The dizzying speed at which the affair involving WeWork and its founder Adam Neumann unfolded amazed even those accustomed to the fast-paced tech sector.
Until its shelf prospectus was published prior to a mid-August IPO, WeWork was a fast-growing start-up with a massive valuation, and Neumann was a wealthy, promising entrepreneur. It’s true there were always some doubts and questions surrounding the company, but they were marginal.
But now everything has unraveled: Since the prospectus’ publication, the company’s valuation has plummeted from some $47 billion to $15 billion, and under pressure from his investors, Neumann was forced to step down as CEO. He remains the company’s chairman.
It seems like Neumann’s removal was a necessary step for WeWork to go forward with its IPO. In 2019, when the biggest technology companies are being subject to major public criticism, it seems like no one has the patience for CEOs like Neumann.
Neumann resembles a character on the comedy show “Silicon Valley” – a parody of a charismatic entrepreneur, but also narcissistic, ostentatious, wild, greedy, immature, manipulative, someone who doesn’t take into account the consequences of his actions. A Wall Street Journal expose described him as irresponsible and lazy, and WeWork as a company with a toxic atmosphere: In 2016, at the end of a meeting discussing broad layoffs, participants downed shots of tequila. This comes after allegations of sexual harassment and sexism at the company.
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In the shelf prospectus, which contained vague statements such as “We dedicate this to the energy of we,” the truth behind the company was exposed, not to mention the shaky business model. Neumann earned millions through questionable deals with his own company, such as selling WeWork the trademark WE for $6 million. Some analysts claimed that WeWork was a fraud intended to funnel money from investors, chief among them Spotbank, into Neumann’s pockets. Now the bubble has burst.
Thus, in the blink of an eye, Neumann was turned into an albatross around the company’s neck. WeWork would have struggled to go through with its IPO and to raise money in the future with a contentious CEO like Neumann. The question of whether WeWork is a technology company or a real estate company isn’t relevant; it brands itself as part of the technology sector. This industry, along with its companies and investors, is facing intense criticism from the media, the public, regulators, governments and politicians. It can’t allow some Israeli kibbutznik to jettison its attempt to repair its reputation.