Masayoshi Son, the founder of Japan’s SoftBank, made headlines in 2017 when he invested a staggering $4.4 billion in WeWork, a co-working startup that had captivated investors with its ambitious vision. This investment came at a time when WeWork was still unprofitable, yet it was valued at $20 billion—comparable to the valuation of established giants like Hilton Hotels. Son's gamble not only marked the largest investment in a U.S. startup to date but also set the stage for a rollercoaster journey that would ultimately become a cautionary tale in the investment world.
The relationship between Son and WeWork's founder, Adam Neumann, began in January 2016 at the Startup India event in New Delhi. It was there that Son first encountered Neumann’s vision for a new way of working and living. Impressed by Neumann's charisma and ambitious goals, Son believed he had found a potential game-changer in the industry. According to industry insider Jordan Levy, “Masa thought Adam Neumann was the Second Coming [of Christ].” This belief would drive Son to make one of the boldest investments of his career.
In 2017, SoftBank’s Vision Fund made its move. The initial deal required a $3 billion deposit to solidify the investment, consequently valuing WeWork at a staggering $47 billion. This valuation raised eyebrows among critics, who questioned the sustainability of such an inflated figure, especially for a company that had yet to turn a profit. Nevertheless, Son’s vision was rooted in the belief that WeWork could evolve into a real estate giant worth billions.
Son's enthusiasm for WeWork and Neumann's leadership fostered a close relationship. He often referred to Neumann as a "friend," reflecting the trust he placed in the entrepreneur. This bond played a pivotal role in SoftBank's decision-making process as it continued to pour funds into the startup.
However, as the months passed, cracks began to appear in WeWork’s facade. The company, which had garnered significant attention for its rapid expansion and innovative approach to workspaces, faced mounting scrutiny regarding its business model and financial viability. Critics pointed out that despite its lofty ambitions and market presence, WeWork was still operating at a loss.
In 2019, the reality of WeWork's situation began to crystallize as it prepared for an initial public offering (IPO). The anticipated valuation plummeted dramatically—from $47 billion to just $5 billion in less than two years. This decline was compounded by revelations about Neumann’s leadership style and management practices, leading to his ouster as CEO. The IPO plans were ultimately shelved, marking a significant turning point in the company's trajectory.
Son’s experience with WeWork serves as a stark reminder of the risks associated with investing in unproven companies and entrepreneurs. While he had previously earned acclaim for his ability to identify potential in fledgling firms, this particular investment highlighted the pitfalls of overvaluation and blind faith in charismatic leaders.
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