WeWork finally files for bankruptcy: The fall of a once $47 billion empire.

In 2011 Adam Neumann, the then CEO of fledgling office leasing company WeWork, told a colleague he was working at the next Google. While the 1990s and 2000s were about ‘I’ – think iPod and MySpace – the 2010s would be about ‘we’. The future, he said, was about community.

Neumann’s prediction would be prescient as WeWork leaned on its community-building mission and its likeness to Facebook as a physical social network to secure millions of dollars in funding. In 2014 it achieved unicorn status following a $150 million investment round and later peaked at a valuation of $47 billion. The sky was the limit as Neumann wanted to grow even more by taking on the entire real estate market, building a company that would be worth trillions of dollars; the largest company on earth.

For some, however, the ever-growing success of WeWork was baffling. What were they doing differently? What could justify a valuation that was fifty times its revenue in 2015? Over time as WeWork continued to haemorrhage money, incurring net losses of $1.6 billion in 2018 and $3.3 billion in 2019, the writing was on the wall. Masayoshi Son, the Japanese billionaire tech mogul and a long-time believer in WeWork and Adam Neumann, reneged on a $20 billion buyout of the company. The events leading up to a planned IPO were chaotic, revealing deteriorating financials and a company culture that reflected questionable governance, and eventually Neumann was ousted from the company he had once built.

Following a period of ‘DeNeumannization’, a restructuring and navigating through a global pandemic, WeWork racked up net losses of $4.4 billion in 2021. From a share price of $520.80 on 22 October 2021, it now hovers around a single dollar. On 6 November 2023, WeWork filed for Chapter 11 bankruptcy, marking the eventual fall of a once seemingly unstoppable corporate behemoth that promised to change the world.

A WeWork mug with the slogan, "Do what you love."
WeWork was once valued at $47 billion. Photo credit: Photo by Charles Etoroma on Unsplash.

WeWork’s bankruptcy is the culmination of one of the wildest corporate stories of the past decade in which a renter of office space positioned itself as a tech company and managed to secure billions of dollars of funding, facilitating unfathomable growth steered by a hugely ambitious CEO and an equally ambitious mentor.

The plan for 2019 was to add 20 million square feet of office space despite having lost $3,000 every minute in 2018. But looking back, WeWork had something to it. There was a certain buzz, a certain magic to it. It was a reprieve from working in coffee shops with loud music and patchy wi-fi. It was a millennial alternative to the stale, gloomy office spaces that already existed in the market. And it took advantage of the rise of startup culture and freelancing following the 2007-2008 financial crisis. But in removing the perks, whether it was renting your first year for free, undercutting competitor prices or the prospect of wild parties, it was, in the end, an office leasing company, and no amount of magic could create money out of nowhere.

Perhaps this realisation was hard to come by when WeWork’s valuation continued to rise, steered by the ambitions of Adam Neumann, and fuelled by his equally ambitious backer, Masayoshi Son, who once told Neumman: “Being crazy is how you win. You’re not crazy enough.” The adoption of a blitzscaling strategy, or ‘crazy’ growth, was epitomised following a conversation Neumann had with the former CEO of Starbucks Howard Schultz, who told him that it’d be wise to slow down to get a grip on issues that could cause problems in the future. Neumann’s response? “F*ck that.”

WeWork space in Atlanta
A WeWork space in Atlanta. Photo credit: Photo by Kamal Kant Kosariya on Unsplash

Contributing to WeWork’s meteoric rise and precipitous descent was the power held by the company’s leadership, exemplified by the title of a popular book, The Cult of We: WeWork and the Great Startup Delusion. Adam Neumann’s ability to secure funding and to keep the company growing at breakneck speed earned him the reputation as a CEO with super powers and someone to be revered. But some remarked that his main super power was his disregard for the wellbeing of his employees, who often had to work long hours on tight deadlines.

But while WeWork has crashed and burned, the story is different for Adam Neumann. On August 15 2022, venture capital firm Andreesen Horowitz (a16z) published a blog post announcing its support for Adam Neumann’s new company, Flow. Neumann is described as a “visionary leader” and someone who “fundamentally redesigned the office experience and led a paradigm-changing global company in the process”.

A16z’s $350 million investment in Flow has enabled the startup to achieve unicorn status before even having launched, and not everyone was happy about it. Outlining the gender bias in venture capital investments, gender economist Katica Roy suggested the investment exemplified how “there will be Adam Neumanns but there won’t be Abagail Neumanns”, and that it was a ‘slap in the face’ to female founders and founders of colour, who often don’t get a first chance, let alone a second one.

While Adam Neumann gets to have another shot at startup glory, WeWork remains a lesson of a rags to riches to rags again story, a lesson of profligate spending and lavish excess, and a reminder of the times we live in whereby it no longer requires decades of work to achieve unicorn status. While the WeWork story comes to a close, the culture and ambition surrounding it do not. If ‘I’ reflected the 90s and 2000s and ‘we’ reflected the 2010s, AI is looking to be the defining feature of the 2020s, and many AI startups will be looking to replicate the growth WeWork once had.

Related Posts

1 of 9
Notify of
Inline Feedbacks
View all comments