Adam Neumann breaks his silence

Adam Neumann (Getty)
Adam Neumann (Getty)

Meet the new Adam Neumann, same as the old Adam Neumann.

The WeWork co-founder, who presided over one of the most spectacular rise-and-fall stories in modern business, made his first public remarks since he was forced out of his startup two years ago.

From listening to Neumann’s account, relayed to New York Times DealBook’s Andrew Ross Sorkin on Tuesday, it would appear he made the same mistakes any startup CEO might make. He grew too fast and tried too soon to go public. Some of his controversial behaviors, such as allegedly smoking marijuana on company jets and excessive partying, were normal for any quirky, youthful company. And WeWork’s IPO disaster stemmed more from Wall Street’s newfound focus on profitability, rather than revenue.

“We had a fun culture,” said Neumann. “There comes a moment where you grow to the next stage and that could have happened sooner.”

Neumann appeared at ease, smiling often and even imparting his usual visions of grandeur. He said his biggest regret was how the company’s decisions after the abandoned 2019 IPO affected employees.

“When employees choose to go on a mission and they come with a full heart … and then suddenly there is a change in direction that they didn’t control, and they lose their jobs because of something they did not do,” Neumann said. “I feel tremendous regret for it, even though it happened after I stepped down and it happened because the company changed directions.”

But Neumann said the narrative that all employees lost their stock options and equity is false. Only some employees who worked from the company between 2016 and 2019 took those hits, he said, while those who came aboard early and toward the end were able to make money when WeWork eventually went public via a SPAC merger last month at a roughly $9 billion valuation.

“When you take equity and join a startup,” said Neumann, “you take a risk.” At its peak in 2018 after a SoftBank-led fundraising round, the company was valued at $47 billion.

The former CEO, who has been criticized for his $1 billion golden parachute and compensation package, said the condemnation is unfair. Most of the money he made from WeWork came from his initial stake in the company, he said, as well as from selling other stock on the secondary market in the years leading up to the first planned IPO.

Sorkin asked whether Neumann would give former employees some of the money he made from the eventual IPO. Neumann said he had thought about the idea, but was not ready to discuss it further. He did talk about his new ventures, including a family office investing in cryptocurrency and a company focused on capturing carbon emissions.

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Today, WeWork looks quite different from the one Neumann led. It has restructured or exited more than 200 leases. It has new partnerships, including with Cushman & Wakefield to help office tenants adapt to remote work and flexible space with the pandemic having changed how companies use offices.

Also gone are Neumann’s lavish expenditures such as WeWork’s Gulfstream G650ER. In the interview, Neumann defended his use of the jet, claiming he traveled in it to offices throughout the country. He did say it might have been better to use a jet leasing service.

“A plane was very needed,” said Neumann. “People focus on that so much, they are missing the actual story. The fact of having a plane is detracting from the actual success.”

A major part of WeWork’s story was its IPO calamity two years ago. Securities filings tied to its public offering revealed a net loss of $1.6 billion in 2018. Neumann said the company was just not right for Wall Street. But he said he had no reason to doubt the $47 billion valuation.

“The valuation made us feel we were right, so it made it feel like the style that I was leading was the correct style at the time,” he said.

The IPO filings also disclosed troubling details about Neumann-owned buildings being leased by WeWork. Critics called it a conflict of interest and “self dealing.”

Neumann refuted this characterization.

“There’s never been self-dealing at WeWork,” said Neumann. “There’s only been related-party transactions.” He pushed back against comparisons to blood-testing startup Theranos, whose founder, Elizabeth Holmes, is being tried for fraud.

“If you are going to say it [WeWork] is a house of cards, it is just false,” he said.

Much has been written about the Neumann saga. Wall Street Journal reporters Eliot Brown and Maureen Farrell penned a book called “The Cult of We,” and journalist Reeves Wiedeman wrote “Billion Dollar Loser.” A movie about WeWork is in the works with Jared Leto playing Neumann.

Neumann said Leto told him not to watch it.

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