Time To Cash In
Today we will talk about Adam Neumann, the founder of Wework and his new startup flow.
For those out the loop. Wework used to be this large startup that owned office buildings. They rented office buildings and then sold the subdivided space for more money. Now this business model isn’t anything new. Companies like Regus have been leasing office spaces and co-working arrangements for years. Wework’s greatest contribution to the office leasing business was its culture.
Somehow Adam Neumann managed to create a workspace that appealed to millennials. If you wanted to feel you belonged to a community or were meant for a larger purpose in life, wework had you covered.
At one point, Adam Neumann’s word was gospel. He has this charisma that allowed him to pursuade people to work for him, buy his office space, then once things got expensive, Adam managed to convince VC firms and billionaires to fund his startup.
One of Japan's richest men, Masayoshi Son, was one of the larger investors who put money into wework.
The workers who bought office space were happy. Investors were happy.
All this paints a really rosy picture of wework.
The elephant in the room was wework's lofty valuations. It was overvalued meaning people believed it was worth more than it actually was.
Adam Neumann took wework public through an IPO that valued the startup at 47 billion dollars.
Trouble began when wework released its S-1 filing. This is a form required by the SEC if a company wants to be listed on the stock market.
This was an official document, there was no way to cheese the system. If the S 1 was done poorly, investors wouldn’t have the confidence to invest in wework’s ipo.
Wework had to be honest. Being honest was a bad decision they had to swallow.
The S1 revealed while wework’s revenues were growing, the company was losing a lot of money. There were conflicts of interest between Adam Neumann and the company. Adam owned a few buildings that wework was leasing out. Some took this to mean Adam was enriching himself by making wework pay to use his buildings.
Adam had also bought the “WE” trademark name through his holding company. Wework was paying Adam 5.9 million dollars to license the we trademark to wework. No signs of a proper path to profitability was seen in the filling.
The controversy took hold and wework collapsed.
While the IPO did happen, weworks stock price has been tumbling for years now. It's now 22 cents a share.
Adam Neumann was kicked out of the company, soft bank’s owner Masayoshi Son took over wework and as we all know. It didn’t work out at all. The work from home boom has destroyed property values throughout the cities.
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