“We dedicate this to the power of We – greater than any one of us, but inside each of us,” proclaims the prospectus for office-sharing company WeWork’s forthcoming share sale.

On Monday co-founder Adam Neumann will start trying to sell that vision to potential investors. The signs are not good.

After years of hype, Neumann’s plan to become one of the world’s richest entrepreneurs on the back of a 22% stake in WeWork, now known as the We Company, have been hit hard. The value of the company has been cut from $47bn to as low as $15bn. Even their major investor, the Japanese, Saudi-backed SoftBank, has reportedly argued against pressing ahead with the sale, a delay that threatens a $6bn loan needed to fund an aggressive global expansion of the brand.

It’s a major dent to Neumann’s dream to build a multibillion-dollar global space-sharing real estate firm built on the trust and community spirit of “we” and the vision “to elevate the world’s consciousness”.

The share sale comes as investors have become increasingly skeptical of profit-free tech, or tech-related, companies that have built their businesses on piles of Silicon Valley cash.

Those investors have been burned by offerings by the ridesharing companies Uber and Lyft and watched as Neumann, whose first frays into entrepreneurship were a collapsible high heel for women and a baby romper with reinforced knees, has marketed his “we” concept with an evangelism that often veers into faux-spiritualism.

A WeWork location in New York City.



A WeWork location in New York City. Photograph: Drew Angerer/Getty Images

To believe in “we” investors will have to overlook losses of $3bn in the last three years and stick with a belief in Neumann, whose almost complete control of We through a dual-class share structure gives investors cause for concern.

But Neumann lacks nothing if not self-belief.

Forty years old, 6ft 5in tall and sporting a mane of dark hair, Neumann grew up on an Israeli kibbutz and moved to New York in 2001 to “have fun and make a lot of money”, as he told a commencement ceremony at the college where he met his wife, Rebekah, née Rebekah Paltrow, sister of the actor Gwyneth.

Any confusion as to the scale of Neumann’s ambition was put to rest earlier this year when he told New York magazine that WeWork’s size and scale could put it in a position to help deal with some of the world’s largest problems, including migration and refugees.

“I need to have the biggest valuation I can, because when countries are shooting at each other, I want them to come to me,” he said.

Much of We’s new age spiritualism seems to stem from his wife. Rebekah Neumann introduced him to the Kabbalah, the esoteric Jewish faith once followed by Madonna. Rebekah Neumann has said when she met Neumann he was too thin and smoking too many cigarettes. She told him to ditch the suitcases of ill-fitting rompers and stop talking about money. “We’re going to talk about wellness, happiness, fulfillment, and if the money is supposed to follow, it will,” she told him.

And it has, to an extent that has worried some investors and corporate governance experts. Part of investors’ anxiety about WeWork is the unusually large amount Neumann has already taken out of the company – $700m – in a series of unorthodox personal loans, real estate leases and stock sales ahead of its initial public offering (IPO).

Neumann also owns at least four buildings that he rents to WeWork, thus collecting $20m in rent from his own company. And WeWork still owes Neumann an amazing $236.6m in “future undiscounted minimum lease payments”.

Until last month, when an effort to appease potential investors caused a rethink, he was also collecting $7.9m a year renting the “we” trademark to the company.

Moreover, WeWork’s IPO prospectus explicitly warned investors: “Adam’s voting control will limit the ability of other stockholders to influence corporate activities and, as a result, we may take actions that stockholders other than Adam do not view as beneficial.”

In other words, if you don’t like it, get lost.

Adam Neumann, center, attends the opening bell ceremony at Nasdaq in New York, on 16 January 2018.



Adam Neumann, center, attends the opening bell ceremony at Nasdaq in New York, on 16 January 2018. Photograph: Mark Lennihan/AP

“The revelations have ambushed this pristine brand image and undermined the confidence of investors,” Eric Schiffer, chief executive of the investment firm Patriarch, said. “Given the prospect of losing $6bn, they’d be crazy not to move forward, and quickly.”

On Friday the Wall Street Journal reported We was making moves to reassure investors. The company is telling investors it will reduce the power of Neumann’s voting rights to 10 votes a share from 20 votes a share and eliminate the role his wife would serve in choosing Neumann’s successor if he cannot serve.

The question before investors now is whether or not they buy the idea that Neumann is a visionary such as Elon Musk or Mark Zuckerberg. For Schiffer, the answer is no. “Musk has a proven track record; Neumann’s history does not show that. He’s had one idea that could prove successful but it’s a giant question mark.”

There is no doubt that Neumann has had an impact on office rentals. His idea was to rent real estate on long-term leases, parcel it up with some millennial styling (beer taps, lots of plants and cool sofas) and rent it out short-term. Started in 2010 from a single building on New York’s Grand Street, Neumann found there was ready army of backpacking, laptop-wielding, earbudded young urban professionals who needed somewhere to drink coffee, work on startups, network and pick up partners.

As of 30 June, WeWork reported that it has 527,000 members and 528 locations, up from 485 in March, and said it plans to open 169 new locations. In London, it owns or leases more spaces than any enterprise except the government. Larger companies (including the Guardian) now rent WeWork space.

Adam and Rebekah Neumann, of course, aren’t dumb enough to rent. They own an impressive spread of real estate, including a townhouse in New York’s West Village.

But like many so-called “unicorns”, private companies valued at more than $1bn, the only way to survive is to expand. There’s no guarantee WeWork will ever reach profitability, as it makes clear in its prospectus. Investors are worried, especially as the company’s expansion is focused on China, an unknown quantity at the best of times and especially now, potentially heading into a global recession and as rivals copy many of its moves.

The unfolding drama has already hit Neumann’s wealth prospects. At one point, some estimated WeWork’s value as a listed company could soon reach $65bn, valuing Neumann’s stake at $14bn.

At the $15bn valuation now looking more likely, Neumann’s stake would be worth $3bn – not enough for a listing in the 500-member Bloomberg Billionaires Index – but still not bad for a decade’s work.

Over the next few weeks, Neumann and We Company will see how their neo-utopian vision meshes with the hard realities of the public marketplace. “We are captivated by the limitless potential of We,” Neumann said recently.

Wall Street seems less sure.



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