REUTERS/Larry Downing
You shouldn't do it, Jamie Dimon told Adam Neumann.
The leader of the largest US bank was on a call with Neumann in the summer of 2019. WeWork, the office space sharing company that Neumann had cofounded, was preparing to go public in what was expected to be one of the largest startup IPOs ever.
Dimon's firm, JPMorgan, was the "lead left" bank for the deal, overseeing the process. And it was now up to Dimon to convince the 40-year-old Neumann that his latest obsession was a terrible idea.
Neumann wanted new supervoting shares to consolidate his power. His shares already had the power of ten votes-a level that gave him a very healthy majority control, given that he held about 30 percent of the company's stock.
But the status-conscious co-founder and chief executive had become obsessed about the handful of CEOs of lesser companies who had even more potent shares. The CEO of the fitness bike company Peloton had twenty votes per share, Neumann carped to lieutenants. Peloton! Surely he deserved twenty, too.
Throughout the summer WeWork executives had tried in vain to convince Neumann that the 20 votes per share weren't necessary. Dimon's deputy on the deal, Mary Callahan Erdoes, had struck out as well and relayed her concerns to her boss.
The supervoting shares were just one of numerous eyebrow-raising provisions and conflicts of interests Neumann was entangled in which would have to be disclosed in the IPO prospectus and risked turning off investors. By Erdoes' estimate, it could mean a hit to WeWork's valuation of as much as 30 percent.
Dimon got on the call with Neumann and zeroed in on the twenty votes per share. The move wasn't fair to his shareholders, Dimon told Neumann.
In business, Dimon said, there's "what I should do" and "what I could do." Grabbing more power from investors through the restructuring, Dimon advised him, just wasn't the right thing to do.
Neumann loved the attention of Wall Street bankers. He even often referred to Dimon as "his personal banker."
But the pleas of the nation's top banker didn't move Neumann: He was determined to have the added power.
It was one of several fateful decisions in the run-up to the planned IPO that would lead to one of the most spectacular meltdowns in business history.