You are here
WeWork IPO spells rough landing for CEO Neumann
ADAM Neumann showed he can capitalise on troubled times a decade ago, tapping into demand for workspace by those forced out of jobs in the aftermath of the financial crisis to grow WeWork into a global brand commanding a US$47 billion valuation.
Yet his plans to take WeWork's corporate parent the We Company public have backfired, as his company becomes the poster child for a bubble in venture capital fundraising that has pushed some startups to unsustainable valuations.
The We Company is contemplating slashing its valuation to as low as US$10 billion from the US$47 billion billing clinched in a private fundraising round in January backed by Japan's SoftBank Group Corp, people familiar with the matter said on Friday.
The sharp drop comes amid investor criticism of widening losses and Mr Neumann's firm grip on the company. Mr Neumann, 40, is under pressure to proceed with the initial public offering (IPO) to raise cash to keep WeWork's operations going.
The New York-based company rents workspace to clients under short-term contracts, even though it pays rent for them itself under long-term leases.
It is by far the biggest crisis Mr Neumann has faced in his career, after arriving in New York at the age of 22 following service in the Israeli military.
He failed in several ventures before selling his first co-working firm, Green Door, for US$300,000 with business partner Miguel McKelvey a decade ago.
Mr Neumann and Mr McKelvey used the proceeds from that sale to start WeWork, with its first customers coming to the lower Manhattan site just off Chinatown in February 2010, after seeing ads in Craigslist.
Community was a driving force behind the new venture, launched at a time when millions who had lost jobs during the 2008 financial crisis were looking for flexible work space.
"It quickly became apparent that people were ready for a new approach to work, not just their workspace," Mr Neumann said in a blog post in 2016, marking the launch in Berlin of WeWork's 100th site.
The early success of the shared workspace validated the global community Mr Neumann envisioned where people can achieve more together than alone, or in the words of the company's famous mantra: "to make a life, not just a living". REUTERS