Hello and welcome. You are listening to Patrick Boyle on Finance, a podcast exploring ideas from quantitative finance, examining events occurring in markets right now and financial history to see what lessons can be taken away, including interviews with some of the most interesting people in the world of finance. To learn more about the podcast, visit onfinance.org.

WeWork was founded by Adam Newman, a man who spoke mostly in slogans and his partner, Miguel

McElfee back in 2010. Adam made some big claims like that we work, a short-term

office leasing company, would elevate the world's consciousness, unleash every person's superpower,

and that it operated on a WiiOS, an operating system that makes work better and living better. So yeah, slogans. A simpler

and possibly more accurate description of WeWork is that it's a shared office space with

free beer. But it's hard to raise $22 billion with that description. A bit more magical realism is needed. That's

why Newman, a man who was hardly ever seen near a computer, pitched it as a tech company,

and claimed that WeWork was the world's first physical social network. Now obviously the term

physical social network doesn't actually mean anything,

but venture capital people love lines like this. They focus more on the story than on the numbers.

These are after all the same people who were impressed when Sam Bankman Fried claimed while playing

video games that FTX could

someday be the world's leading banana procurement app.

They're possibly even more gullible than Michael Lewis and so I won't make fun of them because

it wouldn't be nice and I pretend to be nice on this channel.

Adam Newman is said to have told anyone who would listen early on that his job was to keep

growing the business until it was too big to fail.

And he got pretty close to that goal.

In September 2019, Eric Rosengren, the president of the Boston Federal Reserve Bank, actually

warned that the collapse of WeWork could lead to huge losses for banks and commercial

property owners.

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