Inside WeWork's IPO meltdown: Adam Neumann's chaotic partnership with Wall Street

Free subscriber-exclusive audiobook!“No Rules Rules: Netflix and the Culture of Reinvention”Get it now on Libro.fm using the button below.This story is adapted from Wall Street Journal reporters Maureen Farrell and Eliot Brown's new book, "The Cult of We: WeWork, Adam Neumann, and the Great Startup Delusion," available July 20, from Crown, an imprint of Random House, a division of Penguin Random House.Adam Neumann was barking into his phone at one of his top deputies, livid over the headlines and chyrons flashing on TV about his company.It was August 14, 2019, and WeWork — the shared-office-space startup Neumann cofounded — had just revealed its financials to the world as part of a planned initial public offering.Neumann, the high-voltage chief executive, aged 40, was expecting a good day with a wave of positive press that could propel his company to a blockbuster IPO and enhance the near celebrity status he and his wife, Rebekah, basked in. They knew Neumann didn't like bad news and tended to look elsewhere for a more optimistic opinion.Despite the involvement of some of the world's most powerful and influential bankers, including JPMorgan's Jamie Dimon, by the time WeWork's IPO advisors tried to reel Neumann back to reality, it was too late.The following account is based on interviews with numerous current and former WeWork employees, bankers, and others who worked on the attempted IPO.The banks' work preparing for the initial public offering had begun in earnest in April, when Neumann — while throwing himself a giant 40th birthday party in the Maldives that included a 239-foot, five-story yacht named Titania — announced WeWork's intention to conduct an IPO.Neumann had long courted investment bankers and loved meeting with them. The expected prize at the end of the day was a plum role in a monster IPO.In May 2019, fresh off his Maldives trip, Neumann summoned bankers from JPMorgan Chase, Goldman Sachs, and Morgan Stanley to the low-slung WeWork headquarters on Manhattan's West 18th Street. It was time for the ritual known on Wall Street as the IPO "bake-off": Each bank would take turns pitching Neumann and his team, and WeWork would choose the best to lead the listing.First up was Morgan Stanley, led by its star tech banker, Michael Grimes, who played a central role in the IPOs of most top Silicon Valley companies, including Google, Facebook, LinkedIn, and Uber. The bank's asset-management arm had invested in WeWork years earlier, when it was valued at $1.5 billion and JPMorgan had become a huge lender to the company but also to Neumann personally, giving him more than $97 million in mortgages and other loans.Pressure was high on Noah Wintroub, JPMorgan's top tech banker. Twisting the knife, he told him that Goldman did."They're going to take over," he told Wintroub.After all the time and effort Wintroub had invested in the relationship with Neumann, the declaration was a stinging slap in the face.As the pain set in at JPMorgan, Goldman Sachs worked on its plan to provide up to $10 billion in loans to WeWork, a key ingredient of its winning pitch. Goldman's bankers eventually told Neumann and WeWork that it would be able to lend WeWork only some of the $10 billion — perhaps $3.65 billion — and would ask other banks like JPMorgan to help with the rest.Neumann felt betrayed. Dimon had his bankers quickly assemble a plan to help WeWork borrow $6 billion once it completed its IPO, and Neumann told the bank it would lead the listing.Goldman's bankers, though, refused to give up so easily.Srujan Linga, a newly minted managing director who impressed WeWork's team as a financial whiz, had been working on the debt deal for weeks. Even though JPMorgan had been christened the lead, neither bank seemed to feel secure, given Neumann's propensity for change.As the summer went on, the bankers realized WeWork wouldn't be immune to the market chill and the investor wariness over money-losing companies like Uber and Lyft.In a meeting, bankers from JPMorgan and Goldman gave Neumann a primer on the mechanics of the IPO process, and within it they had a slide that implied WeWork would have a $30 billion valuation, a sharp pullback from the far rosier projections they'd given to Neumann months earlier and from the $47 billion mark that SoftBank had valued WeWork at in a private funding round in January.Neumann lost it. Aides said they heard them frequently yelling at each other through the walls.Finally, the bankers began to take a more assertive approach.Seeing the deal as an important one, Dimon deputized Mary Callahan Erdoes, the 52-year-old CEO of JPMorgan's wealth-management division and one of a handful of executives mentioned as a Dimon successor, to head up the bank's efforts.She grew concerned.When Erdoes began to take stock of all of Neumann's power and money grabs that would be disclosed in the prospectus, she told him all the provisions could mean a hit to WeWork's valuation of as much as 30%.Aides had endlessly watched Neumann obsess over valuation as long as they'd known him, so they expected this argument to resonate.