WeWork, once considered a breakthrough solution to the needs of modern offices and valued at a staggering $47 billion, filed for Chapter 11 bankruptcy on Monday.
It’s a devastating fall for the desk rental company, founded in 2010, which operated 43.9 million square feet of space worldwide as of New Year’s Eve 2022.
The company was one of the great startup success stories of the early 2010s and had built an empire spanning 100 countries at the time of its highest valuation in 2019.
“We are here to change the world,” its eccentric co-founder Adam Neumann once declared triumphantly. “I’m interested in nothing less than that.”
But just a few months after its IPO in 2019, WeWork had faced intense criticism of its business model and leadership, causing investors to retreat almost overnight.
Much of that harsh criticism was reserved for then-CEO Neumann and his tequila-fueled lifestyle, which spooked investors before his resignation in 2019.
The IPO was delayed for another two years and WeWork would not make a profit until 2022. However, as the company was hit hard by the pandemic and the work-from-home trend, it would never achieve the same reputation and investment again.
When it filed for bankruptcy this week, the company, once worth $47 billion, was said to be worth just $45 million.
Adam Neumann and his wife Rebekah Paltrow attend the AnOther Magazine and Hudson Jeans Dinner at the Jane Hotel in New York on September 14, 2009
The New York-based workspace sharing company rents co-working spaces to freelancers, startups and established companies
Adam Neumann, co-founder and CEO, attends the WeWork London launch party on November 11, 2015 in London, England
In April 2021, Neumann sold his 11-acre guitar-shaped California estate for $22.4 million, ten months after it was first put on the market for $27.5 million
Adam Neumann, now 44, founded WeWork in 2010, promising an alternative to traditional office rentals for modern companies looking to attract top candidates with a comfortable work environment at an affordable price.
His dream was to reinvent the work of work, and his passion came through to investors as he spoke of reproducing the sense of togetherness he experienced growing up in Israel, which he felt was missing in the West .
Timeline of WeWork’s rise and fall
2008–2010 – GreenDesk, an early incarnation of WeWork, is founded
2010 – GreenDesk is sold and WeWork opens its first location in New York
2014 – WeWork begins its international expansion with a location in London
2017 – SoftBank invests $4.4 billion
2018 – SoftBank invests $4.25 billion
WeWork reportedly lost $2 billion
2019 – WeWork’s value peaks at $47 billion
WeWork announces IPO
August 2019 – WeWork reports losses of $900 million in half a year
The company is attempting an IPO but is postponing it until September
September 2019 – WSJ reports that directors plan to ask Neumann to resign following revelations of behavior and drug use
September 26, 2019 – Neumann resigns as CEO and relinquishes majority voting control
October 2019 – SoftBank acquires WeWork. WeWork is now worth $8 billion
November 2019 – WeWork lays off 2,400 employees
2020 – WeWork reportedly paid a whistleblower to keep quiet about culture and alleged abuses
May 2021 – WeWork loses $2 billion in the first quarter due to the pandemic
October 2021 – WeWork goes public
December 2022 – WeWork makes a profit
November 2023 – Since it doesn’t work, WeWork files for bankruptcy
Joey Low of Star Farm Ventures invested in the company in 2013.
He said: “When I met [Neumann], after a few minutes I wanted to invest. He was hungry for success – that was for sure.”
In fact, Neumann once joked that he might one day become Israel’s prime minister or “president of the world” – and he reportedly said he hoped to live forever.
His larger-than-life personality was embraced as WeWork’s innovative new business approach gained support.
The hysteria reached its astonishing peak in 2017 when SoftBank invested $4.4 billion in the company.
It was one of the largest private investments in a company ever – and another $4.25 billion was added a year later.
Neumann said at the time that the company’s value rested “more on our energy and spirituality” – although he continued to seek investment.
WeWork’s precise focus on “energy and spirituality” was later called into question when so much Neumann Tequila was reportedly drunk on business flights that passengers vomited all over the plane.
In “The Cult of We: WeWork, Adam Neumann, and the Great Startup Delusion,” Eliot Brown and Maureen Farrell claimed that Neumann’s private jet was filled with so much marijuana smoke that the crew was forced to put on oxygen masks.
In an article for the WSJ back in 2017, Brown called WeWork “a $20 billion startup powered by Silicon Valley pixie dust.”
Her book also alleged that Neumann smuggled a cereal box full of marijuana into his home country of Israel.
But Don Julio 1942 tequila was the favorite, good for bringing people together – even if it was supposedly poured first thing in the morning.
When Neumann laid off seven percent of the workforce in 2016 for cost reasons, he even followed the announcement with trays full of tequila shots for toasting – and a guest appearance from Darryl McDaniels of the hip-hop group Run-DMC.
At the time, SoftBank executives “concluded that Neumann’s penchant for tequila and marijuana wasn’t a deal-breaker, but they wanted a mechanism to take control if something went wrong,” according to the Financial Times.
They negotiated that Neumann would be kicked out if he committed a violent crime and was imprisoned in a common law jurisdiction.
Adam Neumann’s penthouse in New York’s Grammercy Park has been relisted for $32 million – $5.5 million less than the previous listing price. Pictured is a simple black and white dining room
A 2021 book claimed that Neumann’s private jet was filled with so much marijuana smoke that the crew was forced to put on oxygen masks. (File image of a Gulfstream G650)
The illustrative image shows a model of the interior of a Gulfstream G650
According to Billion Dollar Loser: The Epic Rise and Fall of WeWork, Neumann continued to attend meetings barefoot and insisted that low-paid employees use “purpose” and free beer to pay their bills.
The book described the company as having a “party boss” at the helm, where social events were more frequent than meetings – long before collapse.
Questions arose about the company’s leadership and model.
According to Vox, “Neumann’s dominance on the board allowed him to implement a series of unusual financial practices that many viewed as a conflict of interest.”
Neumann’s wife was employed at the company, as was his brother-in-law – as Head of Wellness.
Author Reeves Wiedeman wrote about Neumann’s eccentric tendencies, claiming that Neumann demanded that Don Julio cases be in every office in 1942 and that he would “roll over” if they were not there during his top job.
Then, in August 2019, the company released its full financials, revealing a loss of $900 million in six months.
Although WeWork manages numerous offices, it does not own them, but rather rents them for a period of ten to 15 years.
While some praised the project’s overnight success, others feared that the $47 billion valuation was grossly inflated.
This was partly due to the emerging history of losses. The company only made a profit in December 2022. And it wasn’t clear how the company would grow – other than Neumann’s ambitious plans for coexistence and training offshoots.
Decisions from above have also deterred many employees. In 2018, Neumann announced that WeWork had banned meat. Investors were shocked and eventually negotiated more “sustainable” practices – allowing employees to eat meat in offices but not paying for meals that contained meat.
Critics were also alarmed by the sale of the “We” brand for $6 million in stock, which Neumann later returned.
At the time, some employees reported seeing Neumann eating meat.
Horrifying reports of wild spending didn’t help. In one alleged incident, Neumann hosted a three-day party for 8,000 employees to celebrate the company’s $37 billion value.
In September 2019, after “a tumultuous week in which his eccentric behavior and drug use came to light,” the WSJ reported that directors were considering asking Neumann to resign.
In October 2019, Neumann agreed to leave the company after SoftBank bought $1 billion worth of shares from him to get him out. Neumann was reportedly set to receive nearly $1.7 billion from his investor.
The deal valued the company at just $8 billion – a far cry from the $47 billion reported earlier this year.
The following year, it was reported that the company had paid a whistleblower more than $2 million in cash to keep quiet after she threatened to do so, alleging an alleged culture of drug use, sleeping with colleagues and discrimination to uncover in the company she was the victim of a sexual assault.
The company was in a difficult financial and reputational situation. In May 2021, it was revealed that WeWork lost more than $2 billion in the first quarter due to closures due to COVID-19 and the impact of a settlement agreement with Neumann.
As part of the SPAC process, Neumann received payments of around $770 million and retained shares – another $722 million.
That reportedly included $480 million for half of his remaining shares, $185 million as part of a non-compete agreement and $106 million as part of a settlement.
The company tried to find a new balance without Neumann and went public in October 2021 through a merger with a special purpose acquisition company… but the turmoil continued and WeWork ended up losing 98 percent of its value.
A year later, the company’s dramatic decline was reflected in its own Netflix miniseries, in which Jared Leto and Anne Hathaway played Neumann and his wife. It was called WeCrashed.
Adam Neumann speaks onstage during the WeWork Presents Second Annual Creator Global Finals at Microsoft Theater on January 9, 2019 in Los Angeles, California
Adam Neumann, co-founder of WeWork, arrives at an event on the sidelines of the company’s trading debut in New York, United States, on Thursday, October 21, 2021
WeWork was founded in 2010 against the backdrop of the global financial crisis and offered companies an alternative to traditional office rent
Adam Neumann and Rebekah Neumann attend the 2018 Time 100 Gala at Frederick P. Rose Hall, Jazz at Lincoln Center on April 24, 2018 in New York City
Despite the setback, Neumann is largely back on his feet.
Even if the company he founded files for bankruptcy, the entrepreneur is still worth $2.2 billion in 2023, according to Forbes.
That’s much less than the $4.1 billion reported in 2019 – but still more than the $1.6 billion in 2016 and up from the low of $1.4 billion in the year 2022.
Last year, the WSJ reported that Neumann had acquired shares in around 4,000 properties in Miami.
His residential real estate company Flow was valued at more than $1 billion by Andreessen Horowitz in 2022.
Portal reported that he is also behind climate technology company Flowcarbon, raising $70 million in its first round of funding.
Neumann and his family suffered some losses along the way.
In April 2021, Neumann sold his 11-acre guitar-shaped California estate for $22.4 million, ten months after putting it on the market for $27.5 million.
In July 2023, they were asking $32 million for a 7,880-square-foot penthouse in New York City, a $5.5 million reduction from the previous asking price.
But today Neumann is ranked No. 1,381 on Forbes’ highest net worth list, even though his dream with WeWork didn’t come true.
“As a co-founder of WeWork who has spent a decade building the company with a great team of goal-oriented people, the company’s expected bankruptcy filing is disappointing,” he said in a brief statement.
Adam Neumann has taken WeWork to glorious heights and challenged expectations of what a startup could achieve in the wake of the financial crash.
His antics raised suspicion among investors, who questioned the fragility of WeWork’s ambitious plans for the future of work.
But despite the unfortunate fall of a champion of the startup world, Neumann continues to invest energy and spirituality in young ventures…