech ecosystem into an uproar. “THIS IS DISGUSTING” tweeted Kate Braddock, CEO of the startup Switch and a general partner at the W Fund. Even Jason Calacanis was calling bullshit.

And now, he’s back again—this time trying to buy his baby, WeWork, out of bankruptcy for ~$500 million dollars. I cannot tell if what we are watching is the phoenix rising or the unwanted return of an un-killable cockroach. Maybe it’s both.

For some reason—after all of this—part of me wants to see Adam come back and succeed. I guess I like an underdog, and I guess I am a fan of a redemption arc. Hell, if I can make room in my heart for Jamie Lannister after he shoved a kid out a window on first impressions, then maybe I can make some room for Adam as well.

So here's to second chances, and the hope that in the next act, Adam proves that he's learned from his past—a testament to the human capacity for growth and renewal. My prediction: don’t hold your breath folks.

Fun facts

• The loftiest of expectations: The Wall Street Journal reported in 2019 that Neumann had aspirations to live forever, become the world's first trillionaire, expand WeWork to Mars, become Israel's prime minister, and become “President of the World”. Aim for the stars and maybe you’ll make it to the moon as they say.

• Halloween infamy: Adam’s story was trending so hard a few years ago that he was a popular Halloween costume. That’s when you know you’ve made it.

• No time for paddling: Adam became obsessed with surfing, but hated one half of it. “The way I surf, I don’t have time for paddling.” Instead he hired chauffeured jet skis.

• Community on Mars: Adam organised a meeting with Elon Musk and told him; “Getting to Mars would be the easy part. Building community would be hard.” Not even lying.

Extra reading

• The We Company S-1 - August, 2019

• Billion Dollar Loser, Reeves Wiedeman - October, 2020

• The Cult of We, Eliot Brown - July, 2021

• Why WeWork Died, How They Grow - November, 2023

And that’s it! Adam doesn’t have socials, but you can go ahead and check out WeWork here.

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BRAIN FOOD 🧠 

I caught a super cool episode last week on the Acquired podcast where they interviewed Morris Chang, the founder of TSMC. It's his first long-form English interview in nearly two decades, flown out to Taiwan for it.

Morris dives into pivotal TSMC moments like securing Apple’s business and their conflict with NVIDIA, all stuff I had never heard about. It’s honestly packed with interesting business stories. If you love tech-history, go watch it.

TWEETS OF THE WEEK 🐣 

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