Adam Neumann was flying high. Literally.
His office-rental giant WeWork was months away from being valued at $47 billion. Revenue was doubling annually. And Mr. Neumann was zipping across the Atlantic Ocean in a Gulfstream G650 private jet with friends last summer, smoking marijuana.
After the group landed in Israel and left the plane, the flight crew found a sizable chunk of the drug stuffed in a cereal box for the return flight, according to people familiar with the incident. The jet’s owner, upset and fearing repercussions of trans-border marijuana transport, recalled the plane, leaving Mr. Neumann to find his own way back to New York, these people said.
Since Mr. Neumann co-founded WeWork—recently renamed We Co.—with Miguel McKelvey nine years ago, he has led with unusual exuberance and excess. His combination of entrepreneurial vision, personal charisma and brash risk-taking helped the company surpass $2 billion in annual revenue, and made it the country’s most valuable startup.
Now many of the same qualities that helped fuel his company’s breakneck growth in the private market are piling up as potential liabilities as the company prepares to go public—helmed by a CEO who looks little like a typical public-company chief.
Mr. Neumann muses about the implausible:
- becoming leader of the world,
- living forever,
- amassing more than $1 trillion in wealth.
Partying has long been a feature of his work life, heavy on the tequila.
Public investors are increasingly skeptical of the formula that has worked for Mr. Neumann so far: his pitch that We is far more than a real-estate company. With its rapid growth and use of technology, he argued, the company deserves rich valuations normally reserved for tech companies.
Instead, many potential investors now see a fast-growing office subleasing company with losses of more than $1.6 billion last year.
Since We filed the prospectus for its initial public offering last month, it has been besieged with criticism over its governance, business model and ability to turn a profit. It is now expecting an IPO valuation as low as a third of the $47 billion sticker price it garnered in a January funding round—a drop without recent precedent. This week, We postponed the offering until October at the earliest.
Wall Street and Silicon Valley investors have been dismayed by the number of potential conflicts of interest disclosed in the “S-1” IPO prospectus, including Mr. Neumann leasing properties he owns back to the company and borrowing heavily against his stock. Even some of We’s private investors said they were angered to learn that an entity Mr. Neumann controls sold the rights to the word “We” to the company for almost $6 million—before public pressure led him to unwind the deal.
“This is not the way everybody behaves,” said Dick Costolo, former CEO of Twitter Inc., who led the company through one of the larger tech IPOs of the past decade. “The degree of self-dealing in the S-1 is so egregious, and it comes at a time when you’ve got regulators and politicians and folks across the country looking out at Silicon Valley and wondering if there’s the appropriate level of self-awareness.”
Given the prominence of the IPO, he added, “that is a big problem.”
Mr. Neumann, 40, declined to comment through a spokesman, who cited rules surrounding the planned IPO. Mr. Neumann told We employees Tuesday the process had been humbling and he would learn from it, say people who heard him. We executives have previously said he is strongly devoted to the company, and many of his personal transactions were made with the company’s best interests at heart.
This account is based on interviews with current and former employees, investors and friends who interacted with Mr. Neumann as he built We.
For startup investors, the 6-foot-5 Mr. Neumann has always had the qualities they crave in Silicon Valley founders, despite being based in New York. He is intensely ambitious and a masterful storyteller with a magnetic personality who can inspire and sell.
Raised in Israel on a kibbutz, Mr. Neumann moved to the U.S. when he was 22, where he attended Baruch College and tried to start businesses. One was a collapsible heel on women’s shoes that didn’t get off the ground. Working out of his Tribeca apartment, he started Krawlers, which sought to make baby clothes with knee pads to make crawling more comfortable. The slogan, he has said: “Just because they don’t tell you, doesn’t mean they don’t hurt.” It never gained traction.
He and Mr. McKelvey started a small co-working space on the side during the recession that followed the financial crisis and were amazed by the demand.
By 2010, they had started WeWork, with essentially the same core business model that exists today: They lease an office long-term, renovate it to make it hip and inviting, and sublease smaller desks and offices short-term.
According to “Kushner, Inc.,” Gary Cohn, former director of the National Economic Council, has told people that Ivanka Trump thinks she could someday be president. “Her father’s reign in Washington, D.C., is, she believes, the beginning of a great American dynasty,”
.. Kushner, whose pre-White House experience included owning a boutique newspaper and helming a catastrophically ill-timed real estate deal, has arrogated to himself substantial parts of American foreign policy. According to Ward, shortly after Rex Tillerson was confirmed as secretary of state, Kushner told him “to leave Mexico to him because he’d have Nafta wrapped up by October.”
.. As political actors, the couple are living exemplars of the Dunning-Kruger effect, a psychological phenomenon which leads incompetent people to overestimate their ability because they can’t grasp how much they don’t know.
Partly, the Jared and Ivanka story is about the “reality distortion field” — a term one of Ward’s sources uses about Kushner — created by great family wealth. She quotes a member of Trump’s legal team saying that the two “have no idea how normal people perceive, understand, intuit.” Privilege, in them, has been raised to the level of near sociopathy.
.. Ward, the author of two previous books about the worlds of high finance and real estate, has known Kushner slightly for a long time; she told me that when he bought The New York Observer newspaper in 2006, he tried to hire her. She knocks down the idea that either he or his wife is a stabilizing force or moral compass in the Trump administration. Multiple White House sources told her they think it was Kushner who ordered the closing of White House visitor logs in April 2017, because he “didn’t want his frenetic networking exposed.” Ward reports that Cohn was stunned by their blasé reaction to Trump’s defense of the white-nationalist marchers in Charlottesville, Va.: “He was upset that they were not sufficiently upset.”
Still, even if you assume that the couple are amoral climbers, their behavior still doesn’t quite make sense. Ward writes that Ivanka’s chief concern is her personal brand, but that brand has been trashed. The book cites an October 2017 survey measuring consumer approval of more than 1,600 brands. Ivanka’s fashion line was in the bottom 10. A leading real estate developer tells Ward that Kushner, now caught up in multiple state and federal investigations, has become radioactive: “No one will want to do business with him.” (Kushner resigned as C.E.O. of Kushner Companies in 2017, but has kept most of his stake in the business.)
To truly make sense of their motivations, Ward told me, you have to understand the gravitational pull of their fathers. Husband and wife are both “really extraordinarily orientated and identified through their respective fathers in a way that most fully formed adults are not,” she said.
“You’ll notice that the U.S. position toward Qatar changes when the Qataris bail out 666 Fifth Avenue,” said Ward, adding, “We look like a banana republic.” Maybe that’s why Jared and Ivanka appear so blithely confident. As public servants, they’re obviously way out of their depth. But as self-dealing scions of a gaudy autocracy? They’re naturals.
If you spend any time with supporters of President Trump, something becomes quickly apparent. Ask them why they stand with the president and the first response will generally be something abstract: Trump is making America great again. He’s putting America first. He’s delivering for the people. After eight years of Barack Obama, Trump is turning things around. Some will mention the economy; fewer will mention other policy issues. But generally the theme is that they support Trump for being Trump.
.. a bit under 60 percent — indicated that the rationale for their support stemmed from his personality and approach to the job vs. his policies or values.
.. personality is preferred to policies among Trump supporters, with a slightly higher percentage pointing to policies and values than last year.
.. On the question of whether Trump has used his position to inappropriately enrich himself, his family or his friends, Republicans have gotten more confident in the president. They assumed he would not by a 41-point margin in 2016. They now believe he hasn’t by a 58-point margin.
.. Interestingly, though, perceptions that Trump is dishonest are only the third-most common concern that people express about his presidency. The most common concern, like the most common reason that supporters like him, is his conduct and personality.
.. Only about a quarter of the country points to Trump’s policies as their main concern or reason to be enthusiastic about his presidency. More than half point to his personality and approach to the job as why they are or are not concerned about where his presidency is headed.
Mexicans are mad as hell at a system they see as self-dealing, under-performing and corrupt. That should sound familiar to Americans — not to mention Italians, Britons, and those in every other nation swamped by the populist tide. In Mexico’s case, they’re largely right.
.. Enrique Peña Nieto, the outgoing incumbent, came to office promising to cut the crime rate in half. Instead, Mexico suffered more than 25,000 murders last year, a modern record. He promised an end to corruption. His administration is suspected of spying on anti-graft investigators, and his wife was caught buying a $7 million mansion from a government contractor. He promised economic growth of 6 percent a year. It hardly ever got above 3 percent. The average wage fell by about $1,000 during the Great Recession and hasn’t recovered since.
.. American president, who is also on record saying he couldn’t care less whether his policies hurt them. If AMLO wins, Trump will deserve him.
.. AMLO’s popularity rests on the belief that he will end corruption, bring down crime, and redistribute ill-gotten gains to the people. How, exactly? Just as Trump declared at the 2016 Republican convention that he “alone” could fix a broken system, AMLO seems to have convinced his base that he can just make things happen. “Everything I am saying will be done” is how he punctuates his pledge
.. It’s the way of demagogues everywhere.
.. Trump promises to build border walls, win trade wars, keep us safe from terrorism, and end Obamacare, all at the snap of a finger
.. AMLO promises to fix social inequities that date back 500 years in a single six-year term.
.. compares himself to Benito Juárez, Mexico’s answer to Abraham Lincoln.
.. The idea of steady improvement and gradual amelioration isn’t for him. In Mexico’s current anger he seems at last to have found his moment.
.. it isn’t clear whether the softer rhetoric is anything more than an attempt to allay the fear (which factored heavily in his previous defeats) that he’s a Mexican Hugo Chávez.
.. It especially doesn’t work out well when populist policies collapse (as they generally do) on contact with reality. What typically follows isn’t a course correction by the leader or disillusionment among his followers. It’s an increasingly aggressive hunt for scapegoats: greedy speculators, the deep state, foreign interlopers, dishonest journalists, saboteurs, fifth columnists, and so on.
That’s been the pattern in one populist government after another, from Viktor Orban’s Hungary to Recep Tayyip Erdogan’s Turkey to, well, Trump’s America. Now Mexico risks being next.