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Adam Neumann, the billionaire co-founder of WeWork, has been watching from the sidelines as the once-promising office space empire he helped create faces bankruptcy. WeWork filed for bankruptcy recently, revealing staggering debts of $19 billion, raising questions about the future of its 777 locations.
Neumann and his co-founder, Miguel McKelvey, were trailblazers when they established WeWork in 2010. They introduced a fresh approach to commercial real estate by offering trendy workplace memberships in office locations.
Despite its initial growth, Neumann’s behavior and leadership style increasingly alienated investors, leading to his resignation as CEO in 2019. Now worth approximately $2.2 billion, Neumann has expressed the difficulty of witnessing his brainchild unravel, potentially stirring emotions among investors who still attribute some of the company’s troubles to him.
In a recent statement, Neumann appeared to take a subtle dig at his successors at WeWork, saying, “It has been challenging for me to watch from the sidelines since 2019 as WeWork has failed to take advantage of a product that is more relevant today than ever before. I believe that, with the right strategy and team, a reorganization will enable WeWork to emerge successfully.”
In fairness to WeWork’s current CEO, David Tolley, he has had limited time to make an impact on the company. Tolley assumed the role of CEO less than a month ago after serving as the interim leader since May. At the time, he expressed confidence in the company’s direction, stating, “I emphatically believe we’re on the right path.”
Just over three weeks later, Neumann described WeWork’s bankruptcy, which pertains to its U.S. and Canada operations, as “disappointing” but acknowledged the contributions of the business’s “amazing team of mission-driven people.”
WeWork did not respond to Fortune’s request for comment outside regular working hours.
The Path to WeWork’s Bankruptcy
WeWork, based in New York, gained attention from Silicon Valley and Wall Street as it sought to transition from a disruptor to a market force with an attempted IPO in 2019. However, the path to going public encountered turbulence when the company’s S-1 document before the listing revealed a $1.9 billion loss in the year preceding the IPO.
Investors grew concerned, raising doubts about the business’s sustainability. SoftBank, WeWork’s largest external investor, reportedly urged the company to postpone its IPO plans.
A year later, SoftBank’s CEO, Masayoshi Son, publicly criticized the company, expressing regret over his firm’s significant investment in the office-sharing company. He also reduced his valuation of WeWork, which had once reached a peak valuation of $47 billion. In March 2020, Son valued the business at just $2.9 billion, a fraction of the capital his firm had poured into the venture.
By 2020, WeWork’s situation had further deteriorated. Neumann had departed from the company after a scathing exposé by the Wall Street Journal, a legal battle over Neumann’s trademark of the word “we,” and mass layoffs.
The unexpected and devastating factor working against WeWork was the global pandemic, which forced many employees to work from home. Lockdowns left WeWork locations vacant, but by 2022, occupancy rates had rebounded to 72% of pre-pandemic levels, despite ongoing debates over the return to office.
WeWork eventually went public in October 2021, with a valuation of $9 billion. Over the past year, the company’s stock price has plummeted by over 99% to just 84 cents.
Neumann has since launched Flow, a “residential consumer-facing real estate company.” Flow’s mission puts it in potential competition with WeWork, as Neumann stated in July that Flow could either “compete or partner” with his former company.
