A pair of WSJ reporters have simply launched a brand new ebook, “The Cult of We”, yet one more wild story chronicling the exploits of WeWork founder and former CEO Adam Neumann. As one may count on, the ebook options a number of new revelations about Neumann and the extent of Neumann’s extraction of assets from his cash-burning ‘unicorn’, primarily within the type of compensation.
In truth, the ebook reveals that Neumann extracted much more wealth than beforehand believed: entities he managed made greater than $2.1 billion from the corporate between its founding to the current day, together with through inventory gross sales, money settlement funds and shares.
Offering yet one more instance of how WeWork’s backers and bankers – notably SoftBank and its chairman Masayoshi Son – enabled Neumann and his manic impulses, the WSJ reporters reveal that Neumann and a bunch of his closest associates bought shares throughout each funding spherical. He made roughly $500MM from these gross sales. In 2019, Neumann pocketed $300MM from extra share gross sales. Then in May, it was reported that Neumann acquired one other award value $245MM, bringing the overall worth of Neumann’s exit package deal to almost $1 billion.
Later, through a renegotiation of his exit package deal, WeWork agreed to pay out one other $185MM as a part of a non-compete settlement whereas additionally ‘renegotiating’ a $431.5MM line of credit score secured by greater than 19MM shares of WeWork inventory owned by a Neumann managed entity.
Following years of whispered reviews about his erratic habits, the whole lot fell aside for Neumann after WeWork relased its S-1, exposing that Neumann and his household would retain nearly full management over the corporate. WeWork rapidly modified the voting rights’ association, but it surely was too late. The mixture of WeWork’s mounting losses, Neumann’s habits and the madness uncovered by the corporate’s “consciousness-elevating” S-1 prompted traders to balk. The firm’s valuation rapidly dropped from almost $50 billion to lower than $10 billion.
WeWork lastly went public this spring in a take care of a SPAC referred to as BowX Acquisition Corp. Its traders managed to boost some institutional capital, and have been pitching WeWork as a reopening play, arguing that its “flex space” choices will grow to be much more common in a world the place ‘hybrid work’ turns into the norm, and the place firms do not need to decide to long-term leases.
In addition to the staggering payouts acquired by Neumann, the ebook additionally revealed many different ridiculous particulars. During the corporate’s early days, Neumann overtly fantasized about making an attempt to grow to be Israel’s prime minister. He additionally stated he wished to grow to be “president of the world” afterward, after the corporate had achieved its huge valuation.
For an govt who cultivated a character cult, Neumann had a brand new exit designed to his places of work so he might keep away from working into employees in the primary foyer on his approach to the elevators. When it got here to interactions with real-life politicians, Neumann was usually late or in any other case impertinent. He as soon as tried to schedule a last-minute assembly with Canadian PM Justin Trudeau, and almost missed a gathering with British PM Theresa May as a result of his spouse reportedly wished him to skip it.
Neuman additionally grew paranoid as prime executives began to push again towards extra of his selections. As the Verge reports, after 2012, priorities shifted at WeWork and administration turned obsessive about rising WeWork’s “valuation”, usually on the expense of making a worthwhile and sustainable enterprise.
In an interview with the Verge, one of many authors of “the Cult of We” quipped that “it still is kind of wild to me how Adam Neumann had the ultimate power to make all of this happen and do all the things he did when you have some of the most sophisticated financiers in the world behind him…How did they all get played?”
They did not, after all. They have been in on it the entire time. WeWork’s bankers have been joyful to see it load up on debt and enterprise capital. And when it got here time for the IPO, they have been greater than desirous to dump the shares on the general public markets – proper up till it turned clear that Neumann had poisoned the effectively.