WeWork: The Rise and Fall of a Company: Adam Neumann and the $47 Billion Scam
In 2019, its market capitalization was estimated at $47 billion, and in November 2023, the company filed for bankruptcy. What happened to the coworking market leader? What are the reasons for its success, growth, and apparent prosperity? What are the reasons for its failure? What is WeWork?
The short version of the story has not yet been published.
What is this episode about:
Adam Neumann and Miguel McKilvey founded WE in 2010.
They successfully raised capital and experienced rapid growth over the next three years.
After 2015, the company became very visible, and Adam was a regular in the media.
In 2016, the company's market capitalization was $17 billion.
In 2018, 425 WeWork coworking spaces opened in 100 cities.
In 2019, the market capitalization was estimated at $47 billion...
The rest is in the video.
At some point, it seemed as if Adam and Miguel had discovered the secret to transforming this business into a major international corporation.
After the 2008 financial crisis, office occupancy rates dropped significantly. Coworking spaces began popping up everywhere: beautiful interiors, comfortable workspaces, flexible payment options: rent a desk, a conference room, or an entire floor. Excellent coffee, convenient locations, and a wealth of additional services. WeWork branches are open in virtually every major city, with a total of 120 cities and 700 coworking spaces. The company's CEO, Adam Neumann, has become a star. His captivating speeches and interviews attract attention. WeWork planned a highly anticipated initial public offering in 2019. However, four years later, in 2023, the company went bankrupt. In this episode, we examine the company's history, the reasons for its success and failure. You are watching the full version of the video; please note, we also have a short version of this story on our channel. Links in the description.
WEWORK TIME CODES
00:00 - Introduction
01:45 - The Beginning of the Story: GreenDesk Coworking
02:16 - The First WE-Branded Coworking Space on Manhattan Island
03:13 - The Second Wall Street Location, 2011
03:34 - Adam Neumann Becomes a Star
04:29 - The Company Grows Rapidly, 2013
04:58 - The Company's Market Cap is Estimated at $1.5 Billion in 2014
06:00 - Summer Camp Corporate Events
07:08 - The Market Cap is Estimated at $10 Billion and IPO Preparations
07:48 - How a Coworking Location is Chosen
08:42 - The First Layoffs and the First Scandal
09:05 - WeLive Co-living Launched in 2016
10:19 - New Investors: Soft Bank
11:54 - Series Business Acquisitions
12:47 PM - WeGrow Kindergarten 2018
1:36 PM - Weekly Monday Party
2:37 PM - A Turning Point in 2019: IPO
3:26 PM - Estimated Market Cap Reaches 47 Billion
4:34 PM - Share Issuance Plan Collapses in Summer 2019
5:30 PM - Adam Neumann Under Criticism and Leaves the Company
6:24 PM - IPO Cancelled, Adam's Resignation, and a Decline in Market Cap
8:00 PM - COVID Arrived and Offices Closed
10:25 PM - IPO in 2021
11:16 PM - New Management
24:22 PM - Hope Has Risen for the Company to Start Making Money in 2022
25:18 PM - WeWork Stock Price
26:41 PM - Revenue and Loss Report 2020-2023
27:45 PM - Sandeep Mathrani resigned as CEO
29:00 - How many coworking spaces does the company have? Bankruptcy is coming soon
30:12 - Bankruptcy is very likely in 2023
31:29 Reasons for the company's rise and business model
32:18 - Coworking space cost: renting a desk or a room
34:30 - Positioning of coworking spaces
35:02 - Reasons for the company's success
35:43 - Reasons for the company's failure
38:19 - A list of all the reasons for the collapse
40:16 - The main problem in the business model
40:49 - Investor deception
41:34 - Assessing Adam Neumann's charisma
44:50 - Conclusions on the whole story
This YouTube channel is dedicated to the history of economics and business. Cases, entrepreneurs, technologies – things without which it is impossible to imagine the economy, and even more difficult to understand.
WeWork amazed observers with its rapid growth and new approach to commercial real estate. In just five years, the company accomplished what its closest competitor needed around 30. Imagine: in 2010, there were two locations; in 2012, there were seven; in 2014, there were 23. In 2016, when the company's market capitalization was estimated at $16 billion, there were over 100 locations. In 2019, the number of locations exceeded 500. The company set another record: by 2023 alone, four books about the company and Adam have been released, along with a full-length TV series starring Jared Leto. It seems no other company has received so much attention.
There was a moment in 2018 when the world of investors and real estate operators was convinced that Adam and Miguel had reinvented the office leasing business model. That they had the secret sauce that would transform a seemingly simple coworking business model into a multibillion-dollar international business. A level unheard of in the world of commercial real estate, investments, and c...