WeWork CEO Adam Neumann's relationship with SoftBank's Masayoshi Son

Masayoshi Son is the billionaire head of the Japanese holding company SoftBank, which owns a large stake in WeWork's parent, the We Company.

We's cofounder and CEO Adam Neumann told Business Insider in May that his personal relationship with Son is one of his best assets, but now Son is reportedly pushing for Neumann to be demoted in the wake of a disastrous pre-IPO.

Neumann said in May that he is especially receptive to Son's advice and criticisms.

C-Suite Insider is a collection of exclusive interviews with leaders of the world's largest companies.

SoftBank head Masayoshi Son has been one of WeWork cofounder and CEO Adam Neumann's biggest supporters, but reports indicate that he and his firm are considering demoting Neumann in light of a disastrous pre-IPO.

Since 2017, SoftBank has invested more than $10 billion into the coworking space company WeWork, which since January has been under The We Company. Son reportedly decided to invest after a single, brief meeting with Neumann.

But as We prepared for its IPO that was originally scheduled for this month, scrutiny of its S-1 and Neumann's behavior as a leader resulted in little interest in the public markets. We's valuation target dropped from $47 billion to as low as $15 billion.

At this point, SoftBank has “lost faith in Adam Neumann's ability to lead WeWork,” and is discussing his future this week, according to the Financial Times' Eric Platt and Andrew Edgecliffe-Johnson. CNBC's Alex Sherman then reported sources close to the matter said Son himself wants Neumann out of the CEO role.

How Neumann developed the relationship with 'Masa'

Neumann cannot legally go on record during this pre-IPO quiet period, and We's representatives have refused to comment on the matter. Business Insider spoke with Neumann in May, and the conversation touched on his relationship with Son — he calls him by his nickname, “Masa” — which he described as one of the best assets on his side.

“I'm usually the person who thinks very large in the room,” Neumann told us. “But with Masa, it doesn't matter how big you're thinking — he's going to out- think you. He'll go bigger. I learned a lot from that. I still learn every time I interact with him.” He noted that in his best relationships with investors, like the one with Son, he is especially receptive to their advice and criticism.

“In Masa's case, he does very well face-to-face,” he said. “I'll get on the plane and go to Tokyo, even if it's not always easy, and develop a personal relationship.” He mentioned in our interview that in a few days after it, he and his wife Rebekah, We's chief brand and impact officer, were headed to Tokyo to have dinner with Son.

“Masa and Rebekah get along very well, which is fascinating, because she's very picky. She likes him a lot. She calls him Yoda,” Neumann said, referring to the “Star Wars” character. “He is Yoda. He has the Force with him.” Son invites the nickname, regularly quoting the little green guru in meetings and presentations.

The friendship faced a test earlier late last year

Neumann told us that an unexpected challenge last December proved to him the strength of his relationship with Son.

SoftBank was planning on investing $20 billion in WeWork by the end of the year, and Neumann was weighing his options. WeWork confidentially filed for an IPO.

Neumann explained why:

“I filed because I wanted optionality. A: The fact that we agreed on a deal doesn't mean the deal is done — which ended up being the case, because it wasn't signed yet. B: Until that moment of signature, I would still have to impose such a big move not just for myself but for the employees, for the investors, for our members. I would've really taken that last look once it was all said and done. What's better for all of our employees and members？”

As Neumann told it, Son called him on December 24 (Japan's stock markets are open on Christmas Eve) to tell him the investment was going to be significantly smaller. The investment would be coming from SoftBank, whose stock was struggling, not its $100 billion Vision Fund, and would only be $4 billion, at $110 a share.

Neumann pushed back with an offer for $5 billion, to which Son agreed, adding that he also wanted $1 billion in secondary, which is to say he wanted to invest a total of $6 billion, with $1 billion of that toward existing shares. They had a deal. (Neumann noted that reports of this transaction inaccurately stated the investment was supposed to be $16 billion and ended up $2 billion.)

The news was initially difficult for Neumann to accept, and he kept it a secret from his investors until Christmas ended, and even from his wife until later that night. But, he said, he was able to recover from it without damaging his relationship with Son because of the way Son handled it, and he even said that he and his investors are happy they did not sell as much as they originally planned.

“Relationships get measured when a challenge comes, not when everything is perfect,” Neumann said. “He called me personally, and he was very straightforward. He told me exactly why.”

This week, Neumann and Son are testing their relationship to a degree they haven't before, where Neumann's role and the fate of the entire We Company is at stake.

This is an updated version of an article that was published on May 18, 2019