Grubstakers - Episode 95: Adam Neumann (WeWork)

Episode Date: September 4, 2019

The episode this week describes the hottest new trend in companies that have no conceivable way to make money: launching IPOs and letting the founders dump that problem onto the general investing public. Early 2000s nostalgia is in so we're bringing back dot com pump and dumps. Welcome to the life of Billionaire Adam Neumann and his "company" WeWork, which is cooking its books so blatantly that even the financial newspapers owned by other billionaires have been pointing it out. We explore his humble origin story growing up the rich kid in a Kibbutz on stolen land, his meager start doing business out of the Tribeca apartment his parents paid for, and how the WeWork IPO later this month will solidify him as a billionaire even when the company inevitably crashes and burns. One thing we forgot to mention on the episode: the Brooklyn landlord Joshua Guttman, who gave Adam Neumann the space to start his first company Green Desk, has been linked to numerous mysterious arson fires at his properties. Everything here seems to be on the up and up! https://www.nytimes.com/2006/05/18/nyregion/18landlord.html

First they think you're crazy, then they fight you, and then all of a sudden you change the world. Berlusconi flatly denies that any mafia money helped him begin to start the dynasty. I have always had a thing for black people. I like black people. I'm telling you, these stories are funnier than the jokes you can tell. I said, what the fuck is a brain scientist? I was like, that's not a real job. Tell me the truth. But anyway. In 5, 4, 3, 2, 1. Hello, welcome back to Grubstakers, the podcast about billionaires. Happy Labor Day to you and yours.

My name is Sean P. McCarthy, and I'm joined here by all my co-hosts. Steve Jeffers. Yogi Poyle. Andy Palmer. And so this week, you know, to celebrate Labor Day, we wanted to talk about the real laborers. The people who do the hard work of launching IPOs multi-billion dollar initial public offerings right and we thought there was no better example of how these are the real wealth producers in society than Adam Neumann the billionaire co-founder of we work oh yeah he's great yeah so we

work is going to launch an IPO this month, September 2019. We don't know the exact date, but they're going to have their initial public offering. And it's kind of an interesting thing where something we've talked about in this podcast is, you know, corporate media generally runs cover for billionaires, doesn't really interrogate their position in society. However, in the lead up to this initial public offering, there have been prominent articles in Forbes, New York Times, Business Insider, Financial Times, Bloomberg, New York Magazine, all of which have basically said, yeah, WeWork is a Ponzi scheme.

They're going to do a Ponzi scheme for an IPO. Yeah, that sounds about right. Just all over the media and everyone's like, yeah, I guess we just do Ponzi scheme for an IPO. Yeah, that sounds about right. Just all over the media, and everyone's like, yeah, I guess we just do Ponzi scheme IPOs now. It's about community. It's about community, guys. Just building them. For research for this episode,

I spent about five hours a year and a half ago on a date with someone who works for WeWork, just arguing because she hated that I voted for Jill Stein. I'm surprised you had time between her 60 to 70 hour work week. I think she managed to find time in between, in her words, scheduling when people would be fired. Yeah, for this episode, I chose to put one of the vaginal jade goop eggs in my ass. And we'll see how it lines up with the end of the episode and so i mean so we work like this is the initial public offering equivalent of running into a jewelry store smashing a display case and grabbing everything you can and then

running out and it's just interesting where i mean this is it gives me deja vu to the dot-com bust where we'll kind of go through Adam Neumann, Forbes gives him a net worth about $4.1 billion. It's not very reliable because that entirely depends on how you value WeWork, the company, which nobody knows how to. It's apparently been valued up to $47 billion. Last year, they said it was $20 billion. But there's like a competing uh

company that does a similar thing that has a market capitalization of like three billion dollars even though they make they actually make a profit and have more square footage than we were the the 47 billion dollar valuation that people is being bandied about is often based on just the amount of private investment that's been shoveled in over the past eight years oh really yeah so there's like a few big players like a soft bank from japan and uh the vision fund yeah yeah that we'll get into right yeah my burning pile of cash is valued at uh eight billion dollars it's true we work loses like two billion dollars a year i think they lost 1.8 billion last year they lost more than one billion the year before it well like i mean like the other unicorn companies

which uh the rough definition seems to be over one billion dollar valuation but negative operating cash flow right uh they um I was reading this one company, Triton Research, which does IPO evaluation research. And it's pretty consistent that for every $1 of revenue that these unicorn companies make, they lose $2.

What? Yep. Why is it that all these companies, every one of them is like, hey, let's put a boatload of money into something that doesn't really work and then hope that all our competitors will die before us and we somehow remain

victorious? It's a really interesting phenomenon. There's a couple of countries, companies that just have, just live off of the idea that they can grow forever, basically. So they're less like the popular conception of unicorns and more like the medieval conception of unicorns, which is that they'll kill you. Yeah. Yeah.

This is the dangerous unicorn. It's not like the friendly My Little Pony one. Like all unicorns, they're white. So I think that's pretty obvious. I do like how we've set up an economic system based around the bank robbery video game Payday 2. Get in, get the money, get the fuck out. This is like the startup economy we've all built.

Well, the investment banks on Wall Street are helping them basically rehearse the heist. Right, and that's exactly... That's part of why they earn their fee, basically. It's how the the original private investors and the founders can get in get out get the money yeah well and that's something we've talked about on this podcast is you know the dot-com bust of uh 2000 2001 was like really kind of a pump and dump for wall street where they would ipo all of these uh companies that had no

ability to ever in history possibly make money. And so you kind of see that again with WeWork, just jumping ahead a little bit from this Forbes article which lays it out really well actually. So Adam Neumann, the billionaire subject of today, quoting from Forbes, seems to be using the company's IPO as another way to profit. Neumann has a personal line of credit of up to $500 million from UBS, JP Morgan Chase, Credit Suisse, all of whom are coincidentally underwriters in WeWork's IPO. Interestingly, one bank not listed as a personal lender to Newman is Morgan Stanley,

which reportedly pulled out of WeWork's IPO after it failed to win the lead underwriter position so the entire point here is that these banks get to collect the fees and uh other uh cash incentives that come with being the lead underwriter and exchange they're like hey here's a 500 million dollar line of credit and so you know even if we work goes under newman as well as uh newman will have cashed out right but the banks that underwrote the ipo will have collected hefty fees and probably cashed out as well, unloaded their stock options. So it's just something where it's like, again, this is deja vu with the dot-com bust. Now, this is all legal. This is not something that's been stopped before.

Like, why are we not? Like, if it's so similar to something that clearly crippled the fucking economy, how is it not something that people are going, hey, let's stop this thing? It's all legal, baby. Really? It's all legal? Yeah. Oh, as far as, I mean, as far as like the fees that Wall Street firms are getting for just for underwriting this deal? Yeah. Wow.

That's nuts. I mean, it's probably, their fees probably exceed the $500 million line of credit. Sure, sure. Yeah. Interesting. Right. And so Adam Neumann's got a $500 dollar line of credit sure sure yeah interesting right and so adam newman's got a 500 million dollar line of credit god damn it adam newman's got a 500 million dollar line of credit uh he's according to the wall street journal cashed out at least 700 million of his personal stock so it's like again like you can argue about if he should be worth 4.1 billion based on this valuation he's already exited with at least a billion dollars his company has never

made money and it's like i mean it seems like a giant pump and dump scam on all investors which we'll kind of go through a little bit more here but um i guess one other thing is you mentioned SoftBank, the Japanese bank. So in 2017, SoftBank, they launched the Vision Fund, which is a $100 billion fund, which includes $45 billion from the sovereign wealth fund of Saudi Arabia. And so in 2017, they invested a little more than $3 billion in WeWork. But they wanted to invest more, but apparently the Saudi investors got nervous. So I just like that the people who thought it was a good idea to murder a Washington Post journalist in an embassy

were also smart enough to figure out that this was a scam. Right, right. I mean, they totally got away with murdering Khashoggi. You know, in retrospect, we all thought they were just being dumb but no they knew that was a pretty solid roll the dice roll the dice twice like uh even they're like i don't want to push my luck yeah well and it's interesting like and we'll kind of go through this with adam newman and his wife but it's it's the new culture of how scams sound where it's just all this new agey post-capitalism bullshit

it's the same old capitalism but you know we talk about we and they talk about we're not selling uh office space we're selling community right and uh all this shit oh another fun fun thing share a coke yeah they they uh we work refuses to call tenants tenants they call them quote members and they refuse to use the word tenant anywhere i got a member for them but i guess we should just know we should note for people not familiar with the we work business model they rent office space on long-term leases like 15-year leases and then they sublet it to uh usually small business startups but more and more uh big name companies as well and um yeah like the the average lease term is pretty short for their tenants like more about members 15 minutes members sorry 15 months or so i think they their primary

uh uh membership is board trust fund kids. Sure, sure. Trying to tell themselves that they're working. You're telling me there's big company members now, too? That there's companies going, let's invest in... Is it incestuous in that the companies think that WeWork would be popular, so they want to put money in it as well? Or is it less incestuous and more those companies are idiots?

That's mainly okay like almost almost all of their members are like small businesses of like like five to twenty people or so oh okay and there's a there's been a few more like large large members i'm just gonna switch to tenants easier uh gonna work out this large tenant. Yeah. There's been a few large scale tenants but basically it's just all small businesses.

Sure. That makes sense. Yeah, that need like cheap like you don't even own your own desk sort of setups. Right. Yeah, we had to call

the sheriff's department to forcibly end somebody's membership. This is a bad time to tell our listeners that we're doing this podcast out of a WeWork. We're at a WeWork right now.

We're doing this at the open bar that is at WeWork. So if you hear anything in the background, it's people making the cappuccinos and martinis and stuff. There's people in the coworking space making the cut it motion. Don't blow up our spot. I wonder how much of that free beer you could get before you're kind of breaking even on the have you guys been to one no no i've been to them a few times there's an open bar oh there's uh you know free coffee all that one thing one thing we'll cover

is a couple of practices that the wife chooses to include in WeWork. And one of them is they have kombucha on tap. So if you want the booch, get to a WeWork. Adam Newman was supposedly drinking so... It was either Adam or Miguel, according to a source that we got, that they were drinking so much kombucha that it was making them ill. Until someone was like, oh no, that has alcohol in it. And they were like, oh, that makes more sense. Right.

Yogi mentioned Miguel McKelvey is the co-founder. He's also a billionaire as well. Billionaires are the best and the brightest. We're not going to focus so much on him today because I think this will be an interesting two-parter where we'll do Adam Neumann today. Hello, Neumann. We'll do Neumann today,

and then we'll do Miguel McKelvey after the federal indictments come out. Right, of course. So we can follow up once they have all fled the country to avoid their wire fraud charges. Renting an apartment out of Monaco with Ghislaine Maxwell. I'm looking at the WeWork workspace pricing. And for a private office, it starts at about $930 a month. Cool.

Yeah. You can also get what's called a hot desk, which is you don't have a specified place. It's just you will be somewhere for about $475 a month for one person. I guess if you want to save some money on an apartment and have as much free beer as you want, you get a cot, $540 a month, private office.

Right, right. Are there reports of people living in WeWorks? Not that I've seen. Because there's no security there, right? It's just people showing up. Do they close up shop ever? I think they usually close at like 6. I mean, I guess it depends on the building.

Sure, sure. Interesting. Yeah. Oh, yeah. No, we'll close up. Yeah, you go on home. I think they usually close at like 6 I mean I guess it depends on the building Sure sure Interesting Oh yeah no we'll close up Yeah you go on home Yeah I got a job being security at a WeWork Great rent and great benefits Free beer Yeah so just to characterize their

Membership it's mainly like Small 5 to 20 person Small businesses that Like like that aesthetic i guess of uh you know um glass glass walls wood paneling right um mid-century furniture yeah should they get on wayfair yeah right like and you know a lot of companies have gotten into this whole co-working space kind of thing and whatever other buzzwords. But I guess before we start with kind of the chronological biography of Adam Neumann, I did want to mention the one thing that essentially why everybody thinks this is a scam, and I really do personally believe it's impossible for this business to make money, is they have lease obligations. We mentioned they mostly don't own their buildings. They just get these 15-year leases or however long it may be,

and they have lease obligations totaling $47 billion, which, oddly enough, is the highest valuation for them I've seen. But they only have, Steve, you were saying rental income guaranteed of something like $4.5 billion? Yeah, they have $47 billion of obligations for their leases. Right. Off $4.1 billion worth of income from those leases. Right.

And so that's the interesting thing here is the Forbes article points out, like, this is an economic expansion. Like, not everyone's doing great of course but you know lots of businesses have been doing well enough we work has been burning billions of dollars every year in a comparatively good economy so what the fuck happens if there's a recession well they've been filling the gap basically with private investors so far right and they want the ipo to bail out their some of the highest some of the highest percentage ownership and also the founder i mean i bet they cracked the code where when there's a recession they just turned it all around well here's the interesting thing

the only conceivable explanation i've heard that doesn't involve this just being a straight up pump and dump boiler room scam is that we work is just trying to expand until they are a too big to fail tenant right like they're trying to become a fucking not Lehman Brothers but let's say Goldman Sachs you know where right now we work is the biggest tenant in all of New York City they are the second biggest tenant in London next to the British government so it's like all of these offices have these office spaces, have these long leases with WeWork. If WeWork buckles under, then it's like either the idea is the entire rental economy will collapse. Hell yeah.

Unless they renegotiate their leases or just the fucking government has to straight up bail them out. I'll be honest. Like, usually these, learning about these billionaires and all their corruption and shit, it leaves me with a pretty bleak feeling. But the idea of WeWork completely collapsing and destroying the rental market just fills me with joy. I mean, you got to hope that there's maybe a Sanders administration. Sure, sure.

By the time they really go under. Well, I've noticed like doing this podcast, the billionaires that like we've almost two years now, the billionaires that I really hate are kind of like the Warren Buffett, like I'm a good guy. But like these kind of Adam Neumann people where it's just like yeah i'm just openly do where it's just like i'm just openly doing a boiler room scam on the dow jones industrial average try to stop me on some level you almost respect that you're like he recognizes they killed epstein in plain sight you can just you can get away with shit now so yeah why not just do a fucking uh pump and dump scam in front of everybody's faces and be like yeah i don't care how many people write about this if all i have to do is

break the cameras and pay the guards enough to lie it's it's not that much there's a lot of different ways to characterize the precarious position of we work but one way is in terms of its occupancy they can handle in a downturn right and Regis or Regis however however you want to pronounce that and Kelly one of their one of its one of its biggest competitors they compare them turn ourselves in terms of a lot of people compare them in terms of their what occupancy they could manage in a downturn and still maintain be able to be able to pay interest on all of their obligations

and not just be a complete Ponzi scheme. And it would in a downturn, a lot of people estimate WeWork would go down to about, like, if they go below 85% occupancy, they're pretty screwed. Really? But compare that to Regus,

where that's where they're at that's regis's occupancy rate in an up market oh so they have they're relatively more efficient in terms of what they can handle in the down term right right so regis actually has their company set up so that if they so 80 is high for regis like that would be good for them? Yeah, they're able to accept lower occupancy rates and still be servicing all of their debt, all of their equity positions. Now, is Regus cheaper than WeWork?

Or are they just another company doing the same thing but in different markets? So they're another older company working at the same scales as WeWork. They have residential commercial properties just like WeWork. Interesting. They have residential commercial properties just like WeWork. A lot of people have said like, why

should I care about WeWork if another group has already been doing basically the same thing. Right. A lot of the interiors of their buildings are a lot different. They say like, well WeWork is better because it's able to court millennials or whatever.

Sure, sure, sure. And a richer clientele, somewhat more wealthy. And more growth-oriented companies, basically. Right, right, right. WeWork is selling the brand as well as the... It doesn't really satisfy a lot of the questions that come up in Bloomberg and what have you about investors. They're like, wait a minute. If a bunch of rich people can come together in Fort Rodriguez and do basically the same thing,

and then we work as just doing more or less the same thing themselves, why should I care? Can I just go on a tangent for a second? There's a thunderstorm coming in, and I just like to make a request. I'm closest to the window. If I get struck by lightning, keep recording.

The show must go on. Yeah. We'll start the biography here, but I did just want to note one more thing um with regards to all this self-dealing we've mentioned and we'll kind of get back to it but so we work has released what's called the prospectus for their ipo which is like supposed to be you know their disclosures for public investors and uh an expert told bloomberg it was quote a masterpiece of obfuscation um and so because they invented a stat called community adjusted ebita which we've discussed ebita is like earnings before taxes depreciation amortization or whatever yeah it's like a crude it's a measure wall street uses a lot of times to try and normalize companies who make completely different things earnings.

Right, right, right. That sounds like a transliteration of hieroglyphs. They're like, this is the approximate pronunciation. Right, right, right. But just like, so community adjusted, like that has no fucking meaning. Yeah, they're adding one more letter to it, basically. Oh, explain that though i haven't really well so i'll kind of go through it a little more uh towards the end of this episode but the gist that i got was they just kind of like hide their costs in all sorts of different spaces where they're like not report

costs per building and they'll just like bunch it into a bunch of different things and this community adjusted allows them to reduce their costs for no apparent reason at all no really because they say it's like oh but our spaces are like not taking into account the community factor so we get to like change ebita this standard metric of all of fucking public companies and they're just doing that in front of everybody's faces. Yeah. It's like, uh, investors aren't taking into account that there's an open bar.

I love the post recession or great recession scams that just completely infested our culture where no one in our generation has enough money. And so we're all like trying to skim money where we can right sharing things and marketers just picked up on that and just turn it into all of these like share a coke community i love it because it's the equivalent of like hey we'll share our netflix password with you if you join us it's like it's there's no real fucking benefit to it except the fact that you can get a slightly better life at a cheaper value yeah so like with the i mean ibid or ibid is like something only really only really

wall street analysts would ever care about ibid but they're adding on one additional letter to it basically and makes it even more tenuous as a measure of evaluation I'm blue community EBITDA iPhone 69 so and I guess one other thing to mention is Ashton Kutcher

who you might know from that 70s show he's he's a like He's been a big... You mean Jobs? Yeah, he's been a big tech investor. I think he made a lot of money on Uber and shit. Yeah, yeah. But so he's been a strategic partner of this company.

He's strategically pouring money into corporations that lose millions a day. Well, it's the butterfly effect. You see, it's one of the realities that he got to explore because of a notebook that he uses to see different parts of the future. And this is the future where he invests in WeWork.

And like in the butterfly effect, he's getting involved with pedophiles. I just like how nobody considered the optics of having the star of the TV show punked front and center promoting your pump and dump scam. No, we need him because he was doing an Indian accent for Pop Chips, and that's really the brand WeWork needs to exemplify. It would be great if the first day of the IPO, Ashton Kutcher walks onto the floor of the New York Stock Exchange and goes, There's a camera right there. there's a camera right there. There's a camera right there.

You've just been punked. While ringing the bell. It kicks off the next Great Depression. Ashton Kutcher kicked off the Depression today, and honestly, the closing bell has never sounded worse. All right, so let's kind of talk chronologically about adam newman and i have an idea oops oh this is one of the more dystopian things i've ever heard now let's set this up correctly so this is uh we were talking about ashton kutcher is the strategic partner so we work does these creator awards they do all sorts of promotional bullshit it's

coincidentally mandatory for employees to attend. Of course it is. And if they don't attend, count it against their performance. So it's just an extra way of squeezing more hours out of people. But these Creator Awards, it's like a Shark Tank, but you know, new age stuff. So this is a promotional WeWork video, it's about a minute long, where Ashton Kutcher and Adam Neumann are hearing the pitch of an audience member at a WeWork Creator Award. I have an idea. Just to start, we do a pitch on the spot and let's see where it goes. I like this. Okay, raise of hands. One. That was first.

Here's what we're gonna do because we just invented this. We're gonna do this on the fly. I need two minutes on the stopwatch. Ashton's gonna shoot a few questions at you. Fire away, Ashton! And let's see where we go. All right, hold on. I'm hitting the like 35th floor.on's going to shoot a few questions at you. Fire away, Ashton! All right, hold on. I'm hitting the, like, 35th floor. Let's go. Elevator pitch.

My name is Sarah Martin McConnell, and I founded Music for Seniors. We connect live music programming to older adults. Many of them have Alzheimer's, and we need to keep them active and engaged. And guess what? Participating in live music is at the top of the brain gain food chain for keeping your mind active Sarah we work couldn't be happier than to give you the $50,000. It's yours Let's go. What a fucking dystopian future we live in. It has the most, like, you can't see it, but it has the most game show, like, deal or no deal look to it at the end of it.

Man, I just hope that old people listening to live music know that if it wasn't for Ashton Kutcher, they wouldn't be able to get live music in their life streaming to them. First of all, live music streaming isn't live music. It's just a performance that you're streaming. This whole thing makes me so mad. I mean, if they tried to go with real live music, that would be the most diarrhea smelling auditorium in Nashville where this took place.

Ashton Kutcher's like, is it Alzheimer's because you forgot the good pitch? Burn! Face! But I just like, these are the people

who control capital distribution in this country and society. It's like, yeah, you got two minutes to beg us for fifty thousand dollars and if you look at the youtube video more dislikes than likes official we work promotional video only seven thousand views for something that would probably cost more than that to produce yeah

that's seven thousand views on that horse shit? Yeah. They couldn't even get the people that pay their fucking wages to watch this stupid video? How fucking dare they? Like, there's even, like, some... We'll get to this more later, but Adam Neumann's wife is a cousin of Gwyneth Paltrow, and there's an interview with Gwyneth Paltrow and his wife. I think her name's Catherine. I'll look that up in a moment. But it's only on Facebook.

You can't find the video anywhere else. And it's pretty obvious, wherever else they put it, they took it down because of hate comments and low views, most likely. I hate when I'm drinking free beer at the WeWork tap space

and that idiot keeps taking the aux cable and putting on the WeWork promotional videos. Rebecca Newman is his wife's name. I just realized how dystopian the name we work is oh my god just now yeah tell us about it we work oh yeah don't don't even get me started and they have all these other companies we grow and we'll get into them a little bit in a minute but just i mean it's a real arbeit mock fry thing yeah we work well and i think we'll get into this right here so adam newman is born 1979 shut the fuck up that's what i meant to hit earlier uh so adam newman we'll get into this right here is adam newman is uh born in 1979 in tel aviv israel and so he talks about that's what

his weird accent is belgium yeah so he talks about growing up in a kibbutz is a Israeli Community facility though. I guess I'll just start with reading from Forbes And then we can play this other drop of him describing the kibbutz So from Forbes Newman was born in Israel to a pair of doctors who divorced when he was young He lived in 13 places during his first 22 years including two years in indianapolis and a stint on a kibbutz where his mother was the doctor he lived in 13 places uh growing up a former palestinian's home in the northwest bank a fully furnished former palestinian's home in the

midwest bank yeah i got the inspiration for we work when I kept seeing bulldozers destroying non-community spaces. He's giving a TED Talk. One day we can turn all of the West Bank into a shared co-working space. WeWork West Bank. The IDF is the largest in it. You see, Palestinian homes are very exclusionary private spaces. But if you just knock down a wall, then it becomes a community space where you can build a kibbutz. Oh, yeah.

So continuing from this Forbes description. Yeah. So he was on a kibbutz. His mother was the doctor. Quote, severely dyslexic, Newman couldn't read or write until third grade, but still won entrance into the Israeli Navy's elite officer program. I mean, a lot of billionaires are dyslexic.

Yeah, that's their go-to, like, I couldn't read good. challenge story, or, like, struggle story. Right, right. Because it's something that, like, does affect their life, but then doesn't, because none of these people are ever like, I mean, except Naval Ravikant, who was like, I read 90 books every second. The rest of them seem to not need to know how to read. Reading is not necessary to become a billionaire, apparently. Why is dyslexia actually a higher proportion of billionaires in the general population i think it sort of seems like yeah well i think that's from all the people we've covered

i mean but also i think it's a part of the struggle before they become a billionaire it's the whole idea that like if they don't have anything to claim that was difficult for them we would look at them it's like not having a sense of smell exactly right right right it doesn't affect their life necessarily but it's something that would make a regular person be like man it must have been so hard to not be able to read maybe all billionaires know one doctor who's like yeah i'll write a note saying you had dyslexia yeah most likely put some struggle on that story why not it's like anyone who's raised poor. It's not, I have dyslexia.

It's like, I have trouble reading and I don't know why. Right, right, right. So we mentioned Adam Newman's born in Tel Aviv, 1979. His parents are part of the first graduating class of Ben-Gurion University Medical School. That was founded in 1969. The age of nine, his parents divorced. This is from Haaretz.

And so he's in Indianapolis for a bit. You got to pronounce the Aleph, Sean. Yes. So he's in Indianapolis for a bit. Then in 1990, they come back to Israel from the U.S. Quoting from the same article, it was important to my mother that we do something special. That's how we came to be at Kibbutz Niram. She worked as a doctor in a nearby hospital and also as a doctor in the Kibbutz, and he went to the Shah Hanagev School,

which is located near the Gaza Strip. So he grew up right on the border with Gaza. But I did want to mention one interesting thing about Kibbutz Niram. He had some fun childhood antics, sawing open water pipelines going into Gaza. Kids will be kids. They couldn't drink clean water for a whole week. Yeah, we'd play these games where we'd put fireworks in the tunnels,

bringing medical supplies in. And then we told the IDF that they had missiles. Oh, yeah, so fun story from Kibbutz Niram. So it's founded in 1943. It should be noted the Nakba is the common name for in 1948, about 700,000 Palestinians were expelled from their homes, mostly through terrorist violence and intimidation, coinciding with the founding of the State of Israel. Many of them are still alive today, but of course, a lot of their descendants are alive. 700,000 people expelled from their homes. Kibbutz Niram, as I said, was founded in 1943.

But in 1948, it participated in this orgy of war crimes and violence against Palestinian refugees. Just from a Haaretz article, quote, Another brutal case occurred at Kibbutz Niram, a case of the interrogation of an Arab by unauthorized persons with cruel tortures and his execution amid abuse. He was tortured there. His genital organ was clasped with pliers. His head was smashed against a wall. He lay in a pit and was shot and covered over. was quoting from a 1948 report by the israeli government that was delivered to uh then the

first prime minister david ben-gurion who the medical school was named after this report describing this brutal war crime and execution was delivered to him and then he covered it up until the year 2018 when it was reported on so this is just the kind of thing where there was and there are lots of other cases but this particular kibbutz like at least one refugee or innocent person was just fucking had their dick like mutilated yes with pliers and was executed and again that's that's what happened in the nakba there was so much like terrorist violence and intimidation to just tell these people get the fuck out of your homes or we will kill you and this is where he grew up he grew his parents were fucking settler colonialists man but i love that 2015

bill murray movie rock the nakba see at least like you know a good dyed in the wool uh long ancestry american like andy he can just say like my great great grandparents were settler colonialists you know, a good dyed-in-the-wool, long-ancestry American like Andy, he can just say, like, my great-great-grandparents were settler colonialists. Like, Adam Neumann... Few more greats, actually. Adam Neumann, like, just straight-up his parents were. And this is what he describes as, like...

But I liked that scene in Operation Finale about Eichmann with Oscar Isaac as the adorkable Mossad agent, where Ben-Gurion comes in and says, only you guys can bring justice for the Holocaust. And he is supposed to be like the wise old Grandpa Israel. Right, of course. Supposed to be, is. Zooey Deschanel adorkably dropping the pliers. Oh no! zoe de chanel adorkably dropping the pliers oh no how am i gonna cut this arab's genitals off it's so hard being a new girl um okay so and i wanted to play because we talked about this kibbutz here so adam newman actually

talks about the kibbutz a lot, about providing the community inspiration for WeWork. And here's just a short drop of him talking about it. I was with all my friends from morning till night. We ate in the same dining hall We drove to the same school and then we all did our homework together or we didn't do our homework together It was awesome as a dog So I remember looking at the kibbutz and saying so in a kibbutz everybody makes the same amount of money So one of my friends dads was the head of the factory He worked 16 hours a day and other friends dad was the head of the gardening He worked six hours a day. They both made the same amount of money So even though for us as kids it was amazing, I always

remember thinking that it's not fair that someone's effort is not getting rewarded based on what he puts in. And I've had a few discussions with Google about this. They sometimes call us kibbutz 2.0. But I think a little bit of a capitalistic kibbutz. On the one hand, community. On the other hand, still, you eat what you kill, and you get what it is that you did.

And every person... It's very unfair that people are not getting the reward for all the hard work of starting a pump-and-dump scam. Wait, I thought they got... I mean, I thought with the kibbutz, they just get the same hourly wage. So, like, if you... Well, it's nice that the people who make the kibbutz

don't eat what they kill. All I know is he doesn't eat what they kill. All I know is he doesn't eat butt. Considering how it was found. Yeah, then they'd be cannibals. Yeah, I don't know, Steven. That's an interesting question because I... I thought they just made the same wage. Right.

They didn't get paid the same. Right. I don't know. For six versus 16 hours. It sounds like a child's interpretation of what the kibbutz is may not be the best source yeah my friend's dad he worked six hours a day as a janitor whereas i worked 16 hours a day defrauding public investors and pension funds and i don't think it should be we get the same amount of money and that's the we work philosophy um i don't understand why if i flip burgers for three hours and you

eat burgers for three hours why you eat burgers for three hours Why your burger weight is inside your mouth Oh man WeWork is going to be destroying so many IRAs Yeah certainly 401ks Go ahead and hit the pause button on this episode And find out if your 401k is invested in WeWork And if it's in an index fund the good one it probably

is invested we work right right put it in bonds yeah james bones it really is just like a tragedy where 401ks are all tax subsidized so just the working public writ large like bankrolls these scams oh yeah so goldman sachs gets to like ipo it and exit and then all the people with 401ks are just gonna have no idea that they're getting fucking hosed on we work um but we'll see how that all turns out um i did want to mention one other story from the kibbutz uh according to forbes he remembers uh that it was hard for him to make friends at first. Adam Newman does. However, his family had the only VCR,

and Newman finally got some kids to come to the house and watch movies. But the VCR was gone. His mom had taken it to the hospital for a 24-year-old cancer patient with little time left. The other kids were extremely understanding, and we still ended up hanging out, Newman says, tugging at his shirt, his face reddening and his eyes tearing up. The funny thing is that everyone soon completely forgot about the VCR. And then one day, two months later, we came back into my house and the VCR had returned. Nobody had to ask why. So he's the kid who had the Star Wars toys at the daycare.

And that's just like i mean first of all that's a dumb ass story but it's also just a way of illustrating he was the rich kid on the kibbutz right and so you know because it's like it's kind of hard to trace where exactly his startup capital came from but all the other kids had betamax and none of the cancer kids wanted to watch betamax they needed a vhs because as we all know, between the wars of VHS and Betamax, there was more pornography on VHS. And the cancer children, that's all they wanted. Probably one of the most brutal wars in the region.

All the other kids were jealous because we got to occupy the house of the family who had a VCR when they fled. And they didn't have time to take it with them. By the way, and it's a quick addendo, a quick aside, but you guys know that that's true, right? The VHS Betamax war was won because there's more pornography on VHS. And then the same thing happened on HD DVDs and Blu-rays. Japan chose Blu-rays, and that's why Blu-rays won that war. And if you are not worried about the face fake things, the fake swap things yeah that's a hundred percent coming from the porn industry

the technology to replace people's faces to make it look like celebrities is instilled inside porn and celebrity fake porn so if you're worried about porn taking over the universe it already has um so uh the israeli oh yeah so he serves adam newman serves in the israeli navy for five years 1996 to 2001 uh i i did do a basic effort attempting to tie him to shelling in lebanon uh there was a operation grapes of wrath in like 96 where they shelled lebanon and killed a bunch of civilians, and they were doing that sporadically all the way up through 2001. Oh, did he waltz with Bashir? Yeah.

But, you know, when they say shelling, I don't know if that's field artillery pieces or Navy ships or whatever else. But he really does describe the kibbutz and the Navy as like all these community- building exercises that inspired WeWork. But he leaves the Israeli Navy in 2001. And in 2001, he moves to New York City and he moves into the Tribeca apartment of his younger sister, Addie, who had been a model in New York City since she was 16 years old. Oh. Yes. A model in. Oh. Yes.

A model in Tribeca. Yes. What humble roots this family comes from. Very successful. I also did Google Addie Newman and Jeffrey Epstein, but no results there. Yeah, I don't think the flight logs go back that far. I've got them right here for the next episode.

It's truly a maximum effort research tangent. Though, interestingly enough, Adam Neumann, as of 2018, has invested in Ehud Barak, the former Israeli Prime Minister. What was her last name again? Neumann. Oh, yeah. A-D-I Neumann. They go back to 95. I'll start

scrolling. Thank you, Andy. Yes. Resident Epstein expert, Andy Barr. So Ehud Barak was a former Israeli Prime Minister who said he's visited Epstein more than 10 but less than 100 times. All the way up to at least 2016.

I bet the cable companies took this guy's lead for building a fucking window. Yeah, we'll be at your place from 1pm to 10. the next day. Oh, yeah. So in 2018, Ehud Barak has a medical marijuana startup that Adam Neumann has invested in. Of course.

Why not? So, you know, that's his six degrees of separation with Jeffrey Epstein. Wait, Ehud Barak has a medical marijuana startup? He does, yes. Soon we're going to see WeWeed. Spelled in the French French O-U-I Weed.

That's a decent idea. We company. Yeah. So the way Adam Newman describes it, again, in 2001 he moves to New York City. He lives in his sister's Tribeca apartment. He describes his life in New York as going to clubs and, quote, hitting on every girl in the city, unquote. He goes to city school at Baruch College in 2002, majors in business.

And he kind of pitches the initial idea for WeWork there, though apparently his professor doesn't go for it and is like, this is an obvious Ponzi scheme. But it's funny, like he talks about, you know, this just shows teachers don't know what they're talking about. What was his pitch like, I wonder? He's like, what if I got a lease on a building and then I leased it out for relatively shorter periods of time than my lease.

What if I did that? Ashton Kutcher was in that room. Revolutionary. Yeah. What if I just get like enough institutional investors to be like, yeah, we could dump this on the public. Right.

Yeah. So according to a business insider, he said the idea was, it was like an entrepreneurship competition. And this was killed in the second round because a professor didn't think Newman would be able to raise enough money to change the way people live. Unquote. And on some level, that professor was right. Right, right, right.

He was just like, yeah, I have to imagine that the public markets will function at the most basic degree possible and prevent this. What year is all this shit going on? 2002. Okay. So this is all pre-2008 crash. And so he drops out of business school, Adam Neumann does. The way Adam Neumann describes it, he describes WeWork as his fourth business and his co-founder's fifth business. So another thing we've talked about is like,

they have enough money to fucking fail. Right. Like they're living in Tribeca. He's living in a Tribeca apartment. His two parents are doctors. Yeah, he's dropping out of college. Right. Yeah, you can be a serial entrepreneur

a little bit easier when you have that background. So he's like, he's at this business college for a bit before he drops out. He starts out, his first company is an idea for women's collapsible heeled shoes. And then he launches a company called... What a dumb idea.

Yeah. Collapsible heels? What are you, dents? I don't know. You can walk more comfortably. Nobody gets heels to be comfortable. That's like inherently, that'd be like a sports car that turns into a minivan like it doesn't make any sense they collapse into flats i guess i guess so idiotic that's the stupidest thing i've ever heard if anyone if any of our listeners

actually bought a pair of that's like the cargo zip off shorts thing like it seems like a decent idea and concept and then you see anybody wearing it and you're like, you're the dumbest person in the street and you're the least fashionable person that's ever existed wearing zip-off cargo short pants. You make cargo pants into cargo shorts and then you have two sleeves.

Where do you put the sleeves in? Well, they're cargo shorts so you just put them in the pockets. You didn't own any zip-off cargo pants slash shorts? I only wore those for most of my life. Okay, because I wore those in middle school. Union Bay, that was my brand. Okay. On days where, you know.

You could go either way. Yeah. A little bit too hot. A little too cold. 65 degrees or so. I just realized nobody should read too much into a former idf member moving to lower manhattan in 2001 and being put up in a luxury apartment for some reason uh so oh yeah his second business is called crawlers and this is he's selling baby clothes with built-in knee

pads and uh apparently the slogan was, quote, just because they don't tell you doesn't mean they don't hurt. Wow. Unquote. So he's selling those two babies. And then from New York Magazine. Here's my next idea. They're dog goggles.

Just because they can't talk doesn't mean their eyes don't need blocking from rain. Yeah, it's literally like the pitch from It's Always Sunny, like, kitten mittens. Right, right, right. And it's like, here's the thing, they might not be the worst ideas, but the fact that this idiot was like, this is gonna be my business, ugh, that's an idea that within three seconds somebody should go, buddy, move on. Baby crawlers with knee pads is just as good as baby gas masks. Sure, there's some application for it, but the reality is most babies don't need gas masks or knee pads.

Unless they're living on the Gaza Strip. The knee pad thing requires more creativity than his actual business now. Right, right. more creativity than his actual business now. Having subtenants in lots of commercial buildings requires no creative energy. Whereas the kneecap thing does. He made knee pads for babies so they could more efficiently suck Jeffrey

Epstein's dick. It was Mossad's top priority. There's got to be a better way. Oh, yeah. So just from this New York Magazine profile. It does seem like when he did the baby knee pads thing, like right after that, some mentor took him aside and was like,

I know you're trying to scam people. Don't go flashy. Go with something boring. It's way more believable yeah yeah from sorry from this new york magazine profile he meets his co-founder uh miguel mckelvey uh miguel mckelvey also grew up in commune in oregon uh apparently they said they met him through a mutual met each other through mutual friends uh from the new York Mag profile. McKelvey had a job at a small architecture firm in Brooklyn where he worked on a few early American apparel stores. One of his colleagues was Newman's roommate.

When McKelvey went over there to their apartment, he was taken aback by the casual vibe of the place. The door was left open and people were hanging out, chatting and playing guitar. I didn't know israelis at the time he says now looking back on it this was a very israeli environment just open door policy unquote and uh yes there's an open door policy unless you are a medic trying to leave the gaza strip in which case you will be shot through the heart by a sniper. Before we started the episode, I looked into the commune Miguel was at in Oregon, and it is not the Rajneesh commune that was featured in the Wild Wild Country documentary on Netflix.

I don't know what commune it is. Unfortunately, the state of Oregon has had many. But the other thing is that during this time when Rebecca Newman and Adam Newman have been dating for a little bit and they meet Miguel, the name of WeWork was created by their mutual friend, Andrew Finkelstein, who Adam Newman met on the roof of his building one night. And Andrew Finkelstein chose the name WeWork or created the name WeWork to pitch to them.

But originally their company was called Green Desk. Right. And the story with Green Desk, again,'s like hard to get info on their startup capital but it seems like they were both clearly rich kids yeah clearly um so the story with green desk according to new york mag is basically this um like they mentioned that uh newman was subletting some of his space i don't know if this is still the tribeca apartment or some other, but it's like, okay, so he has enough real estate in New York to make money subletting it. But the story is Newman persuaded his landlord, Joshua Gutman,

to rent him a floor in Brooklyn and they launched Green Death, Green Desk. Slip of the tongue, but also true. So they, he persuaded the landlord to rent him a floor in brooklyn and they launched green desk an earth-friendly co-working space it was a hit uh newman and mckelvey looked to expand to manhattan gutman instead wanted to fill vacant spaces in his brooklyn building they sold him

their stake in green desk for three million dollars and bet their winnings on a Manhattan co-working space that became WeWork, the first WeWork. So just an interesting thing here is like, I guess it should be mentioned, I worked in Brooklyn real estate. I was a real estate rental salesperson. And just something that's kind of under-discussed is the Hasidic community and their ownership of so much of Brooklyn. lightly Sean they won't rent to you or do business with

you if you're not Jewish yeah like every single um uh New York rental firm has to have a Hasidic member like a Hasidic co-owner co-founder just because like that's the only person who can make a connection with the community so it's just one of those things where you know we talk about connections like clearly adam newman had some money but these various new york landlords go into business with him partly because he is jewish so do you yeah you think that if he wasn't jewish he wouldn't have been able to done the we work that he did absolutely not just because you just can't deal particularly with brooklyn real estate without either being jewish or having a partner who was jewish um but what i wanted to mention send your this podcast is anti-semitic to at sean mccarthy com at twitter uh what i wanted

to mention is so and that's just like again a weird story where they get this landlord to to rent them space in his building no explanation story where they get this landlord to rent them space in his building. No explanation of where they got the money to rent this space. You have to assume they just grew up with money. They rent this space and then he buys them out for $3 million. And this is their startup capital to go into their next venture, which is their Canal Street property. They now have more than like 66 New York properties, but their first one's on Canal Street. And then the one other story of their startup capital is, so they get this $3 million,

2010 they found WeWork, and there's a Hasidic landlord, a guy named Joel Schreber, who according to the real deal, after they cash out, Newman and McKelvey are looking for space for their first co-working. Right. And they go and meet this Hasidic landlord, Joel. And he doesn't want to rent to them, but he wants to invest with them. Oh, interesting. So he invests $15 million. What?

And the interesting thing is, according to The Real Deal, this landlord, Joel Schreiber, he's involved in over 12 money-owed lawsuits. Like, 12 people have sued him, or at least at the time the article was written, they are ongoing, that he embezzled or stole money from them. What? Including a woman who says she invested $5 million with him,

all of which he stole right before he invested in WeWork. Oh, wow. So it's just like one of those shady new york real estate stories where again so apparently they get three million from selling the space to this landlord who for some reason trust them enough and no explanation of where their initial money comes from so they get the three million then they get another 15 million at least five million of which was just straight up stolen from someone right right that's crazy that they were like hey we got this business idea,

and he was like, I just want to put money into y'all. It'd be like a dealer showing up, and you want to buy drugs from him, and being like, you know what? Let me see if I can buy your supplier instead. Like, that's crazy. Right. I don't want your services.

I want the service. Right, and so the way this is kind of described in the New York Mag, we met- That's got to be money laundering, right? That's got to be he was trying to move some money around and was like, you know what? I can put money into y'all. You kids seem like you're going to make some money from this stupid venture. Yeah.

And, you know, so the way that the New York Mag describes their initial startup, again, 2010, is like McKelvey. He has the architecture background. So he's kind of the one who makes the initial distinctive WeWork spaces. They later bring in other people as well. But Adam Newman's whole deal is he's like the charisma pitch man. So he goes around to these various landlords. And I did just want to quote from this New York mag profile. He struck a deal for WeWork's second space across from the Empire State Building while polishing off a bottle of Johnny Walker Black with David Czar, whose family owned the building.

After touring a property owned by Jared Kushner, then a young real estate mogul, Newman coaxed Kushner into a bar for shots of tequila and later settled a dispute by beating him in an arm wrestling match. Newman and his wife Rebecca remained close with with kushner and ivanka trump uh the past 10 years was the decade of i he said in 2011 this decade is the decade of we and so i mean that's like the origin story again we've kind of mentioned how networking works in these power circles is like yeah he just meets like uh kushner and these other real estate fail sons and he's like hey let's go get fucked up and party.

And then it's like, yeah, sure. I'll sign out my dad's building lease to you. So it's like that's, you know, this is the fucking skill that we're all told is so much more valuable than everyone else's contribution to the world and society. So you're telling me if you can arm wrestle and drink you can and are jewish you can become a success in new york real estate you have to be good at arm wrestling you gotta be able to drink but also most importantly you probably need to be jewish yeah well at least for brooklyn real estate sure sure i mean i bet it'd be a benefit all around the world too it is true the market value of a person who's able to

spend more than two hours with jared kushner is one billion dollars um and so you know uh i guess we'll kind of expand more on the story when we do a future episode on the other co-founder uh miguel mckelvey but with the time i have left i just kind of want to kind of drill down all of the self-dealing going on and all of the different ways this is probably a pump and dump scam sure sure um hey before we do that I just want to talk about his wife Rebecca Newman real quick because this lady uh is uh heading uh We Grow which is a new venture that is partnered with WeWork which is schools for kids that I mean honestly just seems like, you know, it's filled with like mysticism and education.

It's not really we're great teachers. It's literally just give us more money because we can make money from your kids showing up at WeWork Enterprises. And I bet there's some sort of like WeWork employees get cheaper. That's what you're describing. Yes. I've described community. Yeah. We work employees get cheaper. Oh, you mean community? Yes. You're describing community. I've described community, yeah.

Her story, real quick, is that her brother passed away when she was 11 years old. He was about 23 years old, and that was very detrimental. She goes to Cornell for business but then hates it and then does a lot of spiritual stuff. She goes to India. She trains with the Dalai lama she gets a yoga certificate she is you know white lady spiritual to the bone and she marries adam during this whole fucking baby crawlers incident and then she's also a cousin of gwyneth Paltrow. So anything that the brand Goop does, Rebecca wants her employees of WeWork

to do. And one of her sources sent us some information that they were at a speech given by the WeWork people and apparently the founder's wife made everyone go on a yoga executive retreat with the focus to teach

women employees to support their men. And her husband, Adam Newman, tried to walk it back in the intro speech, but she cut him off and was like, no, I meant what I said. And they also sent out an email to their receptionist or whoever worked the front desk, whatever they're called, if they're going to wear sneakers or athletic shoes, that they have to be brand name, even mentioning that they have to be Yeezys to maintain some sort of brand. And I also mentioned that they have

kombucha on tap on trap too. But the goop if you don't know is Gwyneth Paltrow's lifestyle wellness brand and they've been in a handful of controversies involving vaginal steaming coffee enemas and stickers supposedly made by NASA

for health and wellness. Wait, you're not supposed to steam your vagina? Apparently not. Apparently, you're supposed to keep it at an optimal room temperature. But the biggest thing that cost him $145,000 is these jade... That's the most efficient way to cook it, though.

That's what Epstein would say. These jade fucking it's the most efficient way to cook it though that's what epstein would say uh these jade uh fucking vaginal i don't know eggs that uh gwyneth paltrow's company told women to put in to feel more one with oneself and so uh gwyneth paltrow's cousin rebecca newman is uh a partner in this whole we work thing so the entire brand identity and the brainwashing symptoms of WeWork come from Rebecca Newman. Right. And so it's interesting where the IPO perspective lays out that Adam Newman, regardless of how shares are distributed, will always have controlling interest in the company. Oh, really? So, you know, like there's all this self-dealing compensation that we'll get to in just one second.

But like the perspective essentially says, says like if you don't like this tough like you you could buy this entire company you can't change any of this here's here's the thing about vaginal aches too is when you take it out 24 hours later it's bigger than before um but oh the other part of that is his wife rebecca newman uh there's another part of it according to the new york times that says that if adam newman is disabled or killed or whatever the case may be rebecca newman takes over the company so it is just something where uh well i guess let's just kind of uh to skip ahead a little bit we mentioned they launched 2010 they're able to do a bit of business because of the recession you know like landlords are having trouble finding tenants and then these

you know uh co-working sub leases uh they're able to like continually build through various investors such as soft bank in 2017 but it's you know it's not a company that's ever made money it's just always been growing kind of on the google or uber i should say amazon or uber premise that like if you just become so dominant in the market you can lose money forever and then eventually you just make money because you're a monopoly or whatever the case may be if you build it they will come yeah um okay so we mentioned the community adjusted ebita uh it's earnings before interest tax depreciation and amortization. What is the vaginal egg adjusted

EBITDA? So again, this is like a standard accountant approved way of measuring a company's performance. Just according to New York Mag, the community adjusted EBITDA excluded many costs like marketing, construction and design that we were claimed

would disappear once it reached financial maturity in an attempt to show it could make a healthy profit. The Financial Times dubbed WeWork's doctored version, quote, perhaps the most infamous financial metric of a generation, unquote. So, you know, they're just making up stats and all this kind of shit. Again, according to Wall Street Journal, Adam Neumann in the lead up to the IPO, which is always a great sign when they're dumping out in the lead up to the IPO.

He's dumped out at least $700 million worth of stock and pocketed it. You know, most founders wait until after the IPO. And, you know, he's purchased penthouses in uh gramosy park west village these are like 28 million 11 million townhouse a large westchester farm at 15 million dollars um just all these kind of investments uh but so i wanted to go over this forbes article lays out some of the official or some of the, the, uh, self-dealing. So this is from Forbes, uh, at least four buildings where we work is a tenant, uh,

Adam Newman owns and then rents back to WeWork. Wow. Apparently they've like divested this in the lead up to the IPO. Cause they got called out on it. Sure. But it was like clearly still a profit. Like the wall street journal reported that WeWork had paid more than $37 million in rent

to an unnamed, quote, principal stockholder, unquote, which is very obviously Adam Neumann. Yeah, he is the landlord in a couple of cases to WeWork. Right. So he was able to give them what some people think are sweetheart deals.

He was also just kind of taking investor money and pocketing it in his own properties. This would be like a red flag to most investors for an IPO. Right. And that's just kind of like the blatant self-dealing where they're going to put this in some sort of trust because they've been called out in the lead up to the IPO but just for years and years WeWork was paying rent to buildings owned by Adam Newman which very clearly for the company's health and financial prospects it would be better if the company just owned those buildings outright you know so it's like very blatant self-dealing going on here according to Forbes another example example is adam newman has been borrowing

from we work the company has made multiple loans to newman personally and to his personal llc at interest rates below one percent these loans have been repaid but the below market interest rates suggest adam newman was getting a clear benefit another example they've been employing family members newman's wife rebecca we've, is a co-founder of WeWork and serves as the CEO of the company's education business, WeGrow, which we mentioned. But people make the allegation that they essentially just set up better if everyone just attended a WeGrow school and then they wouldn't do global warming. And it's like WeGrow charges $42,000 a year in tuition. I'm not sure how your strategy is going to fix the world. I've got some audio of Adam Ne newman negotiating uh the uh rental price

with himself yeah let's hear it i don't know they're deranged hello hello newman that was it just take that last part the last two the girl the no the hello newman's in quick succession gotcha i don't care why people don't like me online. How much of this do you want in? This was your idea, Yogi. It was. Hello, Newman. I wrote down on my phone, Seinfeld Newman, drop question mark, and Andy went, yes.

Hello, Newman. I don't want to be Orientalist, but Yogi is the most devious member of this podcast. Oh, yeah. Oh, you damn right. Where he will give Andy sound drop setups knowing that Andy will be blamed online for them. Well, listen. Damn you, Seinfeld.

That's Adam Newman cussing out one of the landlords. Oh, yeah. So just continuing. So Rebecca, his wife, we've mentioned, is the CEO of WeGrow and also will take over the company if Adam Newman dies or is disabled. WeWork also employs another member of Newman's immediate family in a senior role, and it paid another family member to host events related to the Creator Awards in 2018. These are the ones where ashton kutcher and him are giving out money so it's like yeah their employee family at all these senior levels oh and then this one's so blatant they changed they most recently rebranded the

company from we work to quote the we company uh but the company in order to rebrand the company paid newman's personal llc 5.9 million for the rights to the, quote, Wee family of trademarks. Oh, wow. So they rebranded the name and paid him almost $6 million for the Wee trademark. What? Yeah, and so the company's dual-class share structure means public investors will have no recourse to stop the self-dealing and personal profiteering.

That's actually a factor in some of the higher valuations is that I guess they believe in Adam so much. Oh, really? His founder power, if you will, in terms of his higher class shares structure is a factor in the $47 billion valuation. I mean, it makes sense. You've got to have his

Gaza Strip spirit to maintain that assessment. And we mentioned at the top, the other part of it is the companies that are underwriting the IPOs, JP Morgan, Credit Suisse, and UBS are also extending him about $500 million in credit. No UBS. UBS.

So, possible conflict of interest there um and then from the real deal according to the most recent u.s securities exchange commission filing known as the s1 we work has committed 47 billion dollars to u.s landlords over the next 15 years it plans to raise as much as 6 billion in debt when its IPO launches. It currently has about $2.5 billion in cash and has acknowledged that it sees, quote, no pathway to profitability in the foreseeable future. So, yeah, keep an eye on that upcoming recession. So what do you predict, ladies and gentlemen? What do you think is going to happen with this WeWork empire?

I think Adam Neumann is going to get murdered and Rebeccabecca's gonna turn it into like yoga studios or something yeah i'm renting out space to cults yeah rebecca yeah yeah i think so i think like just the stupidest and therefore most likely possible ending is that the u.s government is going to extend them like a 20 billion dollar line of credit at zero percent interest because they just you know like maybe they're right maybe it's not even a ponzi scheme they're just a too big to fail tenant where they figured out like this is the way our economy works now if you just become fucking goldman sachs nothing you do can bankrupt your company right well they're friends with jerry kushner yeah um i did like uh just a couple other stories before we close out here uh so one like after they made these ipo

filings there were a couple different articles about like there's one in deal breaker about how landlords who are renting to we work wish they hadn't seen the ipo filing because you know because again like it's all very complicated and confusing. Like again, an analyst told Bloomberg it was a quote masterpiece of obfuscation. So one tenant has, or no, one landlord, according to DealBreaker, has already launched a lawsuit against WeWork.

Like they're like trying to get theirs in first because they know if there's the bankruptcy, they'll be like stuck at the end of the line so the allegation in this lawsuit is basically this they allege that we work transferred liability for the lease with this landlord from its parent company we work incorporated incorporated uh to a newly created weWork Companies LLC, which just happens to be a shell company that nobody can establish any trace for at all. And so part of the lease, the landlord is known as 120 East 16th Street Co. LLC.

It sued them in New York court, and they allege that the lease says that if they transfer guarantor status on this lease, they have to do it to a company with at least $150 million in assets. But it is just like a funny little trick where WeWork is already changing their leases to LLCs that are just black boxes.

So say a bankruptcy happens, suddenly a bunch of landlords might be stuck like renting to an LLC with no conceivable assets or no contact info at all. I mean, it's kind of a two-way street, because what's the company suing him again? It's called, oh yeah, it is another black,

120 East 16th Street Co. LLC. Yeah, it's just these anonymous LLCs all suing each other. I fucking love our economy, dude. Nobody has any idea what's going on. It's just like, there's like one... I think the great shell company wars on who's gonna get stuck with all again there's like one po box in the cayman islands where 92 of the global

economy is incorporated uh and then so another thing is there's a wired article about like we work using like uh facial recognition bullshit in their work to like check, you know, joy of company employees and potentially in future. Maybe they'll be sharing this info with people who rent from them and telling them, you know, when their employees are smiling and what they are doing with all these other very Orwellian facial rec technology. So we'll see if anything happens with that. It should be noted that WeWork has been able to keep costs in check by avoidance of union labor. They had some sort of dispute in 2015 with the cleaning workers union. So just like burning two million a year and self-dealing the founder, but still keeping costs down by keeping the unions out. Yeah, if there's one constant amongst all these billionaires,

it's union busting. And so I guess just like one last thing to close out here from this New York Magazine article, we should just talk about, you know, the underpinning of every fucking, we are the future, this isn't a job, this is a family startup tech company is overworking their employees to death.

According to New York Mag, in dozens of interviews, current and former WeWork employees and executives question whether the company's culture is itself one worth spreading. Despite the company's slogan, quote, make a life, not just a living,

employees at all levels have often reported working 60 or 70 hour weeks and events like thank god it's monday and summer camp were mandatory so thank god it's monday is they make employees stay late mondays for like drinking and partying but it's like they are making employees do that right like you know so it's just another way of squeezing and we mentioned the summer camp is where they like kind of go away and like drink and party and mandatory camp yes mandatory drinking parties i wonder if hazing pretty much yeah according to new york mag at its annual summit the company keeps track of employee attendance at panels and events by scanning wristbands given to each person excessive absences are reported to

managers a number of employees describe a regular cycle at we work new people would arrive excited to buy the company's mission only to get burnt out leave and replaced by a fresh crop multiple executives told me newman's cheerleading was critical to the company's uh success from a business perspective the cult is working unquote said one executive and you know so and so it is just something where it's like yeah that is entirely the startup model is you hire people fresh out of college uh you work them until they burn out and find you know a job that doesn't do that right and then you just like especially if it's a kind of low uh training overhead you just do it again i mean so and it is like if you listen to rebecca or adam

newman any of their public interviews just go on youtube watch for 10 minutes and just like try to convince yourself you're not listening to charles manson because it's like this is a fucking cult like this is all their rhetoric is all this like oh they talk about we're not like a rental or we're not a landlord we're a technology company right this is where all the rework value because it's like it's just the usual web 2.0 app bullshit where you take like an existing business model that doesn't work you slap an app on it and you do a bunch of fucking techno jargon and millennial and community and all this other shit and you just keep doing that until you have a 47 billion dollar valuation on a you know one to three billion dollar business and then

you fucking cash out and it's other people with 401ks and public pensions that are left holding the bag there's this cova tour profile on rebecca newman and this is like after uh the baby crawlers thing and this is our quote from her at the time i was performing with the old vic theater and we were putting on a checkoff play directed by the great Eve Best. In the empty loft space, it was incredibly inspiring and amazing for me. All of our WeWork members would attend the shows and the rehearsals. Once we were doing an acting exercise, and Eve had us running up and down the stairwells, screaming at the top of our lungs, and all the members ran out to see what was going on. It was very fun fun very artsy

we like to say that we consider ourselves artists in business it's the merging of those two worlds that has been very unique and exciting i that made me realize that the baby knee pads thing was uh chekhov's fraud uh one last thing from the new york mag multiple people told new uh me newman has expressed it as adam newman has expressed a desire to turn over 20 of we work staff every year he denies this but there have been like at least two publicly reported rounds of mass firings uh which the company said involved calling unproductive workers but again this is just work people six or seven hours a week 70 hours a week and then fire them when they burn out right and then you've got a new crop of uh fucking people to exploit and uh run into the ground and you know it's like we said

it is just a cult thing um we should mention we don't have time to go into it too much but there have been various sex harassment and other overwork lawsuits a woman said that she was she'd been groped at both the company summit and summer camp by colleagues really you know um and you know so there's there's various lawsuits for overwork but i guess we'll see what happens with the scam we'll see what happens with the public ipo but two last things i wanted to close out on is a new york mag uh in 2015 a landlord kicked out two tenants rights organizations from their offices in downtown San Francisco to make way for WeWork, which reportedly offered to pay double the rent. Really? So it is like another part of it is, you know, we've mentioned the avoidance of union labor, but we've also mentioned kind of this close relationship with landlords

where it's like they can burn two billion a year to like fucking expel tenants rights organizations from offices and it's like yeah of course landlords will work favorably with someone who helps out their class interests um but i i did want to mention just we've talked a lot about how this is a cult and how you know the language of cult membership and how this like really convinces people that this is some sort of of revolutionary new thing when it's just a business model that's old as time that doesn't make any fucking sense and is going to get anybody who invests in it you know just straight up hosed and so this is from the wired profile we've mentioned these creator awards and uh you know he's talking about uh he adam newman gives this speech at the creator awards he says when you

know that giving is receiving, you start to understand a little bit more about how the universe works, unquote. In order to give, you must first receive. But in order to receive, one must first give. I have it on good authority. This dude does not eat butt. When you talk about giving,

you're talking about receiving $700 million in stock payments and not disclosing that until the wall street journal discovers it join me in the revolution that is commercial real estate fueled by debt drink the unlimited kool-aid i mean beer that is at our locations uh from the wired profile he is preaching to the choir one nominee at these creator awards is visibly emotional as she accepts her award in front of the audience of more than 2,500 people quote I rarely have crushes on business people because I think most of them are full of shit she says to the audience but when I hear Adam speak and he talks about the

we generation I really feel this because everything that goes on in the world is just about what we can do for each other here and so I mean that's on in the world is just about what we can do for each other here. And so, I mean, that's it in a nutshell. It's a cult. It's convinced people that, you know, up is down and that capitalism is good if you just throw the word kibbutz and we on it. And at the end of the day, like, we'll see who's left holding the bag. But keep an eye on your family and friends if they start talking in WeWork lingo and excluding fucking investing in the ipo cut them out of your life um but you know i guess we'll follow up uh it's a big topic so if we missed anything feel free to hit us up grubstickerspodcast at gmail.com and uh again

check your 401ks stay out of we work stock but uh if you want to be risky, you know, put that shit on puts, baby. Fucking short that on the way down. And with that, this has been Groucho Stakers. I'm Yogi Boyle. I'm Andy Palmer. Steve Jeffers. I'm Sean McCarthy. Check us out on Patreon.

40 more. Andy licks the bowl. Mm-hmm.