At WeWork, family matters – and pays
Co-working giant’s deals with relatives carry risks
In August 2015, Arash Gohari, co-founder of the real estate investment firm Xerxes Group, emailed friends and colleagues with some personal news.“I was approached recently by Adam Neumann of WeWork and asked to help him with the company’s expansion on the real estate side,” he wrote in the email, which was reviewed by The Real Deal. “I will have the exciting mission of helping to grow the company by finding new buildings for WeWork to take space in.”
Around two months after Gohari joined WeWork as a real estate executive, the company signed a 15-year lease for an office building at 117 Northeast First Avenue in Downtown Miami. One of the property’s owners was Daniel Gohari, Arash’s brother and partner at Xerxes.
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The Miami lease is just one of several cases of WeWork signing deals that benefited its senior executives, or their immediate relatives. The CEO of a construction firm that builds out most WeWork locations in New York is the brother of WeWork’s head of development. The upstate property WeWork used to host its summer camp for several years is owned by the family of a senior WeWork real estate executive. And several relatives of WeWork’s top brass landed top jobs at the company, including CEO Adam Neumann’s wife – who is billed as a founding partner – and brother-in-law.
One source close to WeWork, speaking on condition of anonymity, described the company as “very incestuous.” The source cautioned that this isn’t necessarily a bad thing. Executives may put more faith in relatives than in outsiders, which can benefit a company. And nepotism is a core trait of many of New York’s real estate’s leading family firms.
But WeWork isn’t a family business. It’s a self-described tech company that has raised billions from venture investors, and is one of the five most valuable startups in the U.S. Reliance on relatives can create the impression of favoritism and conflicts of interest. That’s something the company, which is reportedly gearing up to go public, may need to be mindful of, particularly given that Neumann already owns a personal stake in a major building WeWork leases.
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Daniel and Arash Gohari did not respond to requests for comment. As of Wednesday, Xerxes Group’s website listed both men as principals, even though Gohari’s Linkedin profile identifies him as a WeWork executive (he also uses a WeWork company email address). The Xerxes Group’s website features a photo of 117 Northeast First Avenue.
In a statement, WeWork said “from real estate and operations to technology, finance and more, WeWork continues to hire experienced leaders to help us scale our fast-growing global business.” It did not specifically comment on the cases described in this story.
O brother, where art thou?
For about a decade, UA Builders, a New York-based construction firm founded in 2004, was a fringe player. Then it won a contract to build out WeWork spaces. Now, according to the company’s website, it has over 200 employees. Out of the 35 featured construction projects listed on the site, 25 are identified as WeWork spaces. The majority of those jobs took place in 2016 and 2017.
The two firms share more than just a business relationship. Granit Gjonbalaj, who according to his LinkedIn profile served as a managing principal at UA Builders between 2011 and 2015, joined WeWork in 2015 as its global head of development and construction. He currently serves as WeWork’s chief real estate development officer. His brother, Albert Gjonbalaj, is UA Builders’ CEO.
A spokesperson for UA did not respond to several requests for comment. Jose Cruz, UA’s director of virtual design and construction, told TRD during a January interview that UA has built “about 90 percent of all the WeWork spaces in Manhattan.”
“WeWork is fairly invested at this point in us,” he added. “And throughout time what we’ve actually done is create various entities to exclusively serve WeWork.”
Wet hot American summer
Every year in late August, WeWork hosts its members for a weekend of swimming, yoga, concerts and beer kegs. The event, dubbed “Summer Camp,” has got ink in the New York Times and Business Insider, among other publications. None of the articles mention, however, that for several years the event took place at an upstate New York property, Raquette Lake Camps, owned by the family of one of WeWork’s top executives, Mark Lapidus (In 2017 the event moved to the U.K.).
Lapidus, who is WeWork’s global head of real estate, also happens to be first cousin to Neumann’s wife, Rebekah Paltrow Neumann. That makes him one of several WeWork executives with family ties to other top brass.
Rebekah is officially billed as a co-founder of WeWork, and Neumann credits her with developing the “soul” side of the business. She launched the company’s grade school WeGrow last year, and previously served as the firm’s chief brand officer.
As WeWork has grown, it has branched well beyond co-working into businesses such as property investment, education and fitness. And in those businesses, too, there’s been opportunities for friends and family.
Avi Yehiel, who oversees WeWork’s gym business, “Rise by We,” is married to Adam Neumann’s sister, Adi. Eric Gross, who sits on the management committee of real estate investment vehicle WeWork Property Investors and joined Hudson’s Bay Company’s board of directors after WeWork bought the Lord & Taylor building last year, is the brother of WeWork’s vice chair Michael Gross.
Talia Goldberg, a principal at venture capital firm Bessemer Venture Partners, said that companies “need to have clear policies mandating all employees to voice potential conflicts to an independent group.”
“We all have various roles as employees or executives, siblings, parents, friends etc,” said Goldberg, whose firm isn’t an investor in WeWork. “Working with family members can be a positive – you know one another’s strengths and weaknesses intimately, and already have experience resolving disputes or working together. But there can of course be downsides if one’s roles as an employee and a family member have competing interests.”