The Story
The WeWork saga has everything: a charismatic founder with messianic delusions, a Japanese billionaire who kept writing checks, tequila shots at company all-hands meetings, a $63 million private jet, a trademarked word sold back to the company for $5.9 million, and the single most dramatic valuation collapse in startup history — from $47 billion to $45 million. If it weren’t all true, you’d reject the screenplay as too absurd.
Adam Neumann co-founded WeWork in 2010 with architect Miguel McKelvey. The business model was cleverly simple: sign long-term leases on commercial real estate, renovate the spaces into sleek communal offices with beer on tap and good lighting, then sublease desks and private offices on flexible short-term contracts at a premium. The arbitrage between long-term lease costs and short-term sublease revenue was the engine.
It worked. WeWork spaces filled up. Young companies and freelancers loved the vibe, the networking, the feeling of being part of something bigger than a solo Craigslist sublet. Neumann, an Israeli-born former baby clothing entrepreneur with preternatural charisma, was the perfect salesman for this vision. He didn’t just sell office space. He sold community. Purpose. In his telling, WeWork wasn’t a real estate company — it was a technology platform that would “elevate the world’s consciousness.”
Investors bought it. SoftBank’s Masayoshi Son reportedly met Neumann for 12 minutes and committed $4.4 billion. In total, SoftBank would pour approximately $16 billion into WeWork over multiple rounds. By January 2019, WeWork was valued at $47 billion — more than 10 companies in the S&P 500 at the time. The company managed more leased office space than any other entity in both New York City and London.
What Went Wrong
The IPO filing in August 2019 pulled back the curtain, and behind it was chaos.
The S-1 document revealed that WeWork had lost $1.9 billion in 2018 on $1.8 billion in revenue — the company was spending more than a dollar for every dollar it brought in. It also revealed a staggering web of conflicts of interest: Neumann owned buildings that WeWork leased from him. He had trademarked the word “We” and charged the company $5.9 million to license it. He had taken out personal loans against his WeWork shares. He had negotiated a level of corporate control — through supervoting shares — that would have made a dictator blush.
The financial language was as creative as the accounting. WeWork presented investors with a metric it invented called “community-adjusted EBITDA,” which excluded nearly every major expense category. It was the financial equivalent of saying “if you ignore all the reasons we’re losing money, we’re actually quite profitable.”
The market reacted with a mixture of horror and dark comedy. The planned IPO at a $47 billion valuation was pulled. The valuation cratered to roughly $10 billion, then lower. Neumann was forced out in September 2019 — but not before negotiating an exit package worth roughly $1.7 billion, including a $185 million non-compete agreement. He was paid nearly $2 billion to leave the company he had driven into the ground. Let that marinate.
What followed was a long, slow bleed. SoftBank took over, installed new management, and tried to right the ship. WeWork eventually went public through a SPAC merger in 2021 at a $9 billion valuation — an 80% discount from its peak. The stock debuted around $10. It would eventually trade below 25 cents before a 1-for-40 reverse split.
COVID accelerated the inevitable. With offices emptying worldwide, WeWork’s model — long-term liabilities funding short-term revenue — became a ticking time bomb. On November 6, 2023, WeWork filed for Chapter 11 bankruptcy with $19 billion in liabilities and $15 billion in assets. SoftBank’s total losses on the investment have been estimated at $14.3 billion.
Adam Neumann, meanwhile, is doing fine. Worth an estimated $1.7 billion after his exit, he launched a new real estate startup called Flow in 2022, which received $350 million from Andreessen Horowitz at a $1 billion valuation. He reportedly offered $500 million to buy WeWork back out of bankruptcy. He was rejected.
The Lesson
WeWork is what happens when the story outpaces the spreadsheet for too long. The underlying business — subleasing office space — is real and can be profitable. Regus (now IWG) has operated a similar model since the 1980s and remains a going concern. But WeWork’s mistake was pretending it was a technology company and pricing itself accordingly. Technology companies get 10-20x revenue multiples because software scales with near-zero marginal cost. Real estate does not. Every new WeWork location required signing a new long-term lease, renovating a new space, and hiring new staff. That is an operating business, not a platform.
The other lesson is about governance. Adam Neumann had supervoting shares, a hand-picked board, and no meaningful check on his behavior. He flew on a $63 million jet. He smoked weed on a different private jet. He surfed during work emergencies. He reportedly told employees he wanted to be the world’s first trillionaire, to become president of the world, and to live forever. When these are the ambitions of your CEO and nobody on the board is empowered to say “absolutely not,” the outcome is predictable. Charisma without accountability is just a more entertaining way to lose $14 billion.