The Spectacular Rise and Fall of WeWork

[Music] repic there was something being done that was unprecedented we are we and if we work together we cannot be stopped the peace was roting on further and further and further soft Bank the Japanese investment firm is considering putting $4 billion in your company that sounds like a big number everything that happened from there on out was an absolute shock today the obvious story is the delay in the wework IPO there's a report out the wework is now not going to fire 4,000 people but May Fire 6,000 people I mean I think it's just gotten out of control there's been no better way to light money on fire it really is just one of the spectacular implosions we've seen in the last 10 [Music] years weor was founded in 2010 by an Israeli named Adam Newman and his business partner Miguel Meli the company leases real estate converts it into shared office space then rents the desks inside as mundane as that sounds by 2019 Wei work was a pretty big deal boasting locations in 100 cities and more than 12,000 employees with an IPO looming the Wii family was poised to make a ton of money when we worked trying to go public in 2019 it was valued at 47 billion 10 years earlier and they were working out of just half a floor of this building this was the first ever we work space hey Lisa hi very nice to meet you also so this is the the place this is it this is where all the magic happened and we work in the beginning Lisa Sky ha was Adam and Miguel's second ever hire it all started when Lisa met Adam by chance at a networking event in 2010 you were impressed by him of course Adam's an incredibly impressive person I mean I have saved in my email was an email that he sent me that says good morning period let's create the largest networking community on the planet and look at what he did you know it's amazing when someone kind of thinks about that becoming this $47 billion valuation company how does that happen yeah it's incredible I think Adam Newman is how it happened I mean I have photos of our team you know sleeping in our location just hustling hustling to get it done and Adam has this remarkable ability to just keep driving people Adam's the one who sat in front of the investors he sold the vision and he'll probably go down as one of the greatest salesmen in History Adam had a talent for raising money first from Individual investors and later from major Venture Capital firms and banks part CEO and part New Age Guru with a penion for going Barefoot and a love of tequila Adam said the company's mission was to elevate the world's Consciousness if you want to change the world start by changing yourself every single person has a superow we all do you have one and you have one and I I know these need to have one there's an energy that you fill and it's an energy of people doing their own thing while actually still being part of something greater than themselves we like to call it the wi generation whether Adam believed his own spiritual Babel or it was all a Savvy Market employee is anyone's guess but it was working in 2015 we work was valued at $10 billion for employees with shares that could mean a big payout One Day Tara Zuma joined the company in March 2015 hey Tara hi hey Sebastian meet you come on in thank [Music] you when you start at a startup there's sort of this assumed gamble that you're playing with and so like in roulette if it hits on red 20 we're all going to retire is this sort of like vagus mentality when it comes to Startup growth and was that something they talked to you about when you were signing on that there would be potential for salary raises or or Equity absolutely yeah um but it was about a 10,000 pay cut you know that a pay cut to join we work it was cool you went to the summer camp event I did yeah what was that like nutty experience summer camp was an annual company Rave for all we workers featuring meditation sessions an endless supply of alcohol and performances by acts like the weekend and Lord it felt like a burning manes Festival Adam would give notoriously long and untethered speeches attendance was strictly required what puts us together all of us here is every one of us is here because it has a meaning because we want to do something that actually makes the world a better place and we want to make money doing [Applause] it everyone was always really excited when Adam would speak he had this like Messiah istic air about him I think some of the words I remember hearing around that time were like you have a seat on this rocket ship to the moon and Mars I don't think he had started talking about putting a wew on Mars yet I think it was a joke at the at first and then later we heard that that might actually be something that was being considered putting a we work on Mars it sounds crazy when you say it [Laughter] now yeah fatara the fun War off her job helping run wew work spaces often meant staying late for member events some weeks were 70 plus hours a week how about overtime I did ask HR at some point and they said well you're on salary you you're not entitled to overtime Tara sued we work over these wage issues but the company forced the case into private arbitration she eventually settled for an undisclosed sun while Tara was suing weor Adam was a newly minted [Music] billionaire so we actually more than doubled in size over the past year this immigrant kid is sitting next to the prime minister of the United Kingdom which is an unbelievable thing and uh we promise not to disappoint all he made at least some of his money by leasing properties he owned back to wework and he even used wework's money to invest in pet projects like a wave pool company for surfing a personal passion then a Japanese conglomerate named SoftBank started pouring billions into Wei work SoftBank is run by famed investor masayoshi son some of my investors say Masa you you get too excited and too much concentration in into one company don't go too far too much it's the second largest venture capital investment of all time I'm an investor in Uber so I know what the first largest one was infused with SoftBank billions we work acquired more than a dozen companies Adam went on a shopping spree of his own buying a house in the Bay Area that was listed for $25 million and a luxury Penthouse in Manhattan listed for nearly $18 million in 2019 the Wii company was valued at $47 billion and raised towards an IPO but even though the company seemed like a success no one on the outside had ever actually seen its books and to go public we workor had to reveal these financials in an S1 filing with we workor what was the moment when people were able to kind of look under the hood for me I remember getting the S1 email to me and imagine if you're an academic and you get the best novel start of almost feels like lifechanging and you just can't stop reading the thing and the number numbers were just staggering you'd never seen anything like it a company that had committed to $47 billion in long-term commitments in the form of leases but was doing $3 billion a year in Revenue not to mention wework was losing incredible amounts of money nearly $2 billion in a single year alone why do you think that wasn't something that they were worried about when they made this disclosure my general experience is that if you tell a 30-some year old male that he's Jesus Christ he's inclined to leave you and I think when everyone around you is telling you that you're doing amazing work and you have one of the quote unquote most successful investors in the history of mankind mashian it's easy to believe that what you're doing is working but we work wasn't working and maybe never had it needed huge cash infusions from investors just to keep going and wasn't making enough money back it's losing a lot of money for all the growth it has what is Adam doing with the money especially that he's taking out of the company I mean it's just it's just basic math I don't want we work at any price and then we tanked the IPO was cancelled without the money they would have raised from going public we work had to slash costs Mass layoffs followed hello I'm talking to former employees on the condition of anonymity because they say they signed ndas some companies only dream of getting to an IPO we actually were there and it crumbled within the course of 3 weeks when were you laid off was it just after the IPO yeah thousand was a huge huge you know couple thousand people in one day I think couple of thousand in one day yeah we work said in a statement that the layoffs were necessary to create a more efficient organization and that laid off employees received Severance there was a grief on all sides I mean people were pcking up their desk there very Vivid image of even when Adam stuff was being moved out as the value of we work took a nose dive Adam negotiated an estimated $1.7 billion exit package including a deal for SoftBank to buy back his shares at a later date since January he's been laying low in Israel which is also home to one of his earliest backers Michael Eisenberg who is speaking at a Tech Conference in [Music] [Applause] Jerusalem Michael Michael runs perhaps one of the very best Venture funds in the in the country you are also the really early investor of a company called weor it's true what lessons should we take away from this process what does it mean for the ecosystem in general oh I don't know I think I think we tend to blow things out our proportion that single companies of any kind have massive impacts on the ecosystem I I I don't believe that eisenberg's VC firm Benchmark reportedly made hundreds of millions off its early investments in wework and could still make more everybody told Adam Newman this was not doable was you know real estate hadn't been touched in I don't know hundreds of years I worked the same way and here was a new attempt the most important thing I saw though is I walked with Adam around all two of wew work's first two buildings which is when I invested and I never met a piece of real estate or a brick or some wood that created that kind of vibe you think they're going to come back oh yeah I it's still working the fundamental business is still working they may be taking too much Capital initially maybe I don't know maybe should have grown a little slower maybe I don't know do you have any regret about your Investments and we worked are you proud of that super proud Association I'm super proud of the association that doesn't mean there aren't lessons that's true in every company the ones that have been more successful less successful you know and the failures which is 50% of what I do 50% of what I do fails completely this business requires an iron stomach and that's why I tell you that's why you got these personalities you must respect the entrepreneurs that they try defy Thrive or even fail they went for the journey we didn't failure might be the norm for VCS and entrepreneurs but it's hard on employees who bought shares that have plummeted in value and lawyers aim to bring a class action lawsuit on their behalf against Adam wework and SoftBank all right the case was moved to a different department at the last minute and we worked in show so gentlemen I'm not sure why you're here because this case is not my case anymore as the what's been your experience up to now of trying to get some progress on on this they've turned a Sprint into a hurdle uh race where they're putting every hurdle possible in front of us to try to just get into court to try to present our case first the lawyers argue Adam breached his duty to shareholders he trade marked the name of the company the Wii company and forced the company to pay him $6 million for the the name the Wii company he had received hundreds of millions of dollars in loans the company had given him $60 million to buy a Gulf Stream jet but did he actually break the law with any of this someone who runs a company as a fiduciary duty not just to the company but to the shareholders and that's what this case is about he was using it as we allege and our complaint as his personal piggy bank and the board was going along with it and that is against the law under the civil law once you issue shares to other people that changes the game you can't just act as if it's your own company and these shareholders don't exist Adam ultimately gave back the $6 million he was paid for the Wii trademark weor says the entire lawsuit is meritless the company has new leadership who claim the business is financially sound even in the face of the current pandemic but in a major blow soft Bank pulled out of its deal to buy back wew work stock including Adam's shares which were valued at nearly a billion dollar soft Bank cited investigations into the company by the SEC and the justice department we workor and Adam Newman declined to comment on this story Adam is still hiding out in Israel and sources close to him say he's planning a comeback you can't give up no matter what you can't give up took me five businesses to get to wew work it doesn't always work the first time you got to be able to fail learn why you fail do better for it and then start again

Channel: VICE News

Views: 336,441

Keywords: VICE News, VICE News Tonight, VICE on HBO, news, vice video, VICE on SHOWTIME, vice news 2024, wework, wework news, vice news wework, wework documentary, documentary, vice docs, docs 2024, wework doc, showtime, showtime vice, showtime wework

Id: 6iPQEQBXDYE

Length: 13min 57sec (837 seconds)

Published: Tue Jun 18 2024