Billion Dollar Loser Quotes

You get to a question of, is that what capitalism is supposed to do?” Schwartz asked. “There’s so many little ways that a company like this tells the next generation of entrepreneurs what success looks like. One way to ask this question is, in the system we have set up, do the people who were successful reflect the values we want? Should we care, or not care, if someone makes a lot of money exploiting the system?” Schwartz didn’t mind if Adam got rich; he wanted to get rich, too. “The reason I care is that if the most successful companies are the ones that just drive really hard, and play fast and loose with the truth,” Schwartz said, “then maybe the whole idea that capitalism is great, or even useful, is really challenging to uphold.

One person at WeWork wasn’t worried about the company’s future. “Do you know how long it takes a diamond to be created?” Adam asked a reporter during Summit. “Half a million to four million years. I love that analogy—to make something very precious, you have to apply a lot of pressure.

We’re creating a dystopia, where the mania of the state isn’t secrecy or censorship but unfairness. Obsessed with success and wealth and despising failure and poverty, our society is systematically dividing the population into winners and losers, using institutions like the courts to speed the process. Winners get rich and get off. Losers go broke and go to jail. It isn’t just that some clever crook on Wall Street can steal a billion dollars and never see the inside of a courtroom; it’s that, plus the fact that some black teenager a few miles away can go to jail just for standing on a street corner, that makes the whole picture complete.

They suffered from a fear of missing out on the next Facebook or Uber or Netflix. “There is a fool in every market,” Gurley wrote, quoting Warren Buffett. “If you don’t know who it is, it is probably you.

Adam viewed the costs of WeWork’s expansion as an obstacle with a simple solution. He told potential investors that WeWork could grow at whatever rate they wanted, so long as they were willing to fund it: demand for the company’s offices was so strong that the only restriction on its growth was how much money it could spend building new ones. “Adam’s attitude was, ‘Tell me how much revenue you want me to produce, and I’ll tell you how much capital I need,’” one member of WeWork’s fundraising team said

The nature of the private markets is that if nine smart investors pass, it only takes one relatively dumber investor, and suddenly we’re valued at $16 billion,” the finance team member said

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We’re creating a dystopia, where the mania of the state isn’t secrecy or censorship but unfairness. Obsessed with success and wealth and despising failure and poverty, our society is systematically dividing the population into winners and losers, using institutions like the courts to speed the process. Winners get rich and get off. Losers go broke and go to jail. It isn’t just that some clever crook on Wall Street can steal a billion dollars and never see the inside of a courtroom; it’s that, plus the fact that some black teenager a few miles away can go to jail just for standing on a street corner, that makes the whole picture complete.

After opening a WeWork in an old opium factory in Shanghai, which he thought might be the best yet, he started to wonder how many more times he wanted to figure out where the fruit water dispensers should go.

Despite the implicit warning from one of WeWork’s investors, Adam and Miguel were still dreaming up ways to keep their company private. “We have a lot of fun, and from everything I heard about being a public company, it’s not fun at all,” Miguel said. Perhaps WeWork’s members could own stakes in the company, like a collective, they wondered. Adam continued to believe that the only requirement for WeWork to achieve its ambitions was faith from the investor community. Talking to a reporter from Fast Company, he said that WeNeighborhoods and WeCities were “a when, not an if.” He was far from the first charismatic leader to imagine himself bringing about a better world, and the Fast Company reporter pointed out that pretty much every utopian project in the history of humanity had failed. The kibbutz movement, for one, had shrunk from hundreds of outposts to a few dozen. Adam conceded the point but said that the reporter was missing the crucial difference that made him uniquely situated to lead this particular revolution: “The reason most people did not succeed in this idea before, is that nobody was ever able to write the check.

Massive amounts of venture capital, much of it flowing directly from Masa and the Vision Fund, were flooding into everything from scooters to food delivery to all-you-can-watch movies. The money was being funneled to consumers, who were happy to receive heavily subsidized services, while Bird and DoorDash and MoviePass all burned cash to acquire customers, hoping that one day they could charge full price. For businesses without Warren Buffett’s “moat” protecting them, a new model existed: “capital as a moat.

SoftBank, however, had invested more than $10 billion into WeWork and gotten nothing in return. The Vision Fund was down nearly $2 billion in the most recent quarter, during which Uber’s stock had slipped. SoftBank shares were down 10 percent since Wingspan’s release. Both WeWork and SoftBank executives were coming to grips with the realization that its IPO might be priced at a level far below its $47 billion valuation. While SoftBank’s preferred shares gave it some protection—it could get its money out before the company’s employees—a valuation below what SoftBank paid for its shares would mean that the firm’s investment was underwater, much as

That afternoon, Berrent called Adam and told him to come to JPMorgan. The biggest problem, the bankers insisted, was Adam himself. One junior Goldman Sachs banker had become so perturbed by Neumann’s behavior during the road-show taping that he had called a colleague at JPMorgan to ask whether Adam was high while filming the video. Noah Wintroub had already told Neumann that he needed to stop smoking so much pot with WeWork’s IPO on the horizon. After Adam arrived at JPMorgan headquarters, Artie took him into another room to ask whether he had been high; Adam insisted that he hadn’t been.

Back in New York, Adam was attempting to move on. It was September 18, the day he hoped the company would go public. One employee looked on as Adam spent part of the day in his office, watching clips from the road-show video he had finally filmed a few days before, if weeks too late. He didn’t seem as concerned about the Journal article as those around him were, even though he didn’t have to look far to understand what could happen when things went south for the charismatic founder of a high-flying company. In January, Adam had personally invested more than $30 million into Faraday Grid, a Scottish firm trying to reinvent the delivery of renewable energy—another company in his mini Vision Fund. The investment valued Faraday Grid at $3.4 billion, thanks to supposedly revolutionary technology the company was loath to share many details about; whatever it was, Adam promised it would “fundamentally change the way we access and use energy in the future.” Neumann had found an easy kinship with Faraday’s founder, Andrew Scobie, an Australian with a big personality and lofty ambitions. In his office, Scobie prominently displayed a quotation that he attributed to Adam Smith: “All money is a matter of belief.

That afternoon, Neal DosSantos, a young architect who worked at a firm in Manhattan, was strolling back to his office after eating lunch in Gramercy Park when he spotted Adam heading briskly uptown on the sidewalk and talking animatedly into his phone. WeWork’s CEO was walking past Pete’s Tavern, one of New York’s oldest bars, wearing a gray T-shirt, black pants—and no shoes. DosSantos recognized Adam by sight. He had friends at WeWork and had considered applying for a job there over the years. Given all he had heard about the founder, the moment seemed to sum everything up: Neumann was moving quickly and talking fast, the only CEO who would casually walk the streets of New York barefoot during the most trying week of his life. (One of Adam’s publicists at the time explained away the incident to me by arguing that this was simply who he was: “Adam grew up on a kibbutz and likes to walk barefoot. He is a kibbutznik. Should we ask him to stop?”)

The next day, Adam met with Jamie Dimon on the forty-third floor of JPMorgan’s headquarters. Adam told Dimon that he wasn’t sure there was any way forward for him as CEO. Dimon agreed. No one scandal or decision had taken Neumann down, but it had been a year full of one blemish after another on the heels of a decade in which he could do no wrong. “How could this happen?” Adam told Dimon, according to a person familiar with the conversation. “I did everything you told me to do.” “Adam,” Dimon said. “You did nothing that I told you to.” This wasn’t strictly true. JPMorgan, SoftBank, and WeWork’s other investors had enabled and encouraged Adam for years. It was only when his erratic behavior threatened their own reputations that they turned on him.

What kept Schwartz up at night, at the end of a decade of unrestrained growth for the global economy, with enormous fortunes built out of nothing, was what WeWork’s rise would signal to the next generation of entrepreneurs.

He offered the graduates a blueprint for success: pick the right partner, one “who will see your potential of who you are tomorrow, and love that”; find a therapist; do something meaningful. “If it doesn’t have a purpose, why are you wasting your time?” he said. “Hang out at home and chill.” But doing something with meaning, he admitted, wasn’t enough. He offered a warning to the entrepreneurs in the room. “I’ll tell you another secret,” he said. “Your business has to make sense. If the business is not making sense, if you’re not profitable at the end—yes, there are a few companies, we hear about them, they lose a lot of money every month. Don’t build that.

Can’t beat them? Drown them in cash. Almost none of the companies spending so profligately was anywhere near profitable, and the discounts made it difficult for anyone to figure out the natural demand for their product. The deals also made it hard for competitors to keep up. Hodari and other WeWork rivals said they lost only a small chunk of their tenants to WeWork’s marketing blitz, but if the campaign continued, none of them would have the cash reserves to survive what amounted to predatory pricing. Prior to SoftBank’s arrival, back in the era of Managing the Nickel, WeWork executives had been talking about finding a more balanced growth trajectory. T. Rowe Price, which invested in WeWork in 2014, had pushed for a more sustainable strategy and was so skeptical of the SoftBank-funded bonanza that they sold as much as they could when SoftBank agreed to buy stock from existing shareholders.

Oscar Health, the health insurance provider founded by Josh Kushner, Jared’s brother, had a brand new Powered by We office.

But the flock of Silicon Valley unicorns had grown so large that Benioff himself had become nervous. The kind of rapid expansion that venture capital made possible wasn’t sustainable without discipline. In the middle of the decade, Benioff had issued a warning: “There’s going to be a lot of dead unicorns.” Neumann had begun pitching WeWork as a new breed of SaaS business: “space as a service.” The idea was that companies of all sizes would no longer handle their own real estate portfolios but would instead turn over the management of their physical space to WeWork, transforming the company into something like a real estate cloud—a “platform.” This was a goal shared by every ambitious start-up of the decade, no matter how specious the claim. Facebook, Uber, and Airbnb identified as platforms, as did Beyond Meat, the pea-protein burger maker (“plant-based-product platforms”); Peloton, the indoor exercise bike company (“the largest interactive fitness platform in the world”); and Casper, the mattress company (a “platform built for better sleep”). It was no longer good enough for companies to simply be what they were.

JUST BEFORE CHRISTMAS, the Neumanns boarded Wildgoose I for another winter holiday in Hanalei Bay. Adam was planning to surf again, this time with Laird Hamilton, one of the sport’s legends. WeWork was finalizing a deal, modest by Fortitude standards, to lead a $32 million investment round in Laird Superfood, Hamilton’s company, which sold turmeric and mushroom-infused coffee creamers. Adam’s wave pool investment hadn’t panned out, and WeWork slashed the value of its stake to zero after Wavegarden had trouble selling its $16 million “coves.” But the Laird Superfood bet had less to do with surfing than with doubling down on the nutritional coffee-creamer industry, much as Masa poured money into multiple food delivery apps. If the DeCicco brothers couldn’t change America’s food paradigm, maybe Laird Hamilton would.

He had watched a rat enter and exit the room by flattening itself like a pancake to squeeze beneath the door; he googled “Can rats flatten themselves?” discovered that they could, and devised a solution to close the gap.

The long hours at the hospital could be exhausting, and one night after work, Avivit was reading the tale of Snow White as a bedtime story to her daughter when she blurted out, “Snow White had growth in her liver and went to hospice.

Twenty-six billion dollars of fraud: no felony cases. But when the stakes are in the hundreds of dollars, we kick in 26,000 doors a year, in just one county. You can drive yourself crazy trying to figure out how this makes sense, financial or otherwise. But it does make sense. It’s just not about money. It’s about fucking with people. It’s the logic of our new shadow government. It turns out that we’re too lazy to govern ourselves, so we’ve put society on bureaucratic autopilot—and autopilot turns out to be a steel trap for losers and a greased pipeline to money, power, and impunity for winners. This goes far beyond the oft-quoted liberal cliché about how we now have “two Americas,” one for the rich and one for the poor, with different sets of laws and

Masa gave him a tour of his mansion, which had a $3 million driving range that could simulate a Pacific Ocean fog rolling over Pebble Beach as a light drizzle fell from the ceiling.

Anyone who got in the way of WeWork’s expansion was liable to be shoved aside: WeWork kicked two nonprofits out of their offices in downtown San Francisco when it offered to pay the building’s landlord double the rent in order to take over the space from the organizations, both of which worked to prevent tenants from being evicted from their homes in San Francisco.

Rebekah spoke about their embrace of the sharing economy and lack of interest in material wealth. “We believe in this new ‘asset-light lifestyle,’ ” Rebekah told one interviewer, at a time when the Neumanns owned five homes. “We want to live off of the land. I’m like a real hippie.

When he tried to offer an example of how WeWork separated itself from other office space operators, he mentioned how much fun people had at its recent Halloween party, where Busta Rhymes performed.

Adam would say later that it was around this time that he began to struggle with his ego.

But functional Wi-Fi was a basic office requirement, not a valuation multiplier.

But Adam had another reason to be excited. A deal this large would typically diminish the founders’ control over the company. Miguel wasn’t especially concerned, having already transferred some control to his cofounder. But as part of the deal, Adam engineered a change to WeWork’s charter with the help of Jen Berrent, WeWork’s new general counsel, that gave him ten votes for each share of the company he owned. The arrangement would give him roughly 65 percent of the votes on any company matter. These “supervoting” shares had become popular in Silicon Valley, where founders feared losing control of their companies. Mark Zuckerberg had negotiated a similar deal, as had Travis Kalanick at Uber. Many investors were so eager to get in on the small group of start-ups that could make plausible arguments for world domination that they often believed they had no choice but to accept such founder-friendly terms. But giving so much control of a company to an entrepreneur who had never run a business of this size before was a risk. As the deal was finalized, Bruce Dunlevie, Neumann’s first major investor, tried pushing back on the arrangement. But Benchmark wasn’t eager to lose favor with Neumann, and it didn’t have much standing in the fight, having just given Travis Kalanick similar control at Uber. Dunlevie relented, but not before offering a warning to Berrent and WeWork’s board. “I’ll just leave you with this thought,” Dunlevie said. “Absolute power corrupts absolutely.

The lawsuit was also a major distraction to Evan, Bobby, and Snapchat, during a time when they needed to focus more than ever. Finally, they reached a settlement. Reggie would receive $ 157.5 million and sign a gag order to never speak about Snapchat, the founding, or the lawsuit. Snapchat would acknowledge Reggie’s contributions to the company. Like Facebook’s multiple lawsuits with the Winklevoss twins and Eduardo Saverin, it’s difficult to neatly arrange the characters into winner and loser columns. Reggie Brown likely could not have built Snapchat into the multibillion-dollar company it is today. But he did not simply toss an idea out there for anyone to take—he recruited Evan, the best person he knew for the task, to join him and start the company. So what is fair for each side to receive? Snapchat’s valuation soared so high and so quickly during the lawsuit that it was hard for each side to wrap their heads around it, let alone arbitrate what each side deserved. This question isn’t going away. The Social Network, featuring courtroom scene after courtroom scene of friends hurling accusations at each other through expensive lawyers, spurred scores of young college students to pursue startups. Evan’s massive success with Snapchat has only increased the startup fervor on Stanford’s campus. And Reggie’s lawyers’ firm, Lee Tran & Liang, has become the hot law firm for ousted startup cofounders to sue young tech companies.

A lot of people got caught up in the hype and Adam’s charisma, but when you looked at the numbers, it was always kind of clear.

Neumann had become a millennial prophet for a new way of working and living, brushing back his flowing dark hair as he dispensed koans and made bombastic proclamations that somehow came true.

A month earlier Adam’s assistant had reached out to Jean-Yves Huwart, the conference’s Belgian founder, to inform him that WeWork was the largest coworking operator in the United States. This was news to Huwart, who had never heard of WeWork and couldn’t find many photos of its offices online. Coworking was a disaggregated industry made up almost entirely of small-time operators, so the idea that any company would become a country’s dominant player was an idea Huwart had not even considered. Adam’s assistant sent along a few Photoshopped images of spaces she said the company was building in New York and San Francisco, plus a biography explaining that her boss was working on multiple projects: namely, his continued ownership of a baby clothes company and “changing the way people work…with his company WeWork.

Not long after, Adam left for vacation in Hanalei Bay, on the Hawaiian island of Kauai. Hanalei Bay is a surfing mecca that maintains an eclectic vibe. The celebrities and CEOs who visit try to tread lightly. One morning, two start-up employees who worked at tech companies back on the mainland were paddling out to sea when they spotted Adam in the water nearby. He was flat on his board, holding on to a pair of ropes attached to the back of two surfboards, from which two local guides were pulling him out to the waves. It was the surfing equivalent of a cross-country skier holding on to someone else’s pole—or the start-up equivalent, his fellow surfers noted, of propelling yourself with a $100 billion venture capital cannon. Back in the Hamptons, Adam kept a motorized surfboard. A few days later, Adam was

I told Neumann that when I shared the slogan with others, their first reaction was often to ask, What does that even mean? “That’s a good thing,” he said. “If they say, ‘What does that mean?’ it’s a conversation topic. We’re already there!” He said that each branch of the company aimed to make the world a better place—while making plenty of money in the process. WeWork’s mission was to help people “make a life and not just a living.” He believed that WeLive, which rented out microapartments with large communal spaces, could mitigate increases in loneliness and suicide so that “no one ever feels alone.” WeGrow, the newest venture, was an elementary school run by his wife, Rebekah, with an annual tuition of up to $42,000 and a goal of “unleashing every person’s superpower.

WeWork’s core business was simple. It leased space, cut it up, and rented out each slice with an upcharge for hip design, flexibility, and regular happy hours. Other companies had risen, and in many cases fallen, by offering more or less the same service, which amounted to a straightforward arbitrage: lease long, rent short, and collect the margin.

But WeWork’s rise didn’t shock Schwartz, who had spent part of his career in finance. This was how the system worked. Adam had persuaded one investor after another to believe in his vision; each time he did, previous investors were able to mark up their stakes to escalating valuations, selling shares along the way and passing the risk on to the next fool. Even if WeWork went public and the IPO tanked, Adam owned roughly a fifth of the company, with preferred shares that would allow him to get out before most of his employees. “Let’s say it trades down to a $5 billion valuation,” Schwartz said, throwing out a number more in line with where the London Stock Exchange valued IWG. “Employees will suffer. Investors take a bath. But Adam’s still worth a billion.

When I finished my tour of 154 Grand Street, I noticed that I had several missed calls from an unknown phone number. I stepped outside to call the number back. It belonged to a longtime WeWork executive who heard I was working on a story about the company. He was interested in sharing his experience, but hesitant to speak openly. He stood to benefit handsomely if WeWork successfully made it to an IPO; plus, he had seen how the company treated Joanna Strange and other employees who broke ranks. He believed the business was a good one, but found the ideas WeWork had been spinning up about being a tech company, or revolutionizing education, or improving corporate culture to be laughable. “WeWork has the worst corporate culture I’ve ever encountered in my life,” he said. I heard a similar story from a former WeWork employee I met for an off-the-record conversation a few days later at a coffee shop in Dumbo, near the original Green Desk. “I’ve been involved in some of WeWork’s previous puff pieces,” he said when we sat down. He wanted to know if my article would be one of those.

Adam’s focus on growth at the expense of profitability fit with an emerging business theory that it was best to acquire customers by any means necessary and then figure out how to make money later.

As Adam and Masa drove away from WeWork’s headquarters, Masa pulled out an iPad and began sketching the terms of a deal: SoftBank and the Vision Fund would invest more than $4 billion into WeWork. The investment would be the Vision Fund’s biggest to date, and many times larger than any funding round Adam had managed thus far. Masa signed his name, drew another line next to it, and handed Neumann the stylus. Adam had gotten WeWork this far in large part by making shrewd deals—acting coy when it suited him and playing hardball when necessary. But that morning, Adam had met with a spiritual adviser, as he often did before making big decisions, and received some advice: in life, it was sometimes necessary to do “the opposite of our nature.” Adam also knew a good deal when he saw one. After Masa dropped him off, Neumann got into his white Maybach, which had been trailing Masa’s car, turned up some rap music, and drove back to WeWork headquarters. A photo of the digital napkin, with Masa’s signature in red and Adam’s in blue, was soon circulating among WeWork executives. The entire exchange, from Masa’s twelve-minute tour to signatures sealing one of the largest venture capital investments of all time, had taken less than half an hour.

The reason I care is that if the most successful companies are the ones that just drive really hard, and play fast and loose with the truth,” Schwartz said, “then maybe the whole idea that capitalism is great, or even useful, is really challenging to uphold.

Steve Jobs had once asked his most senior employees to come up with a list of Apple’s top ten priorities, then said the company could manage only three.

If you want a vision of the bleak, bland capitalist future, go to Hudson Yards in New York City, the new, billion-dollar complex of gleaming skyscrapers. It's a lifeless shopping mall for luxury goods, intensely policed and surveilled, where every aspect of life is curated by a corporation... This is the city for the winners. The losers will be in homeless encampments outside the city gates. The left's city of the future looks very different. It is a Star Trek world, where we can travel through space together and meet aliens. It is public libraries and free colleges, where all can come and learn without worrying about money. It is Mardis Gras in New Orleans, where everyone expresses their individuality through art and costume without any regard for profit or commerce. It is camping trips and cookouts, book clubs and street cafes. It is the theory that life is meant to be enjoyed, and that nobody should lack the basic ingredients for a decent existence. It is, above all, the conviction that we're here to help each other through this thing, whatever it is.