Podcast Summary: The Journal – Neom, Pt 2: The Emperor’s New Clothes

Release Date: April 26, 2025

Introduction

In the second installment of their deep dive into NEOM, The Journal delves into the intricate dynamics and challenges that have characterized one of the most ambitious urban projects of the 21st century. Hosted by Ryan Knutson, alongside contributions from experts like Tony Harris and Andy Wirth, this episode, titled "The Emperor’s New Clothes," uncovers the tumultuous management, escalating costs, and cultural clashes that have plagued NEOM’s development.

Leadership and Management Style

A Toxic Leadership Culture

The episode opens with Ryan Knutson recounting the initial impressions of Tony Harris, an education expert who joined NEOM a few months into his role. Harris describes a startling encounter with NEOM’s CEO, Naadmi Al Nasser.

Tony Harris [00:35]: "He called everyone together and he literally started screaming and shouting. It was as though your 4-year-old was having a tantrum on the floor."

This aggressive management style is further illuminated by Rory Jones’ reporting, highlighting Al Nasser’s reputation for ruthless execution.

Rory Jones [03:03]: "We heard this recording of Naadmi describing how he runs projects and he says, 'I drive my people like slaves. That's how I get my projects done. I drive everybody like a slave. And when they drop down dead, I celebrate.'"

Such behavior created an environment of constant fear and stress among employees, leading to high staff turnover and a toxic workplace atmosphere.

Spending Practices and Financial Mismanagement

The Obsession with Expenditure Speed

One of the most surprising aspects discussed is NEOM’s prioritization of the speed at which funds are spent over the effectiveness or impact of projects.

Tony Harris [05:52]: "One of the most important metrics NEOM uses to evaluate projects is the speed at which you spend money. It's not about how effective was the project, how many people did it reach? How many lives did it change? No, it's about how quickly you spend money."

This led to excessive and often unfocused spending, with projects like an online leadership program for kids receiving disproportionately large budgets.

Tony Harris [06:38]: "No, we couldn't spend money quickly enough. We could not spend money quickly enough."

Similarly, Andy Wirth shares his frustration with budgetary expectations versus feasible spending.

Andy Wirth [08:09]: "For this fiscal year, I was supposed to have spent six or seven hundred million dollars. And I couldn't feasibly conceive of a way to expend that sum of money between July and the end of that year."

Reliance on Consultants

NEOM’s heavy dependence on external consultants, such as McKinsey and PricewaterhouseCoopers, rather than leveraging internal expertise, was a significant issue.

Tony Harris [10:00]: "They didn't want us to make any decisions. What they did want us to do was to hire one of the aforementioned consulting companies to research the issue and make a recommendation."

This strategy was perceived as a way for NEOM’s leadership to deflect accountability, ensuring that failures could be blamed on external advisors rather than internal decisions.

Project Challenges and Escalating Costs

Ambitious yet Impractical Designs

NEOM’s master plans, particularly for the mountain region (later renamed Trojena), were characterized by overly ambitious and often unrealistic architectural designs.

Andy Wirth [12:39]: "They were intriguing, they were extremely creative, extremely out there, and I'm an open-minded fella. Some of them seemed outlandish, some of them seemed very creative."

Projects like "The Vault," a glass building requiring the dynamiting of part of a mountain, and the infamous "Line"—a 106-mile long skyscraper stretching into the desert—highlighted the disconnect between vision and practicality.

Tony Harris [19:08]: "Come on, nobody's going to live in a structure like that. When you're inside there, it's going to have the atmosphere of an airport terminal or a shopping mall."

Internal Audits and Financial Irregularities

An internal audit in 2024 revealed a pervasive culture of excessive spending without tangible progress. NEOM executives often manipulated financial metrics like the Internal Rate of Return (IRR) to mask escalating costs.

Elliot Brown [16:00]: "They wanted to have these buildings make money. So they said everything needs to get, you know, around 9% IRR."

This manipulation prevented a realistic assessment of NEOM’s financial health, allowing the project to continue unsustainably.

Cultural Clash and Employee Dissatisfaction

Clashing Visions

A fundamental clash existed between NEOM’s purported vision of a liberal, progressive city and the harsh, traditional leadership style of CEO Naadmi Al Nasser. Employees who envisioned NEOM as a hub of innovation and freedom were instead confronted with authoritarian management.

Rory Jones [35:20]: "NEOM is supposed to be this place where people go and they're free thinking... then they would, you know, according to this audit and the former employees we talked to essentially delude him with how well it was looking on paper."

Attempts to Implement Change

Executives like Andy Wirth attempted to propose more sustainable and realistic development plans. However, these efforts were met with severe backlash from Al Nasser, further exacerbating the toxic environment.

Andy Wirth [27:07]: "Word got out and he absolutely bleeding from his eyeballs screaming at you."

Departures and Leadership Turnover

Exodus of Key Personnel

The unsustainable working conditions and mismanagement led to the swift departure of key figures like Andy Wirth and Tony Harris. Their exit underscored the deep-seated issues within NEOM’s leadership.

Andy Wirth [28:33]: "They'd say, 'Andy, haven't you heard? You carry two buckets over here. One's filled with gold and one's filled with horse.'"

CEO Naadmi Al Nasser’s Departure

Following the failed launch of NEOM’s first development, Sindalah, and the absence of Crown Prince Mohammed bin Salman (MBS) at the grand opening, Naadmi Al Nasser was ousted as CEO. This marked a significant turning point for the project.

Rory Jones [34:09]: "Within weeks, Naadmi leaves as the CEO."

Current Status and Future of NEOM

Shift in Control and Budget Realizations

Post-Al Nasser, Saudi Arabia’s Sovereign Wealth Fund (PIF) has taken a more hands-on approach in managing NEOM, confronting the project's massive budget overruns. Reports suggest the total capital expenditure has ballooned to an unprecedented $8.8 trillion.

Elliot Brown [36:36]: "We saw one document that was a draft presentation to the board last year that put the total capital expenditure of the full NEOM build out at $8.8 trillion."

Comparative Progress in Saudi Arabia

Interestingly, while NEOM struggled, Saudi Arabia’s broader initiatives under MBS have succeeded in diversifying the economy and fostering a burgeoning entertainment and tourism sector. This has somewhat diminished the centrality of NEOM to the kingdom’s modernization efforts.

Rory Jones [37:44]: "Saudi Arabia now has an entertainment sector and a tourism industry. Most importantly, it's less dependent on oil."

Future Outlook

Despite the setbacks, NEOM is unlikely to be abandoned entirely due to its symbolic significance for MBS. However, expectations indicate a likely scaling back of the project’s original ambitions, aligning more closely with feasible developmental goals.

Rory Jones [38:35]: "NEOM's not gonna go away or gonna be canned completely. MBS has tied his reputation to NEOM, and so it's still an important project for him."

Conclusion

“The Emperor’s New Clothes” paints a comprehensive picture of NEOM’s rise and struggles, highlighting the detrimental effects of mismanagement, unrealistic ambitions, and cultural misalignment. While the project remains a testament to visionary capitalism, its future depends on a fundamental restructuring of leadership and a shift towards more sustainable and pragmatic development practices.

Notable Quotes:

• Tony Harris [00:35]: "He literally started screaming and shouting. It was as though your 4-year-old was having a tantrum on the floor."
• Naadmi Al Nasser [03:03]: "I drive my people like slaves. That's how I get my projects done."
• Andy Wirth [08:09]: "I couldn't feasibly conceive of a way to expend that sum of money between July and the end of that year."
• Tony Harris [19:08]: "Come on, nobody's going to live in a structure like that."
• Andy Wirth [28:33]: "You carry two buckets over here. One's filled with gold and one's filled with horse."

Timestamped Insights:

• Leadership’s Abrupt Style: [00:35] - [03:23]
• Spending Speed Over Substance: [05:52] - [08:26]
• Consultant Dependency: [10:00] - [10:55]
• Project Escalations: [12:36] - [18:50]
• Cultural Clash and Attempts at Change: [19:38] - [28:28]
• Departures and Aftermath: [28:33] - [35:20]
• Current Situation and Future Prospects: [35:20] - [39:11]

Credits

Produced by Annie Minoff and edited by Kathryn Brewer. Additional reporting by Stephen Kaelin and Summer Saeed. Fact-checking by Kate Gallagher. Sound design by Griffin Tanner. Music by Emma Munger, Griffin Tanner, and Blue Dot Sessions.

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