{{first_name}},
The most expensive car ride in history took about 12 minutes.
December 2016.
Masayoshi Son, the billionaire founder of SoftBank, shows up late to WeWork's New York headquarters.
The tour was supposed to take two hours...
...he gives Adam Neumann 12.
Adam Neumann of WeWork Eduardo Munoz/Reuters; Samantha Lee/Business Insider
Then he tells Neumann to hop in his SUV so they can keep talking on the way to his next meeting.
In that car, Neumann doesn't pitch office space...
...he pitches a tech platform built to "elevate the world's consciousness."
Never mind that WeWork was a subleasing business.
(Sign long leases, sell short memberships, pray the spread holds.)
Son is so taken with him that he pulls out his iPad and sketches the terms of a $4.4 billion investment.
In the car.
No data room. No committee. No underwriting.
One relationship.
Capital doesn't JUST follow spreadsheets.
It follows conviction.
And that cuts both ways.
"You're not crazy enough"
As they closed the deal, Son asked Neumann, “Who wins a fight…the smart guy or the crazy guy?”.
Neumann said, “…the crazy guy”.
Son agreed.
Then he told Neumann he wasn't crazy enough, and to make his plans 10 times bigger.
Read that again.
The investor said that to the founder.
SoftBank eventually put $18.5 billion behind him.
Here's what unconditional capital bought:
Neumann personally bought stakes in commercial buildings, then leased those same buildings back to WeWork.
He got paid on both sides of the table.
He dressed a low margin subleasing business up as a Silicon Valley tech company, and WeWork grew into the biggest private office tenant in Manhattan and central London, bending lease markets around it.
He pulled roughly $700 million out of the company before it ever went public.
WeWork bought a $63 million Gulfstream he flew like it was his.
He even trademarked the word "We," then charged his own company $5.9 million to use its own name.
Stuck trying to raise more capital?
Most sponsors think the bottleneck is the deal.
It usually isn't.
It’s a few reasons, namely:
Who you are
What you’ve done
Who you’re working with
The risk profile
The upside and downside
Timing
Consistency
…and a lot of other factors
I built a FREE short assessment that scores you on what allocators actually check before they wire. Positioning, pipeline, proof, and follow-through.
Don’t guess, it’s FREE, figure out what’s not working and raise the capital you need.
No subscription or fees. If your score comes back strong, you probably don't need me.
(He gave that one back. But only after the backlash.)
Peak paper valuation: $47 billion.
The Bill
In 2019, WeWork filed to go public.
Which meant public investors finally opened the books...
...and found a real estate company in a tech costume.
The $47 billion valuation collapsed in weeks.
The IPO died.
By 2023, WeWork was bankrupt.
SoftBank's estimated loss: $11.5 billion.
And Neumann?
His leverage was so airtight that he walked away with an exit package reported at up to $1.7 billion!
The guy who lit the fire got paid on the way out of the building!
One more thing, because it completes the picture: in 2022, Andreessen Horowitz handed Neumann $350 million for a new residential real estate startup called Flow.
Before it launched.
The playbook still works.
What I want you to take from this:
Two lessons, and they sound like they contradict each other.
They don't.
One: relationships move capital faster than any deck ever will.
Son didn't invest in WeWork's numbers.
He invested in 12 minutes with a founder who believed completely.
If you're raising, that's not a corruption of the game.
That is the game.
Conviction transfers person to person, not slide to slide.
Two: the relationship earns the meeting, but it should never replace the math.
Every investor who lost money on WeWork had access to the same lease obligations the public read in 2019.
They trusted the room instead of reading the documents.
I'd love to tell you I've never been tempted to skip the math because I liked the person across the table.
I can't…
That temptation is exactly why discipline has to be a system, not a mood.
You can raise on charisma...
...but you collect on fundamentals.
Anyway…thanks for reading this one.
Grateful you let me into your inbox today.
Have a great Thursday,
Andrew LeBaron
Target returns are projections only and not a guarantee of future results. Actual results may differ materially. This is not an offer to sell securities. For accredited investors only.