Adam Neumann’s Rise and Fall at WeWork In 2001, 22-year-old Adam Neumann moved to the United States from Israel. He atte

[answerhappygod]

Adam Neumann’s Rise and Fall at WeWork
In 2001, 22-year-old Adam Neumann moved to the United States
from Israel. He attended Baruch College in New York City but
dropped out when he was four credits shy of a diploma, trying his
hand instead at being an entrepreneur. After two failed ventures,
Neumann and friend Miguel McKelvey started a business called Green
Desk, renting out desks in co-working spaces for people and
companies that weren’t ready to invest in their own offices. By
2010, their company WeWork was
born.221
How, exactly, did WeWork work? Essentially, the company leased
office spaces in metropolitan areas like New York City and San
Francisco—where flexible working space was in high demand—then
split them into tiny 64 square foot sections. WeWork then sublet
the sections to professionals, providing amenities such as
restaurants, office equipment like copy machines, and camaraderie.
Neumann sold investors on his business model by positioning WeWork
as a tech and lifestyle company, but critics say it was never
anything more than a glorified subleasing
firm.222 How is it possible, then,
that by 2019, WeWork had more than 520 locations across the globe
and a valuation of almost $50 billion (compared to its biggest
competitor’s $3.7 billion valuation)?
INSPIRING LEADERSHIP
Neumann “led with unusual exuberance and excess,” said one
reporter, adding that it was the CEO’s “combination of
entrepreneurial vision, personal charisma and brash risk-taking”
that made WeWork the most valuable start-up in the country at one
point.223 The CEO often had
outlandish goals, including an idea to create shared office spaces
on Mars and to give the world’s 150 million orphans a family in
WeWork.224
Neumann seemed to believe that he had extraordinary abilities to
accomplish the impossible. For example, he invested in Life
Biosciences, a life-extension start-up company, because he wanted
to live forever.225 As another
example, according to one insider, Neumann once said, “when
countries are shooting at each other, I want them to come to
me.”226 A source close to the
company described Neumann as “an intense person who thinks he is a
Jesus figure,” but added that “he’s also very good at what he does
. . . He was almost like a
televangelist.”227 Neumann’s
ability to motivate was acknowledged even by former company
executives who strongly disliked him.
TROUBLE IN THE WORKS
Still, those who spent enough time with Neumann eventually saw
holes in his visionary and charismatic façade. Said one real-estate
executive who dealt with WeWork, “He clearly is very smart and
ambitious . . . but he starts talking about some of the more
germane aspects of the city’s land-use process . . . and he has no
idea what he’s talking about. Your bulls–t meter just goes off with
him.” The executive added that Neumann was “the quintessential
person who doesn’t know what they don’t
know.”228
Others have expressed disappointment with the lack of alignment
between the vision that Neumann pitched and the reality inside the
company. “From the outside,” said one former employee, “a lot of
the pitch to the public and employees is all about this ‘we’ thing,
but the closer you get to the core of the company, the less it
exists. It’s all about ‘me’ and
‘I.’”229
Ultimately, it was WeWork’s S-1 filing—the registration form
that companies use when they are planning an initial public
offering (IPO)—that alerted investors to the company’s and CEO’s
troubles. For example, as a managing member of the separate private
company “We Holdings, LLC” Neumann trademarked the right to the
word “We.” He then reorganized WeWork under the umbrella “The We
Company” and charged it—his own company—$5.9 million for the rights
to use the word.230 Neumann was
also taking near zero-interest loans from WeWork, using the money
to buy office buildings, then renting the spaces back to
WeWork.231
Former Twitter CEO Costolo said of Neumann, “this is not the way
everybody behaves.” Costolo characterized “the degree of
self-dealing” inside WeWork as
“egregious.”232 But former
employees said that it was nearly impossible to talk Neumann down
from anything, no matter how absurd it seemed. One insider told a
reporter, “one time, we asked one of the top execs . . . ‘can you
bring him back to reality?’ And she said, ‘when Adam comes in and
wants to do this or that, even if it’s a really bad idea, we will
figure out how to do it.’”233
NEUMANN’S OUSTER
Experts have speculated that the qualities in Neumann that
fueled the company’s meteoric rise proved to also be huge
liabilities for
WeWork.234 Investors rejected
WeWork’s IPO and cut the company’s valuation by
75%.235 The company ousted Neumann
from his role and by the end of 2019 had cut its workforce by 20%
while continuing to open new co-working
spaces.236 In April 2020, Japanese
multinational conglomerate SoftBank pulled out of its offer to buy
a controlling share in the struggling
company.237 As a minority
shareholder, Neumann stood to gain approximately $975 million from
the deal. In May 2020, Neumann announced that he was suing
SoftBank, saying that the conglomerate was “secretly taking actions
to undermine” WeWork.238
FOR DISCUSSION