WeWorked, Until It Didn't
WeWorked, Until It Didn't
As WeWork plummets, Adam Neumann is on the comeback tour
“The We Company’s guiding mission will be to elevate the world’s consciousness.”
Those were actual words written in WeWork’s S-1 filing that not only derailed the company’s splashy IPO, but triggered the domino collapse that resulted in founder Adam Neumann being removed and billions of value being wiped out almost overnight. It marked the end of a spectacular tale of startup boom and bust, venture capital greed and uncontrollable egos.
For a quick recap, Adam Neumann created WeWork, his co-working company (sorry, a “tech” company) that eventually hit a peak valuation of $47 billion. The extraordinary figure was thanks to three factors:
Moving at breakneck speed and burning through cash to suck up buildings and properties — often taking them on long-term leases at inflated prices — it attempted to grow so big it couldn’t fail.
WeWork framed its business as a tech business to capitalize on the frothy market, pointing to its service offerings and data collected on its member's work habits as proof. It somehow worked.
The now-infamous investments by SoftBank, which spiked WeWork’s valuation, but also spiked Adam Neumann’s ego, and all but set off the downfall.
With investors onboard, WeWork had to grow at all costs. Neumann sought to expand and fast. He bought a wave pool company. (lol). He bought up real estate faster than they could fill it. He created WeLive to “disrupt” apartment living; in reality, he just created trendy-looking apartments. His wife, Rebekah Neumann, developed WeGrow, a school that threw out the typical curriculum to feed children’s souls and “unleash every person’s superpower. ” Or, in other words, it was just a school for the super-rich that taught kids to find themselves, rather than maths. Each venture cost buckets of cash and achieved nothing of note.
Finally, he revealed the moonshot — to elevate the world’s consciousness.
Except he didn’t.
Like many ego-driven founders before him, Neumann had developed a god complex, and the consequences of that bled into the company. Crazy parties. Extravagant company-wide retreats. Smoking weed on private planes. Toxic culture. Drinking copious amounts of expensive tequila. Shady practices like buying buildings and leasing them back to his own company or buying the rights to the word “We” and selling it back to WeWork. And all of this happened while the company lost millions of dollars daily. Eventually, when the IPO came calling, the fateful S-1 filling went public. It was heavy on yogababble and images and light on any assurance that the company could one day be profitable. The response was savage, and soon after, the IPO was delayed. Then it was canceled, and Neumann was shown the door.
Rather than elevate his company, he blew it up spectacularly.
And, as the story so often goes, he also walked away rich beyond imagination — over $2 billion rich — while his employees learned that their stock options were worthless. They had dedicated all those years of underpaid work for nothing.
WeBack
Since then, Neumann and WeWork have gone on very different trajectories.
Neumann is on something of a comeback tour. After months in hiding, he reappeared in mid-2020 and returned to doing what he did best — selling investors on fanciful tales in exchange for their money. And what better industry to enter for a former scammer/grifter than one full to the brim of scammers and grifters? That’s right. Neumann’s comeback story started on the blockchain through a company he co-founded called Flowcarbon, which “operates at the intersection of the voluntary carbon market and Web3, bringing carbon offset credits on chain.”
Adam was joined by his partner Rebekah, which was glaringly obvious given that they branded their tokenized carbon credits…
wait for it…
“Goddess Nature Tokens.”
I’m still slightly disappointed that nowhere on the website stated that this project would ‘elevate the world’s blockchain.’ Alas, despite taking in more investor money — including from Andreessen Horowitz’s a16z, which pumped in $70 million — the project was “paused indefinitely,” just two months after its announcement. Not that Neumann cared; in a classic case of men failing upward, Neumann moved on and returned with another revolutionary idea — building the future of living.
And for a particular investment fund, it’s still a winning formula. a16z has backed the project with the biggest check they’ve ever cut for a single round of backing in the fund’s history — a massive $350 million. It has Flow valued at over $1 billion — not bad for a company with only a basic splash page to its name and a reported 3,000 rental units in its portfolio. The blog post praised Neumann, describing him as a “visionary leader” who “fundamentally redesigned the office experience and led a paradigm-changing global company in the process.”
The details of what Flow will do are scarce, but its mission is to solve the nation’s housing crisis. How? Don’t know. Neumann recently took to the stage and spoke for an hour about Flow, leaving no one the wiser about what it is. Rumors recently surfaced that he’s looking to take the project to Saudi Arabia to suck that money tit dry. What’s almost certain is that more investors will throw ethics and morals out the window to go with the flow, throwing money at a man known for burning through it while building toxic companies, hoping he can bank another fantasy valuation before it all comes crashing down.
WeBroke
WeWork has been less fortunate. The company Neumann left behind has become what it always was — not a tech company, but a co-working company. Or, in other words, a landlord and service provider. After undergoing surgery to stop the bleeding and going public via a SPAC in Oct 2021 at a valuation of ~$9 billion, the company had a mini resurgence.
But it’s been all downhill from there. It still loses hundreds of millions every year and is only standing because of the huge investment SoftBank has plowed into the company (of which it now owns 80%). Throw in more challenging economic times, rising inflation, and many workers returning to the office, the outlook is bleak.
In December, Fitch Ratings downgraded the company’s long-term bonds to CCC, effectively a junk rating. The stock price, around $13 at the time of the SPAC merger, has plummeted to under $0.50, and the company has now been given 6 months to get in shape or risk being delisted from the NYSE.
It’s an incredible rise-and-fall story, which left only one winner and a trail of destruction behind it. In some ways, it’s just to see investors get what they deserve; after all, every firm turned a blind eye to the red flags at every turn, fixated on the valuation that just got bigger and bigger. Seeing it blow up is somewhat satisfactory. But then you remember employees who gave up so much, wooed by the promises of riches, all for nothing, while their erratic, careless leader walked away a billionaire, and it hits home that the whole thing was a complete mess.
Worse is the injustice of seeing Neumann back like nothing ever happened, pumped up with even more investor money, selling another fanciful, baseless vision of the future. He’ll be fine, just like the entrepreneurial prodigal sons always are. Meanwhile, the destruction of WeWork is almost complete, having gone from a valuation of $47 billion to being valued closer to a penny stock.
It will take more than “the power of We” to save the company.