Enterpreneur, Adam Neumann

The Rise & Fall of “Better Together”

Adam Neumann spent some of his final days as the CEO of WeWork in the same way he had for countless weekends in recent years: surrounded by family at his house in the Hamptons, New York, U.S. With the company’s plan to go public smouldering, his control over the business dwindling and its biggest investor starting to turn against him, Neumann gathered his wife and business partner, Rebekah, and their five kids, piled into a car and drove east to the Tony beach community

Adam Neumann

Just a few months previously, Naumann’s coworking company had been valued at $47 billion, until it found itself rocked by criticism and controversy since filing its IPO paperwork in mid-August to reveal spiralling losses. Since the release of the paperwork, WeWork has suffered from a lack of investor interest and subsequently announced the shelving of its plans to go public.

In the aftermath, attention turned to Neumann. His business investments came under scrutiny, along with his complex web of personal connections within WeWork, which could present conflicts of interests. WeWork announced some changes, but it wasn’t enough to get the IPO back on track.

In response, Neumann announced that he was stepping down as CEO. in the”best interest” of the company, insisting that he was becoming a “significant distraction” to WeWork’s IPO plans. He’s now reported to be leaving the company’s board of directors and – in order to do so – will receive $1.7 billion as part of a buyout deal. Neumann is expected to sell stock worth a billion dollars to SoftBank, for which he will receive a $185 million “consulting fee”, and credit worth $500 million.

ADAM NEUMANN AND HIS WIFE, REBEKAH PALTROW NEUMANN

He’s cashed out some of his stake in recent years and also taken out loans, with Neumann’s sales and debt transactions have reportedly totalled $700 million. Neumann himself has an estimated personal net worth of $2.2 billion. Since founding WeWork, Neumann has spent over $80 million on five homes, including two properties in New York City and one home in the Hamptons. He reportedly purchased a 13,000-square-foot home in the San Francisco area in 2018, complete with a guitar-shaped room, worth $21 million.

During Neumann’s period as CEO, WeWork has expanded to provide co-working desk space in commercial buildings in more than 120 cities around nearly 40 countries. The company was last valued at $47 billion.

Just days after WeWork announced that it was officially delaying its IPO, a media report detailed Neumann’s hard-partying ways and drug and alcohol use. Two of the most startling revelations in the piece: Once after announcing redundancies, Neumann sent around tequila shots and organised a surprise Run-DMC concert. His private jet was once also recalled in Israel after marijuana was found hidden in an onboard cereal box.

Stepping down as CEO, in the company’s “best interest”, Neumann will receive 1.7 billion dollars as part of a buyout deal

Adam Neumann, 40, was born is Israel in 1979. His parents divorced when he was seven, and he moved around a lot as a child with his mother — reportedly having lived in 13 different homes by the time he was 22. As a child, Neumann spent time living on an Israeli kibbutz – one of the collective community settlements across the country – then attended a school near the Gaza Strip while his mother worked as a doctor at a nearby hospital.

Severely dyslexic, Neumann couldn’t read or write until he was in third grade.

As is customary for Israeli citizens, Neumann served in the Israel Defence Forces after completing secondary school. He served in the navy for five years, although only three years of service is required. “That’s where I got to know a lot of my best friends,” Neumann admitted in 2017. After leaving the IDF, Neumann moved to New York City in 2001, living in an apartment in the Tribeca neighbourhood with his sister, Adi. He spent his early days in New York going to clubs and “hitting on every girl in the city,” he said in a commencement speech in 2017.

Enterpreneur, Adam Neumann
MIGUEL MCKELVEY AND ADAM NEUMANN

Neumann enrolled at the city’s Baruch College in January 2002, majoring in business. He said that he came up with the concept of WeLive – WeWork’s communal living business – for a school entrepreneurship competition. However, the idea was killed in the competition’s second round, because a professor didn’t think Neumann would be able to raise enough money “to change the way people live”.

Neumann dropped out of college just four credits short of graduating. He ultimately finished his degree 15 years later, in 2017, after completing a four-month long independent study, and delivered the commencement speech for Baruch College’s graduating class.

It was while in college that Neumann met his now-wife, Rebekah Paltrow Neumann, a cousin of actress Gwyneth Paltrow. The pair were wed in 2009 and today have five children.

WeWork long had the image of a family business: a husband-and-wife pair at the helm and company slogans about how life is “better together”. Although Neumann started the business in 2010 with Miguel McKelvey, a kindred spirit who – like Adam – spent time on a commune during his childhood, they rewrote the founding story over the years to include Rebekah. The three were listed as founders in registration documents for an initial public offering published last month. Rebekah, 41, has also served as chief brand and impact officer of the parent company, We Co., been CEO of an education arm of the WeGrow business, and is one of three people assigned to select a replacement for her 40-year-old husband if he dies.

The Neumanns’ departure marks a seismic shift for WeWork and its culture, which was shaped by the idea that personal and professional life should be indistinguishable

There were a lot of things about WeWork that made public investors recoil. For every $1 of revenue, it incurred about $2 in expenses and didn’t make a convincing case that it could reverse that equation. It sought to be valued as a technology business, but operated much like a real estate company, while its corporate structure resembled a schematic for a microwave.And the Neumanns seemed to embody it all with their sense of arrogance, as one financial analyst put it. The IPO prospectus offered a litany of apparent conflicts of interest. Neumann hired multiple family members besides his wife, including her brother-in-law, who also left the company. Neumann borrowed company money, collected rent from WeWork on space in buildings he owned and charged the company $5.9 million for the rights to a trademark he held on the name “We”. He had effective control of management decisions through stock with special voting rights, though it ultimately wouldn’t be enough for him to retain power.

This account of Adam and Rebekah Neumann’s nine-year reign and swift fall is based on interviews with seven current and former WeWork employees, advisors and investors, and multiple other people familiar with the company. The departure of the Neumanns marks a seismic shift for WeWork and its culture, which was shaped by the idea that personal and professional life should be indistinguishable. This ethos is on display at the company’s co-working offices, where beer kegs are a fixture. And it’s also reflected in the private primary school operating within WeWork, which Rebekah said they built to give their children a worthy education, or the time Adam was seen visiting his kids at the school wearing nothing but an open robe and Speedos (He was coming from the steam room attached to his office).

In Neumann’s email to staff announcing his departure, he suggested that the mission hasn’t changed. “When Miguel, Rebekah and I founded WeWork in 2010, we set out to create a world where people work to make a life and not just a living,” Neumann wrote. “I could not be more inspired by everything we have achieved.”