In 2019 the Israeli businessman Adam Neumann convinced the Japanese investment fund Softbank to invest $2 billion in the international expansion of his company, WeWork. The coworking empire, which Adam had founded in New York just nine years earlier, was thus valued at $47 billion, an extraordinary figure for a company that had not made a profit in any of its years of activity.
It may sound absurd, but we must remember that, in 2019, WeWork was the fashionable company, the new example to follow for all entrepreneurs eager to create an empire. It didn’t just rent workspaces and meeting rooms. Neumann had turned the company into a philosophy of life, into an international brand that soon, he assured, would offer housing, education and all kinds of services to a millennial generation dissatisfied with the social norms of adult life.
Yesterday, the people in charge of the company recognized that there are serious doubts about the viability of the company. Of the 47,000 million that it came to be worth, hardly anything remains. The company’s shares immediately plummeted from what was already an all-time low. They are trading at 13 cents on the dollar, less than a hundredth of what they were worth just a few years ago. The market capitalization of the entire “empire”? Just over 270 million dollars.
WeWork’s ordeal in the last four years has many stops and has been told in many ways. There are documentaries (WeWork: The Rise and Fall of a $47 Billion Unicorn), TV series (WeCrashed, produced by AppleTV) and books (The Cult of We) that explain Adam Neumann’s uncanny ability to convince investors. -and especially Masayoshi Son, CEO of Softbank- that something as mundane as office rentals could be the business of the future.
Neumann was expelled from his company the same year that Softbank became a shareholder. A disastrous attempt to go public put an end to the patience of Masayoshi Son and other investors. The numbers that made expansion possible for WeWork, which then had nearly 600,000 customers, just didn’t add up. In a limited capital company it was something that could be made up. In the audit process necessary to go public, no.