- WeWork cofounder Adam Neumann bought stakes in at least eight different startups while serving as CEO of the real estate firm, investing tens of millions of dollars.
- People who knew Neumann in his role as a startup investor observed some of the same personality traits he became known for at WeWork - such as being boisterous, brash, and full of bluster.
- But Neumann often took a much more hands-off approach to the startups in which he invested than he did to WeWork, those observers said.
- One CEO of a company Neumann invested in found the relationship frustrating, because Neumann and his representatives were so difficult to reach.
- One startup in which Neumann had a stake - Faraday Grid - failed mere months after he got involved, taking with it his $30 million investment.
- Read more WeWork news here.
Around January 2017, John Cole had a memorable and momentous drive in Northern California from Marin County to San Francisco with Adam Neumann, then the CEO of WeWork.
At the time, Cole was trying to raise new funding for SkyTran, a next-generation mass transit startup that he cofounded. A mutual friend had recommended he talk to Neumann - a rising star in the startup world who was already thinking of ways to reinvent cities - about investing in SkyTran.
The long drive and subsequent conversation in a WeWork office in San Francisco was at turns tense and exciting.
Neumann was full of bravado and aggression, repeatedly saying, "fuck" this and "fuck" that, Cole recalls. He admonished Cole for raising what he deemed to be a puny amount of money - around $13 million - instead of setting his sights higher. If you're not raising a billion dollars, you're not serious, he told Cole.
"Adam Neumann is a walking stick of dynamite. He just wants to go out and kill something," Cole told Business Insider in a recent interview. Neumann, he continued, is "a very, very super self-confident, aggressive sort of person."
But Neumann seemed to get what SkyTran was about. The company is developing a transit system built around individual pods that glide on elevated tracks, whizzing people to much closer to their end destinations than traditional mass transit systems like subways. Neumann was already thinking about how he could incorporate SkyTran's system into his plan to remake cities around the world.
"He's a visionary guy," Cole said.
Neumann's whirlwind encounter with SkyTran provides another valuable perspective to better understand the man at the center of one of the business world's most fascinating rise-and-fall dramas in years. Even while building WeWork into a real-estate behemoth, Neumann fashioned himself into a kind of solo venture capitalist, hunting for innovative new companies and pumping tens of millions into at least eight different startups involved in everything from renewable energy to medical marijuana.
In his side-life as a startup investor, Neumann brought some of the same personality traits that he used to build WeWork into a $47 billion behemoth - and that left it vulnerable to a massive collapse. His intensity, passion, and power of persuasion were driving forces that were always on display - as were a super-sized ego, a free-spending attitude and a stunning disregard for traditional boundaries between personal projects and company business.
A two-track process to do anything that required Neumann's sign off
The behind-the-wheel meeting with Neumann, however jarring, was fruitful for Cole. Neumann not only decided to back SkyTran, he invested enough in the company to name a representative to its board of directors.
But Cole's relationship with Neumann soon turned frustrating. He never actually met with Neumann again. And he had to jump through numerous hoops to get Neumann's representatives to sign off on routine matters.
The person Neumann named to SkyTran's board - a WeWork employee who ran the real estate company's operations in Israel and whom Cole declined to name - didn't actually have the authority to speak for Neumann or for Neumann's family office, which oversaw his investment in the startup.
That meant that anytime Cole needed board-level approval for something - a frequent occurrence at a startup where there are often miscellaneous papers to sign or small loans to take out - he had to go through two parallel tracks. He had to get the approval not only of the WeWork manager on his board, but also of someone who could actually sign off for Neumann.
The WeWork manager would typically point Cole to the family office. The office, in turn, often referred Cole to Neumann's lawyers. Neumann himself was "impossible" to reach, Cole said.
"It was a bit of a dysfunctional family office," Cole said. "They had more irons in the fire than they could manage. Stuff was falling through the cracks."
He ended up speaking frequently with Adi Neumann, the WeWork CEO's sister, who was involved in the family investment office - and was much easier to reach than her brother.
"It was very tough getting a board decision that required quick action through that office," Cole said.
Neumann, through his spokeswoman Laurie Hays, declined to comment on or respond to a list of questions Business Insider provided him for this story including ones dealing with his investment in SkyTran and his interactions with Cole.
A new age philosophy and a diverse mix of investments
In his former role as CEO and founder of WeWork, Neumann was frequently portrayed as boisterous, brash, and full of bluster. The 40-year-old Israeli-born entrepreneur was also known for his eccentricity and for embracing a New Age philosophy, heavy on self-healing and showy concern for sustainability. He once banned employees from expensing meat-based meals and forbade meat from being served at company events.
He's also long been known for his big-spending habits - and not just for the money he's invested in startups. He owns at least four homes, including a mansion in Marin County that has a guitar-shaped room that he bought for $21 million, and a townhome in New York City's Greenwich Village that he purchased for $10.5 million. While he was still CEO of WeWork, he took out hundreds of millions of dollars in loans backed by his shares in the company.
Neumann's personal tech investments in addition to SkyTran include a mobile app that lets users tune into the sound from nearby televisions, a medical marijuana company and an online forum for crowdsourcing home improvement projects.
These personal investments are distinct from the startups that received funding from the WeWork corporation after catching Neumann's eye, such as a Spanish wave pool company and a superfood company that sells "performance mushrooms." WeWork's investment in those disparate startups helped cement a reputation that Neumann - who at the time had complete control of WeWork - was making business decisions that weren't necessarily in the company's interest.
And it's not just as a startup investor where Neumann blurred the lines between his personal and business interests. His wife ran one of WeWork's divisions and was given the power to help name his successor if he were incapacitated. One of his wife's cousins, Mark Lapidus, served for a time as the head of WeWork's real estate operations. Adi Neumann hosted events for the company and Neumann's brother-in-law served as its head of wellness.
"I don't know that many people that talk about being prime minister"
But Neumann the startup investor appears to differ from Neumann the CEO of a multi-billion-dollar startup in at least one important way. While he was consumed with WeWork's operations, he seems to have been fairly detached from the goings-on at his side bets.
That passivity seems unusual these days. Many venture capital firms boast of their close relationships with the founders of the startups they've backed. That's particularly the case with the kinds of companies that Neumann mostly invested in - nascent firms that are just trying to get off the ground and often in need of the guidance and hand-holding of experienced industry insiders.
But that's not the role that Neumann seems to have played, at least not at about half of the companies in which he's known to have invested. In at least one case, his detachment may have cost him tens of millions of dollars.
Michael Cheung co-invested with Neumann in a startup called Pins in 2013. The investment marked the first time Neumann had individually invested in a startup other than his own, according to data from PitchBook. At the time, WeWork was a young company with only a handful of locations. But even then, Neumann had an outsized ego, according to Cheung, the founder of Caerus Investment Advisors. Neumann even spoke of becoming the prime minister of Israel, Cheung said.
"He was hyper-aggressive and egotistical," Cheung said, continuing, "I don't know that many people that talk about being prime minister."
Pins developed a location-based application that allowed users to create a private list of places they'd visited and wanted to remember. The company was eventually acquired by Square. As with SkyTran, Neumann didn't play much of a role at the company other than giving it financial backing.
"Adam was fairly passive in his investment with Pins," Jonathan Bensamoun, the startup's founder, said in a message sent over LinkedIn. Neumann "just wrote a check to me early as a friend / supporter of my ideas."
His investments sometimes blurred lines
As with SkyTran, the line between Neumann's personal investment and his day job at WeWork appeared to blur at Pins. According to Cheung, Neumann came to his investment through a WeWork contact - Ariel Tiger, the real-estate company's first chief financial officer. Tiger had served in the Israeli military with Neumann and had gone to business school at the University of Chicago with Bensamoun and Cheung.
But he did more than just introduce Neumann to Bensamoun. Tiger also played a role in the decision to sell Pins to Square, Cheung said.
Tiger did not respond to emails seeking comment.
But Hays, Neumann's spokeswoman, said Tiger himself invested less than $30,000 in Pins, separately from Neumann. Neumann followed with his own small investment, according to Hays, who said Tiger asked her to speak on his behalf.
Some of those same patterns - or similar ones - repeat at other startups Neumann has been involved in.
His role at HomeTalk, in which he invested less than $10 million last year, according to a source close to the company that was familiar with Neumann's investment, resembles the one he played at SkyTran and Pins. Indeed, he's had no involvement with HomeTalk since putting money into the company, said the source.
Faraday Grid collapsed months after Neumann's investment
Then there's Faraday Grid, an energy technology startup in which Neumann invested $30 million earlier this year. According to Faraday's announcement of the investment, Neumann saw it as fitting into his vision for reinventing cities.
But after taking such a big stake in the company, Neumann appears to have taken a fairly hands-off approach to it. He made the investment through his family office and sent his sister to the UK to meet with the company soon after backing it. Although it was a personal investment, he put a WeWork employee - Daragh Murphy - in charge of overseeing it, at least for a short time.
That oversight - by Murphy and others - appears to have been lax. Faraday Grid's board didn't meet regularly, Business Insider reported, and the company's CEO was fired for alleged misconduct. The company collapsed into administration - the UK's version of bankruptcy - two months later, just seven months after Neumann's initial investment investment. After the company collapsed, Neumann's family office did step in and offer financial and other assistance to struggling employees.
EquityBee, a startup that offers a marketplace for employees in private companies to exercise their stock options and sell their stock to investors, counted not just Neumann as an investor, but also Ron Gura, who runs WeWork's technology team in Tel Aviv as a senior vice president of product for the company.
It's unclear if Gura or Neumann have official roles at EquityBee. Gura did not respond to a LinkedIn message. Nor did EquityBee representatives.
For all the frustration he had dealing with Neumann's representatives, SkyTran's Cole said he didn't have any regrets about having WeWork's cofounder as one of his investors. In fact he credits Neumann for backing his company and understanding its vision when others didn't and couldn't. Neumann even made incremental investments after his initial one as SkyTran raised additional funds.
SkyTran is set to launch a pilot version of its pod transportation system in San Antonio, Texas in early 2020, and Cole estimates full scale commercialization could happen in three years.
But after Neumann and his family office declined to participate in SkyTran's recent financing round, Neumann's stake in the company declined to the point where he no longer was entitled to a board seat. Cole quietly asked Neumann's representative to step off the board.
Senior Finance Correspondent Dakin Campbell contributed to this story.
- Read more about Adam Neumann:
- Bullying allegations, $1,000 pens, and a celebrity chef: Inside the collapse of Faraday Grid, the '$6.5 billion' energy startup backed by Adam Neumann
- Sex, tequila, and a tiger: Employees inside Adam Neumann's WeWork talk about the nonstop party to attain a $100 billion dream and the messy reality that tanked it
- Firing Adam Neumann doesn't solve WeWork's biggest problem: The underlying business stinks
- Renovation work on WeWork CEO Adam Neumann's $10.5 million Manhattan townhome led to disputes with contractors over $1 million in alleged unpaid bills
