WeWork's unconventional company culture caused it to lose touch with reality, Silicon Valley investor Ben Horowitz told CNBC on Tuesday.
"The culture was so reality distorted that they couldn't hear what was really going on in the business," Horowitz said on "Squawk Alley." "I've interviewed people coming out of WeWork, [they] didn't know how much money was coming in, how much was going out."
WeWork had an optimistic vision of changing the future of work, but ultimately that strength may have also been one of its weaknesses, the Andreessen Horowitz venture capitalist said. WeWork executives' unrelenting optimism made it so they weren't prepared for how to deal with bad news, he added.
"The downside of an optimistic culture is what happens with bad news, can you actually hear it?" Horowitz said. "Or is it like, 'I don't want to hear bad news.'"
The embattled co-working start-up has had several rough months. Last week, SoftBank struck a deal to take 80% control of WeWork, putting SoftBank's chief operating officer, Marcelo Claure, in place as executive chairman. That's after WeWork withdrew its IPO filing and saw Adam Neumann step down as CEO amid heightened investor skepticism and a dwindling valuation.