How SoftBank Fueled WeWork’s Pipe Dream — And Vice Versa

WeWork helped put coworking on the map in a way that had never been done before thanks to its former larger-than-life CEO Adam Neumann and an investor who believed in the company.

Masayoshi Son, CEO of SoftBank, invested about $9 billion into WeWork and stamped it with a $47 billion valuation earlier this year.

Now, the company has lost 93% of its peak private market valuation after its hopes to go public came crashing down.

Earlier this week, Son announced it would buy back around $3 billion worth of WeWork stock from Neumann, current investors and employees with a valuation of $8 billion.

Son’s fund will now invest $1.5 billion into WeWork and lend it another $5 billion, bringing its debt and equity in WeWork to $18.5 billion.

As part of this bailout deal, SoftBank will pay Neumann a cool $1.7 billion for his shares and $500 million for him to repay loans from JPMorgan.

The WeWork saga has played out like the script of a soap opera, but how exactly did we get here?

SoftBank’s Vision Fund manages $100 billion, which was screaming to be spent. This led Son to invest in companies that grow at a rapid pace by selling services to large markets below their costs. When these types of companies go public, they can’t make a profit. 

Despite what seemed like a sly master plan, investors saw right through WeWork’s charade one its S-1 filing came to light, leading the company to cancel its IPO and oust Neumann as CEO.