The business press continues to try and make sense out of Adam Neumann’s rise to fame and fortune, and precipitous fall from grace.
By: Sirita Milhelm
“His story should make for one heck of a movie,” offered Crain’s New York Business in a recent profile article about the WeWork founder. “In fact, the film practically writes itself, starting with the modest origins of a young Israeli entrepreneur trying to make it in the big city and failing with a few startups before hitting it mind-bogglingly big with an office-subleasing company, WeWork. His firm quickly grows into the world’s biggest startup, with a $47 billion valuation, thanks to a never-ending stream of cash from a true-believing venture- capital investor in Tokyo.”
Then, the fall. “But when profits became an issue—as in, WeWork didn’t have any—the spell was broken and Neumann went from tech darling to the poster child of everything wrong with unicorns,” Crain’s continued. “In the aftermath, startups everywhere have learned they need to pave a plausible path to profitability before going public and that VC funders’ love and money might seem bottomless—but they do have limits. As for that Hollywood ending, Neumann walked away from the catastrophe he helped create with an exit package worth $1.7 billion and a whole bunch of pricey real estate in his personal portfolio. As we said, the movie script writes itself. No surprise the guy who brought The Big Short to the big screen is on the job.”
Marcelo Claure, recently named as WeWork’s executive chairman, recently talked to the New York Times about some of his experiences with Neumann. “I said: ‘Adam, we trusted you. We gave you everything. And it’s fair to say things didn’t work out the way we originally planned. Now it’s your turn to turn around and basically pay back that trust and provide us with a proxy of all of your shares.”
While Neumann has stepped down from the firm he founded nine years ago, he is still said to be a board observer and a paid consultant. Said Claure, “I value his opinion a lot in terms of where he wanted to take the business. He has 10 years of experience, and it’d be foolish not to take full advantage of — not the mistakes he has made — of the great things he created.”
WeWork designs and builds physical and virtual shared spaces and office services for entrepreneurs and companies. At one time, it boasted more than 5,000 employees in over 280 locations, spread across 86 cities in 32 countries. In January of this year, it announced it would be rebranding to The We Company, and its valuation was stated as $47 billion. The Wall Street Journal noted that upon the release of its public prospectus in August 2019, the company was besieged with criticism over its governance.”