The $1.7 billion was essentially a payment for Neumann to sit down, shut up, and go IPO investors do not consider “craziness” to be a marketable attribute. As details emerged, potential investors were turned away. The board made concessions, like cutting Neumann’s voting superiority and making him disgorge self-dealing profits. But there was still no appetite for publicly traded WeWork shares. Making matters worse, it was becoming clear that without an IPO or other cash infusion, WeWork would be out of money by Thanksgiving. With no other options, Adam Neumann voted himself out as CEO... and agreed to a more pedestrian three times the voting rights of others. It was either that or shutter the whole business. instructor) to control the company upon his death, bragging to employees: WeWork isn’t just controlled (by me) – we’re generationally controlled… It’s important that one day, maybe in 100 years, maybe in 300 years, a great-great- granddaughter of mine will walk into that room and say, “Hey, you don’t know me; I actually control the place. The way you’re acting is not how we built it.” The lesson is obvious... If you tell a crazy person to act “10 times crazier,” they’re probably going to do it. Unfortunately for Masa, it turns out potential
Neumann, meanwhile, still controlled the company: He owned around 30% of the shares... each with three times the voting rights of other shareholders. As it turns out, those voting rights were the most valuable part of the entire company. Out of options, and desperate to save his investment, in the final week of October, Masa committed nearly $10 billion of SoftBank/Vision Fund’s capital to clean up the mess that he created. $1.7 billion of this went to Neumann directly. In exchange for the payday, Neumann agreed to give up his “super-voting control” shares. He’ll just be another shareholder... and will no longer control the business he started. The $1.7 billion was essentially a payment for Neumann to sit down, shut up, and go away. Without it, Neumann and his controlling stake would continue to haunt Masa and his investment. The dust has settled, and Neumann remains a popular whipping boy in various media outlets... the terms “crook” and “fraud” get thrown around a lot. Always a contrarian, I am tempted to defend Neumann a little bit... Neumann consolidated as much power as possible for himself, and his investors were OK with that. He then acted with extreme self-interest, defended his business model using shoddy unaudited numbers that were obviously ludicrous, and generally behaved like an entitled brat. None of those behaviors are, in and of themselves, illegal. And even if Neumann’s windfall were the
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