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WeWork founder’s fortune plunges as investors lose faith

Still, that’s nothing to sneeze at, particularly for someone who spent part of his childhood on a kibbutz. Neumann moved to New York from Israel in 2001 to have fun and make a lot of money, as he put it in a commencement address at Baruch College, his alma mater. Then he met Rebekah, his future wife, who’s listed in a prospectus as a co-founder, chief brand and impact officer, and a “strategic thought partner.”

WeWork has opened co-working spaces in more than 100 cities around the world.

WeWork has opened co-working spaces in more than 100 cities around the world.Credit:Bloomberg

Adrian Zamora, a company spokesman, declined to comment.

Neumann and co-founder Miguel McKelvey started WeWork after sharing an office space in Brooklyn. McKelvey, like Neumann, spent part of his childhood in a communal environment: a collective in Oregon.

“We are making a capitalist kibbutz,” Neumann said in a 2017 interview with Israeli newspaper Haaretz.

He moved to New York after five years in the Israeli Navy and, in 2002, enrolled at Baruch College, where he studied entrepreneurship and marketing. After a couple of failed product launches, including a women’s shoe line and baby pants with knee pads, he dropped out to focus on entrepreneurial ventures full time.

Rebekah Neumann has studied under the Dalai Lama and “Mother Nature herself,” according to a profile on the website of WeGrow, a private elementary school network she founded. WeGrow tuition costs as much as $US48,000 for the 2020-21 school year, with a curriculum that includes yoga and meat-free community lunches.

WeWork co-founders Adam Neumann and Miguel McKelvey.

WeWork co-founders Adam Neumann and Miguel McKelvey.Credit:Bloomberg

Since its founding, We Co. has raised more than $US12 billion and opened locations in more than 100 cities. The company — formerly known as WeWork Co. — bought its current name from Neumann and McKelvey for $US5.9 million, one of several arrangements that has drawn scrutiny over the years. Neumann maintains voting control through a three-class share structure and also has been criticized for borrowing the firm’s money, leasing properties he owns back to the company and selling chunks of equity ahead of the planned IPO.

The firm rents space in four buildings owned by Neumann, according to the prospectus. It signed a lease on three of them the day he obtained his stake, and committed to being a tenant in them within the next year.

Such disclosures – and the billions of dollars of losses the firm has racked up in recent years – increased unease among investors already frustrated by the lacklustre market debuts of Silicon Valley darlings such as Uber.

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WeWork is considering major changes to governance to assuage such concerns, according to people with knowledge of the situation. The company already has taken some steps, such as adding a woman to its board and having Neumann return the $US5.9 million of partnership interests initially granted to him as compensation for trademarks used in the rebranding. The company and its biggest backer, SoftBank, are also discussing whether to delay the IPO, people with knowledge of the talks have said.

Neumann probably isn’t hurting for cash, even with a delay. He has already pledged some of his stock to secure a line of credit of as much as $US500 million from affiliates of UBS Group AG, JPMorgan Chase & Co. and Credit Suisse Group AG, according to last month’s prospectus. About $US380 million of that total was outstanding at the end of July.

Bloomberg

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