How much softbank bet and lost billions in Wework

On December 6, 2016, Masayoshi Mass – the founder of the Japanese Investment Company Softbank – was second to visit the Wework headquarters in New York City. As usual, he was running late, and his subsequent meeting with President -elect Trump rose a lot. The two-hour planned in Wework Tour turned into a 12-minute walk. Unfinished, the mass invited Wework founder Adam Neumann, to join him in the back seat of his SUV for a trip to Trump Tower, 38 blocks to the north.

Neumann brought together a print of his vision for a new world of work: cold space, high -tech, with cushions, pelotons and many free booze. The mass shook it all aside. By bringing out his iPad, he overthrew the sketches of a $ 4.4 billion investment to be cooked by Softbank and his vision fund. Half an hour later, Mass emailed a photo of the “Digital Pacer” contract. It was a blur of lines that set a global partnership. Softbank investment meant a $ 20 billion rating for Wework, just like Hilton Hotels. Only Uber and Airbnb, new hotshots in the start of the US, had done better.

At the age of 38, Neumann had landed in Cloud nine. Fresh the softbank injection will help create a billion real estate giant. Even better, it would be worth $ 1 billion on paper. While his executive team later exchanged hugs and five high, Mark Schwartz, former Goldman Sachs Banker soon to join the Wework board, issued a note of care. The mass runs hot and cold, he warned. Right now, he is getting hot in Wework. Beware if he starts running cold.

The first measure noticed Adam Neumann in January 2016, at an event called Startup India in New Delhi. Billing Star went to Prime Minister Narendra Modi. But Neumann, a figure similar to Jesus who stands 6 meters 5 inches long, with sculpted cheeks and black hair, stole the show.

For much of his life, Adam Neumann had fought against the chances. He was a dyslexic; His doctor’s parents were divorced when he was 7 years old. He enrolled at the Israeli Naval Academy, the school graduate office, served in a missile boat in Haifa, and then left. On that day in Delhi, Neumann spoke of India’s spiritual heritage as if he had passed a life in the subcontinent. Why were everyone talking about money collection, ratings and risk of a bubble? “That’s not the goal. The goal is to find something you love Trolin,” he prompted.

In the evening, Mass was setting up in the house of the Indian Mogul Sunil Mittal when Neumann was shaken in half an hour. By ignoring the security guards, he said he would require the right address. The tempted to give up, he played in the largest house in the block. This was Adam Neumann: Apparently sincerely, wild, becoming reckless. Like the mass, he operated on another planet, where everything was possible and the money was not great jobs, especially if it were someone else.

“Mass thought that Adam Neumann was the second coming [of Christ]”Says Jordan Levy, the New York Venture investor who would just leave softbank.” Elon Musk, Jeff Bezos and Bill Gates, all rolled in one. “

Wework MASA Multibillion promise to Wework set a seemingly irrational decisions model to invest in the amount of money growing for the founders with whom it would barely speak. Such moments are the item of entrepreneurship capital, which uses a high -risk, high -risk model. In the industry parliament, it is called “shot by the moon”.

But in the case of measures, the deepest psychological forces were at work. His approach to business and life in general was that if he could visualize something, it must be true. But this approach also left it sensitive to other dreamers. . . Who spoke about the construction of business empires and the rule of the world. The closest analogy, says a soft colleague, is Ronald Reagan and his steadfast confidence in the Star Wars missile defense system.

In the real world, Adam Neumann was just more than one intermediary, renting wholesalers of wholesale offices and loading flexible rent, cold design and delivery of services such as the Internet, reception and room of Post.neumann sold Wall Street a fantasy of joyful municipal living like Kibbutz in Israel with an entrepreneurial turn.

In March 2017, Neumann traveled to Tokyo to celebrate $ 4.4 billion in Softbank and distribute procedures: about $ 3.1 billion for global expansion, with softbank using balance ($ 1.3 billion) to determine Wework shares. Neumann. . . Stayed to earn a few hundred million dollars, one of the most lucrative stock sales from each starting CEO.

At the end of the spring of 2017, still firing supporters to raise Vision Fund cash registers, Mass requested a meeting with Warren Buffett, sage and Omaha. Investors loved the wisdom of the Buffett home, expressed every year in an annual letter to shareholders.

The mass, never good in the small conversations, went directly to the point. He wanted Berkshire to support his Vision Fund, the main funding vehicle for Softbank’s Wework investments. But Buffett explained that he was an old school investor who was interested in debt. “I’m a guy of cash flow,” he explained. Softbank Rajeev Misra executive soon realized that Buffett had no interest in introducing money into the Vision Fund. The measure continued regardless of; Buffett was polytely diffident. The meeting lasted barely 20 minutes; The mass had flown 6,000 miles for a meeting that ended with a giant zero. Buffett was aware of conscious.