DealBook Online Summit: Watch Ken Chenault and Ken Frazier on Voting Rights
One of the questions someone just asked is, does did the valuation you think affect your management and management style? Do you think it made you become more arrogant in how you did it? I think that’s a great question. And as we were doing this and the world was telling us, you’re correct, it’s working, the valuation was just another way where people sort of told us that we were right. Oh, everything is working, we’re headed in the right direction. The value is going up. Remember also, our investors were the biggest investors in this country. They weren’t your everyday investors. They were blue chip and they’re the best of the best. So yes, the valuation made us feel like we were right, which made me feel that whatever style I was leading at was the correct style at the time. So I do think it, it affected it. I also think that Chase and at some point I do think, I think that’s what maybe is getting hinted that maybe it went to my head. I do think at some point it did.
Since being forced out of WeWork two years ago, Adam Neumann has stayed quiet in public about the near-collapse of the co-working empire he co-founded. But at the DealBook Online Summit on Tuesday, he admitted to regrets — and tried to revise the record about what happened.
“I have had a lot of time to think, and there have been multiple lessons and multiple regrets,” he told DealBook’s Andrew Ross Sorkin in his first public interview since leaving the company.
Among the mistakes he identified:
He conceded that WeWork’s rapid rise — at its peak in 2019, the company was valued at more than $47 billion — may have had a corrosive effect on his thinking. “It went to my head,” he said. “You lose focus on really the core of your business and why this business was what it meant to be.”
“It was never my intention not for the company to succeed,” he said, expressing regret at the employees who joined the company only to see their stock options drop deep underwater after WeWork’s valuation fell to about $9 billion.
He regretted WeWork’s overcomplicated accounting measures, such as the notorious “community-adjusted EBITDA,” which drew derision from analysts and prospective investors. “When it comes to finance, it’s better to be boring,” he said.
He even admitted to making a mistake in talking too much during a 90-minute meeting with Tim Cook, Apple’s chief executive, several years ago. “It made no sense,” he said. “I was not in the right place.”
But in the interview, Mr. Neumann also disputed or sought to play down some of the most eye-catching anecdotes about WeWork that circulated after his ouster:
He bristled at the criticism that he received a golden parachute after being forced out, even as the business’s valuation plunged and hundreds of employees were laid off. “This perception that as the company went from $47 billion valuation down to nine and I profited somehow while the company is going down is completely false,” he said.
He disputed the characterization of his selling the “We” trademark to the company for $5.9 million before the company sought to go public in 2019, offering a lengthy explanation of what he said happened. Ultimately, however, he said he regretted how it had played out: “I understand it sounds horrible,” he said. “If I went back and I could change time and avoid that mistake, I would.”
When asked about reports of boisterous drinking and drug use by employees at WeWork functions, Mr. Neumann said that “we had a fun culture.” He said that as the company grew, its culture should have matured as well: “I think that could’ve happened sooner.”
Still, Mr. Neumann walked away with hundreds of millions of dollars, and he retains a significant number of shares in WeWork, which went public earlier this year. (He claimed some credit for helping broker the company’s merger with a special-purpose acquisition company, or SPAC.) He has since turned to investing his personal fortune on projects including, recently, cryptocurrency initiatives.
But he also offered some advice to entrepreneurs from the mistakes he had made. “In life, sometimes you are up and sometimes you are down,” he said. Valuable lessons are learned during the low times, he said, and “you can apply that lesson and it will be a great part of your journey and will become a good thing, not a tragedy.”
Jamie Dimon, the chief executive of JPMorgan Chase, may have been pivotal in saving WeWork from disaster.
Adam Neumann, the co-founder and former head of WeWork, said at the DealBook Online Summit on Tuesday that in Sept. 2019, shortly after the company had called off its initial public offering and was facing a cash crunch, as well as questions about Mr. Neumann’s leadership, Mr. Dimon called Mr. Neumann on a Sunday and asked him to meet in the bank chief’s office. WeWork had selected JPMorgan to be the lead underwriter of its I.P.O. before putting the deal on hold.
Mr. Neumann said that the meeting, which has been reported before but Mr. Neumann has never publicly addressed, was “hard to forget.” At the meeting, Mr. Dimon told Mr. Neumann he should quit. As Mr. Neumann recalled to DealBook’s Andrew Ross Sorkin:
He told me, ‘Adam, you have done a great job until now but you will have to put the company first.’ I said, ‘Jamie, I’m always ready to put the company first.’ He said, ‘I think you should step down.’ He said, ‘With you there, you won’t be able to raise the money. Without you there, it will help you raise the money.
“I trusted Jamie and I looked up to Jamie. I still do,” Mr. Neumann said, though he added that he hasn’t talked to the JPMorgan leader lately.
Three days after their encounter, following a reportedly tense meeting with WeWork’s board, Mr. Neumann stepped down as chief executive, though he remained for a time as nonexecutive chairman.
Last month, WeWork went public though a deal with a special purpose acquisition company, or SPAC, effectively completing the financial transaction that Mr. Neumann wasn’t able to, though at a valuation tens of billions lower than Mr. Neumann had envisioned.
Mr. Neumann said he celebrated with some of WeWork’s early employees on the day WeWork went public. While Mr. Neumann said the pandemic was tough on the company, he still thinks WeWork’s future is bright.
“Co-working during the time of the coronavirus — it’s not the world’s best idea,” he said. “Flexible office and community in the world post-corona, when work has shifted, might turn out to be one of the best ideas.”
What’s your thought on cryptocurrency right now and potentially accepting it through Apple Pay or otherwise? Um, it’s something that we’re looking at. It’s not something we have immediate plans to do. I would sort of characterize it as there are things that I wouldn’t do like our cash balance. I wouldn’t go invest that in crypto, not because I wouldn’t invest my own money in crypto, but because I don’t think people buy an Apple stock to get exposure to crypto. And so if they want to do that, they can, you know, invest directly in crypto through other means. And so I wouldn’t do that and I’m not planning to in the immediate future to take crypto for our products as a mean of tender. But there are other things that we’re definitely looking at. Like what? Like, I wouldn’t want to have anything to announce today. Well, let me ask you a different question, because you just said that you might not do it personally. Do you own crypto in any Bitcoin or Ethereum? Or do you play around with this? I do. Yeah, I think it’s reasonable to own it as a part of a diversified portfolio, and I’m not giving anybody investment advice, by the way. When when did you get interested in it? I’ve been interested in it for a while and I’ve, you know, been researching it and so forth. And so I think it’s interesting.
While Apple might not offer users a way to pay with cryptocurrency anytime soon, its leader has invested in it personally.
Tim Cook, Apple’s chief executive, said at the DealBook Online Summit on Tuesday that he has bought cryptocurrencies. “I think it’s reasonable to own it as part of a diversified portfolio,” Mr. Cook told DealBook’s Andrew Ross Sorkin, quickly adding that he wasn’t giving investment advice.
It was a rare insight into how Mr. Cook manages a portion of his billion-dollar fortune. He said he has done some research on crypto and has been interested in it for “a while.” The typically volatile Bitcoin price hit a record at above $68,000 earlier on Tuesday.
The revelation came as Mr. Cook said that Apple itself did not intend to join a growing number of big businesses incorporating crypto in their operations. Tesla, for instance, began accepting Bitcoin as payment for its electric vehicles this year and bought $1.5 billion worth to hold in its corporate treasury.
Mr. Cook said, however, that Apple didn’t plan to buy any Bitcoin with its roughly $200 billion in cash — “I don’t think people buy Apple stock to get exposure to crypto,” he said — and added that it had no plans to make crypto an accepted method of payment anytime soon. “It’s not something we have immediate plans to do,” he said.
But never say never: Mr. Cook added, cryptically, “There are other things that we are definitely looking at.”
I think that we have a responsibility as a business to do business in as many places as we can because I think business is this huge catalyst. I believe in what Tom Watson said is world peace through world trade. I have always believed that. And so I think we should be about not, you know, not pulling up the drawbridge, but we should be about building the bridges. And so I think that’s key for business and in terms of what we speak up on, we speak up on some privately, we speak up on some publicly. We do it in different ways. And you have to get your head around when you’re operating outside the U.S. and any country in the world that there are different laws. That’s part of both the complexity and part of the beauty of the world is everybody has their own laws and customs.
Companies have a responsibility to be a force for good in society, according to Tim Cook, Apple’s chief executive. But how to achieve that is sometimes less than clear.
In a wide-ranging interview at the DealBook Online Summit on Tuesday, Mr. Cook touched on areas where he believes corporate America can, and should, have an effect. Mr. Cook singled out mental health, saying that not only does the topic deserve more research, but also that “all of us should care about making products that help people’s mental health and not play against it.”
He cited the iPhone’s feature for tracking screen time, which he said helps inform people about what is good for their mental health. “If you are scrolling mindlessly, or letting yourself be spun up on negativity, I think this is bad,” he said. “This is bad for your mental health and it’s bad for the people around you.”
But when it came to criticism that he hasn’t spoken out enough against allegations of human rights abuses in China, Mr. Cook defended a low-key approach, saying that Apple speaks up privately on matters of concern. The company’s responsibility is “to do business in as many places as we can,” he said. That means following different countries’ laws and not unduly ruffling feathers, which could risk a place at the table.
“Being on the sidelines is never a good place, at least for business,” Mr. Cook said. “Engagement is the right approach.”
On the first day of the DealBook Online Summit, hosted by Andrew Ross Sorkin, top newsmakers in the worlds of business, policy and culture discuss the future of technology, gender equality, the direction of democracy and life after the pandemic, among many other consequential topics. Register here to attend, free of charge, and catch up on any sessions you may have missed.
Here is today’s lineup (all times Eastern):
10 a.m.-10:30 a.m.
Tim Cook of Apple
The chief executive of the iPhone maker shares his vision for the future of privacy, payments and the internet in general.
11 A.M.-11:30 A.M.
The co-founder and former chief executive of WeWork speaks about his tumultuous quest for a workplace utopia, lessons learned and his next act.
2 P.M.-2:30 P.M.
Meghan, The Duchess of Sussex, of Archewell and Mellody Hobson of Ariel Investments
Two groundbreaking figures discuss how women can reach economic and professional parity, and reflect on how their shared experiences have influenced their thinking.
3:30 P.M.-4 P.M.
Albert Bourla of Pfizer
The chief executive of the pharma giant reflects on the race to create highly effective Covid vaccines, the battle against new variants and what life after the pandemic will look like.
4 P.M.-4:30 P.M.
Ken Chenault of General Catalyst and Ken Frazier of Merck
Two of corporate America’s most prominent leaders make the case for creating opportunities for underrepresented talent and protecting the voting rights of all Americans.
4:30 P.M.-5 P.M.
The Academy Award-winning actor, philanthropist and self-described “poet-statesman” discusses how to mend a broken political system.