How WeWork Founder Adam Neumann Lost The Company $39 Billion In One Year | Forbes Year In Review

if I had to pick one word to describe weworks 2019 it would be cluster so we were started the year pretty strong in January they announced that Softbank had completed a six billion dollar investment in the company which valued it at a pretty stunning forty seven billion dollars and that made it the second most valuable startup in the country behind uber at least on paper at the same time they announced a new umbrella organization called the Wii company which would encompass of course we work the main co-working business as well as an apartment concept called we live Jim called we rise a retail concept called made by we and most controversially we grow which is a experimental school that was started by CEO Adam rumens wife Rebecca because sort of auxilary we brands exist on a small scale Ben really scaled and in a meaningful way it plays into this whole vision that if you take out about his word has been around since the very beginning when the company was founded in 2009 to kind of create community across all sorts of verticals so after this off being investment that valued we work at 47 billion dollars Forbes estimated that CEO Adam Newman was worth about 4.1 billion dollars most of that and his day in the company but at the start of 2019 there there was concerns but these these two bits of news were relatively positive at least to sort of a casual observer I mean when you looked under the hood in hindsight some of this stuff was clearly problematic at the time when they announced the Wii company they also made Rebecca Adams wife a co-founder which at the time raise some eyebrows but some of the effects of that wouldn't become clear until until on when we were confirmed in April that they had filed confidentially to go public it caught people at high surprise they were losing a ton of money in 2018 we work had revenue of 1.8 billion and a loss of 1.9 billion so their loss laughs to their their revenue and there wasn't sort of a clear plan of how they would become profitable reporters across the country really wanted a full gear I'm trying to get the dirt on this company because there's been so much whispering about their oddness it came out that Adam Newman owned properties that he was leasing back to we were and making money and he had cashed out something hundreds of millions of dollars which is unheard of startup founders don't do that I mean they'll take a little bit of money to live off of but when we talk about these huge networks that the that private company founders have it's a lot of it's on paper they don't have that money the paperwork was finally released at 7:07 in the morning on August 14th it was pretty clear immediately that this was not your your average s-1 its document rather than clarifying really confirmed a lot of people's worst fears about this company these are formal documents these are filed with the Security and Exchange Commission so normally you would see people the CEO and different executives and really anyone name referred to by their last name this document it mentions Adam a hundred and sixty nine times there were some details about an Adams relationship with the company he didn't have a formal employment agreement with them all of the executives had agreed to give over their voting shares to him so we have this incredible power and probably the two most surprising things to me were one night what would happen if Adam Lee died or could not serve as he anymore and that was his wife Rebecca she would be one of a very small group of people who would choose his successor that's very unusual it's usually a whole board it's usually huge search committees the idea that a founders wife could decide who would run the company when he couldn't it was not not the norm so the other surprising detail in the S alone was that I didn't had the trademark for the word we and when they rebranded as the week company he had his company pay him almost 6 million dollars to use the word we it struck people as being milking this company for everything he could get out of it and it was particularly ironic when it's this company about claims to be all that community in subsequent rewrites of the s-1 the company tried to correct for a lot of this and it just was never never enough they were losing so much money but losses had the losses had expanded in the into 2019 investors just weren't haven't yet and then kind of a final straw seemed to be in September when the Wall Street Journal did this great report on Adams behavior and and there had certainly been reports and stories before about his drinking and partying and the lead of this was he was getting high on a borrowed private jet and it just really seemed to be a final straw for a lot of people in mid-september and the IPO was postponed and within a week Adam Lewis was forced out we were still needed the money that they were hoping to get from this IPO by October there were signs that they only had enough cash on hand to run the company for a few more weeks so on October 22nd Softbank announced a nine point five billion dollar bailout package and about time on the span the company went from being worth 47 million dollars to worth less than a billion dollars and what was kind of most galling to a lot of people about this deal was that Adam Newman got this sweetheart package all in valued at 1.5 billion dollars that of course coincided with the really most painful part of all of this which is right around Thanksgiving we work laid off 2,400 people and that was famous to me across the organization but last week I got an email from one of their communications people with the press release we work opens monthly record number of new buildings and it two weeks earlier they'd laid off 2,400 people I don't know if they're that strap that means our strategy is to try and like turn the page and I move on and they have for the time being they have some money to kind of write this yet but there's gonna be more hard cuts to table whether that means more layoffs I don't know but they're divesting some of the startups they had acquired over the years in December there was news that one of those startups was being bought back by the founder it's easy to kind of laugh at this misfortune and in hindsight he could have seen it coming but there's a lot of people who lost their jobs and there's the way everyone works and some way now comes from what we work did and now the people at we work are not sure that they'll ever get that back [Music] you

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Keywords: Forbes, Forbes Media, Forbes Magazine, Forbes Digital, Business, Finance, Entrepreneurship, Technology, Investing, Personal Finance, we work, adam neumann, career crash, we, work, wework, adam, neumann, softbank

Id: zRDA_Ve0m_4

Length: 8min 18sec (498 seconds)

Published: Fri Dec 20 2019