There have been some spectacular failures in the wild and wacky world of tech startups (check Uber and Lyft) but nothing can top the implosion of WeWork and its arrogant CEO Adam Neuman. Mr. Neuman had been at the helm of two other startups that went broke but for some reason people loved to lend him money. One of his biggest supporters was SoftBank Group Corp. and its CEO Masayoshi Son who lent the startup billions.

The company got its start around 2010 and had a very simple business model. Get someone to lend you money, take that money and buy all the real estate that you can afford and then lease the space out. If the plan is successful you make the spread between the capital you have borrowed and the amount that the leases bring in. There is really no limit as to the size of your spread as long as you have the cash to pull the deal off. In fact, Mr. Neuman often bragged that he would become the world’s first Trillionaire!

Last Spring as he was preparing their IPO, Mr. Neuman invited the leadership of various exchanges to one of his homes in the Hamptons to negotiate the terms and conditions of the listing. He is very much into a “sustainable earth” movement and one of his demands was that the exchange bar the use of plastic and that they remove meat from the menu of their cafeteria. The NYSE told him that no individual was going to tell them what people should eat, the NASDAQ caved, and they got the deal.

Softbank had not only loaned WeWork billions but had also loaned Mr. Neuman hundreds of millions. They had the company valued at around $47 billion in market capitalization. They were prepared to bring that number to the market. That is when the farce started. Mr. Neuman tried to “squeeze” the market and wanted a higher valuation number. As the accountants tried to make that number work they found out that their were billions missing. Mr. Neuman had totally overstated the value of the land that was being used as collateral for the loans, the IPO was “delayed” while details were being worked out.

The IPO never got done. As the accountants sorted thru the mess the valuation kept going lower until it is now valued around $8 billion. At these valuations it wasn’t a guarantee that the company would have sufficient cash flow to stay in business. Mr. Neuman had a loan due to Softbank of $500 million which he could not pay. The issue was finally resolved when Mr. Neuman was fired as CEO, SoftBank made him a new loan and the company agreed to pay him close to a billion over 5 years as his termination package. Where the drama will end no one knows for sure but one thing is clear Mr. Neuman is very good at spending other peoples money and he is coming out of this deal smelling like a rose!