The story of WeWork’s rise and fall, and the behavior of its party bro founder that contributed to its demise, have been well documented. But it seems that Adam Neumann continues to be a well of salacious stories.
A new book, The Cult of We, was recently released and details even more wild stories from WeWork’s high-flying days, when investors including SoftBank were wooed by its charismatic founder to pour billions of dollars of funding into the office-sharing startup on the premise it could be an all-encompassing lifestyle company.
WORK HARD, PARTY HARDER — It’s hard to choose to the most incredible anecdotes. One that’s been getting lots of circulation describes Neumann’s penchant to party hard, and constantly. He once smoked so much weed aboard WeWork’s private jet, according to the new book, that the flight crew reportedly felt the need to put on their oxygen masks. Neumann also required bottles of Don Julio 1942 always be stocked on the plane, even for morning flights. He had an industrial-strength smoke sucker installed in his office to clear toke smoke, and was frequently hungover in meetings.
WeWork still exists today, and plans to go public on the stock market soon. But it’s downsized and is worth far less than the $47 billion it was once valued at.
When Neumann initially tried to take the company public, he and WeWork became a laughing stock after investors looked at its horrendous financials and wondered how it could possibly be worth anywhere near $47 billion. Then word about Neumann’s personal behavior trickled out, and that of how many billions he had blown expanding the company into dubious new lines of business, including a private school for young children. He was forced out and the company has been cutting costs ever since in a bid to survive.
GOOD IDEA, BUT — WeWork isn’t even a bad concept. People who work out of its offices around the world love the aesthetics and vibe. They’re cool, not drab like most office spaces, and you can rent desks by the month without any large commitment. But it’s an old type of business and one that’s really not worth a lot. WeWork’s largest competitor, IWG, generates close to the same amount of revenue and is valued at just $3 billion. All WeWork is doing is leasing space, sprucing it with up nice furniture, and then reselling it to individuals at a slightly higher price.
Add on top of that all the lavish spending that Neumann was doing, and WeWork at some points was losing more than $2 billion in a single three-month period.
SELF-DEALING — But fortunately for Neumann, even though he was fired, the new book also outlines how he managed to pilfer more than a billion dollars from the company through self-dealing, such as by trademarking the name “We” and licensing it back to the company. He invested in office spaces and then leased them to WeWork for more than he paid. Throughout several funding rounds for the company, shell companies he controlled sold stock to new investors. All while WeWork was hurtling towards bankruptcy.
It’s surprising that he was able to get away with it, but WeWork’s biggest investor, SoftBank, is probably somewhat to blame for fueling his behavior and accepting his idea that WeWork was more than a landlord but actually a lifestyle company. And it paid a big price for doing so — it was forced to settle a legal case with him in order to get him to hand over his majority control in the the company. When WeWork goes public, it’s expected to be worth $9 billion, half the $18 billion that SoftBank put into it.
Revenue was reported to be $3.2 billion in 2020, according to the company. It’s been reported it made no profit on that income, but WeWork hopes to begin making money soon on the premise that companies want flexible workspace options as people begin returning to offices.