WeWork Paid Founder Adam Neumann More Than $2 Billion, New Book Reveals
A pair of WSJ reporters have just released a new book, “The Cult of We”, yet another wild tale chronicling the exploits of WeWork founder and former CEO Adam Neumann. As one might expect, the book features several new revelations about Neumann and the extent of Neumann’s extraction of resources from his cash-burning ‘unicorn’, primarily in the form of compensation.
In fact, the book reveals that Neumann extracted even more wealth than previously believed: entities he controlled made more than $2.1 billion from the company between its founding to the present day, including via stock sales, cash settlement payments and shares.
Offering yet another example of how WeWork’s backers and bankers – particularly SoftBank and its chairman Masayoshi Son – enabled Neumann and his manic impulses, the WSJ reporters reveal that Neumann and a group of his closest associates sold shares during every funding round. He made roughly $500MM from these sales. In 2019, Neumann pocketed $300MM from additional share sales. Then in May, it was reported that Neumann received another award worth $245MM, bringing the total value of Neumann’s exit package to nearly $1 billion.
Later, via a renegotiation of his exit package, WeWork agreed to pay out another $185MM as part of a non-compete agreement while also ‘renegotiating’ a $431.5MM line of credit secured by more than 19MM shares of WeWork stock owned by a Neumann controlled entity.
Following years of whispered reports about his erratic behavior, everything fell apart for Neumann after WeWork relased its S-1, exposing that Neumann and his family would retain virtually complete control over the company. WeWork quickly modified the voting rights’ arrangement, but it was too late. The combination of WeWork’s mounting losses, Neumann’s behavior and the insanity exposed by the company’s “consciousness-elevating” S-1 prompted investors to balk. The company’s valuation quickly dropped from nearly $50 billion to less than $10 billion.
WeWork finally went public this spring in a deal with a SPAC called BowX Acquisition Corp. Its investors managed to raise some institutional capital, and have been pitching WeWork as a reopening play, arguing that its “flex space” offerings will become even more popular in a world where ‘hybrid work’ becomes the norm, and where companies don’t want to commit to long-term leases.
In addition to the staggering payouts received by Neumann, the book also revealed many other ridiculous details. During the company’s early days, Neumann openly fantasized about trying to become Israel’s prime minister. He also said he wanted to become “president of the world” later on, after the company had achieved its massive valuation.
For an executive who cultivated a personality cult, Neumann had a new exit designed to his offices so he could avoid running into staff in the main lobby on his way to the elevators. When it came to interactions with real-life politicians, Neumann was often late or otherwise impertinent. He once tried to schedule a last-minute meeting with Canadian PM Justin Trudeau, and nearly missed a meeting with British PM Theresa May because his wife reportedly wanted him to skip it.
Neuman also grew paranoid as top executives started to push back against more of his decisions. As the Verge reports, after 2012, priorities shifted at WeWork and management became obsessed with increasing WeWork’s “valuation”, often at the expense of creating a profitable and sustainable business.
In an interview with the Verge, one of the 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 didn’t, of course. They were in on it the whole time. WeWork’s bankers were happy to see it load up on debt and venture capital. And when it came time for the IPO, they were more than eager to dump the shares on the public markets – right up until it became clear that Neumann had poisoned the well.
Wed, 07/21/2021 – 22:00
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