WeWork’s co-founder Adam Neumann flew too high, too fast, with the support of his investors. WeWork’s business model is going to be a lot harder to fix
The tremendous speed with which the WeWork and Adam Neumann affair developed stunned those accustomed to the rapid developments in the tech industry.
By the time the prospectus was released in mid-August, WeWork was an accelerated growth startup with huge value, and Neumann was a successful promising entrepreneur.
The company raised over $ 5 billion, including a $4 billion investment in August 2017 from Softbank. The company’s issuance documents as of March 1, show the company has about 200,000 customers, who hire 251 to work positions in 24 countries.
According to the Wall Street Journal, since the release of a public company prospectus in 2019, it “has been besieged with criticism over its governance, business model and ability to turn a profit.”
True, there were always doubts and question marks about the company, but they remained marginalized.
WeWork’s publication of its prospectus was the opening shot for a myriad of stories about Neumann’s eccentric behavior. The company’s cap has crashed from about $47 billion to about $15 billion. Neumann wanted to forge ahead anyway, leading to even more reports about the pressure of his investors, mainly his biggest backer, SoftBank. In order for WeWork (The We Company) to make an eventual offering, it seems inevitable to removed Adam Neumann from its way. Neumann was forced to leave his position as CEO and remains as chairman.
The media drow a picture of Neumann’s character narcissist, extravagant, wild, greedy, childish, compassionate, one who doesn’t take into account the consequences of his actions.
The Wall Street Journal research described him as irresponsible and WeWork as a toxic culture company.
In 2016, at the end of a session where he talked about extensive layoffs, everyone jumped tequila whips and danced. The description joins past claims of a culture of sexual harassment and sexism.
Adam Neumann entered a long list of founders who had to make way for a “responsible adult.” The circumstance is somewhat reminiscent of the ouster of Travis Klanik, the founder of the short-fused Uber, following a series of scandals.
In his place was appointed a conservative CEO, which led to a trend of halting rapid expansion and downsizing for the IPO.
In the prospectus, which featured phrases like “We devote it to the energy of us.” But the truth behind the company גisplay window became clear, not to mention the shaky business model.
Neumann himself earned millions from questionable deals with his own company. For example, he sold the company the registered mark WE for $6 million. Some commentators have argued that WeWork is a form of fraud designed to steal Neumann’s pocket millions of investors’ money.
The debate about whether WeWork is a technology or real estate company is irrelevant. In essence and image, it is part of the technology industry.
Former Twitter CEO Dick Costolo told The Wall Street Journal that the shocking behavior comes at a time when regulators and politicians are exploring Silicon Valley and wondering if there is any self-awareness there.
Adam Neumann’s remove will not solve the company’s deep problems. The temporary CEO duo will now be required to calm the situation, introduce more thoughtful conduct, expansion, reduce expenses and losses, and cut manpower.
In the absence of Neumann, the changes will also affect Israel, which had been a major focus for WeWork. The company currently operates 11 complexes in Israel and two others are under construction in Tel Aviv and Petah Tikva. The company operates a broad technology development branch under the management of Ron Gura.