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WeWork founder Adam Neumann: The Gernegroß with the 1.7 billion dollar parachute

2019-10-23T14:04:57.627Z


Adam Neumann wants to live forever and become the world's first billionaire - but now his once heavily traded start-up WeWork needs a bailout. He himself gets a gigantic farewell present.



There are still people who believe in WeWork. Even after the hellish ride of the past months. After the hysterical times in which the office space provider was hyped in the course of its planned IPO only to one of the most valuable start-ups in economic history - and now has to be rescued from its biggest investor Softbank with a new billion injection from bankruptcy.

If we ask the WeWork manager Robert Meyer *, there are still many people who support the company despite all the turbulence. People like him, who sometimes asked themselves in the morning after waking up, whether they really should stay - but until now held to WeWork. "Because we continue to believe in the business model," says Meyer DER SPIEGEL. "Not because Adam washed our brains."

Adam, this is WeWork co-founder Adam Neumann, 40, an American-Israeli entrepreneur who spent part of his childhood in a kibbutz and whose wife Rebekah, 41, is a cousin of actress Gwyneth Paltrow and worked at WeWork as brand owner. The nearly two-meter-tall Neumann not only has a considerable physique physically, he would obviously like to be the biggest in just about everything else. At least his performances seem like that.

Kate Munsch / REUTERS

WeWork logo in San Francisco

According to "Wall Street Journal" Neumann said, among other things, that he wanted to live forever. That he intends to become the world's first billionaire. That he dares to lead Israel as prime minister. And that WeWork could once rid the world of all famines.

Neumann's start-up makes, mind you, not much more than office space to rent, this hip to set up and sublease at a surcharge to corporate departments, start-ups or sole proprietors. At least halfway particular about the company is that it claims to be calculated by an artificial intelligence, how many conference rooms an office space needs.

At the same time, the company is increasingly relying on spirituality, apparently also at the behest of Neumann's wife. A few years ago, WeWork executives reportedly held weekly meetings with a Kabbalah teacher. The Kabbalah is a mystical tradition of Judaism in which, among other things, it is about transcending one's own everyday self through self-directed ectasis.

"This whole Kaballah thing did not make any sense for us," says WeWork manager Meyer. Even otherwise Neumann had angered many people with his leadership style. But you have to admit that, apart from his megalomaniacal appearance, he was a "charismatic communicator". A founder who knew how to take business partners, employees and customers for himself.

AFP

Masayoshi Son

Neumann's biggest fan was apparently Softbank founder Masayoshi Son. The 62-year-old billionaire seemed to believe in Neumann's ambitious expansion plans. Or at least because WeWork is becoming a worthwhile investment thanks to its "Think Big" image on the stock exchange. Softbank put a total of nine billion dollars through its innovation fund in WeWork.

Therefore, the mood in the start-up was like that of an "all-you-can-eat-buffet", says Meyer. Spurred on by all the money, Neumann has set for business on maximum expansion - and culturally on status-conscious hip-hop.

Private festival near London

Last year, WeWork estimated an estimated 7,000 employees from all over the world to fly to a private festival near London. Indie stars like Lorde appeared, there were football tournaments and yoga workshops. Tequila flowed "in streams", says Meyer, who was there. He does not want to go into the details. "The younger people have just done what young people do when they drink a lot," he says.

Check out this post on Instagram

Absolute fan boy at the front for @rufusdusol playing @wework #sunmercamp #festival this weekend! Azing Playing @campercalling festival this weekend and @fairweatherfestival Isle of Wight the following along @thetailormade - looking forward to it! ... and a day off at some point #summer # 2018 #gig #gigs #thetailormade #festival #rufusdusol #wework #summercamp

A post shared by James Flett (@flett) on Aug 20, 2018 at 4:10 PDT

In any case, such excesses seemed to work well for the company's image. In January WeWork was valued by investors with a staggering $ 47 billion.

According to Meyer, WeWork co-founder Miguel McKelvy also played a not insignificant role in the company - who, in his view, emphasized his modest and rational appearance. The hope was clear that Neumann with its appearance, the money and provides McKelvy the free-spinning Neumann if necessary again captures.

That obviously did not work. In mid-August, after publication of the prospectus, doubts about WeWorks business model were raised. Analysts complained about the incomplete figures. A finance blog accused WeWork of artificially inflating goodwill. Rett Wallace of New York investment consultant Triton Research called the prospectus a "masterpiece of nebulization."

WeWork

WeWork office space in Berlin

The start-up had to postpone its IPO, Neumann resign as chief. Rumors spread that WeWork threatened to run out of money before the end of the year.

On Wednesday it was announced that Softbank put another 9.5 billion dollars in WeWork. Partly the company is granted new loans, partly buys Softbank company shares. Maybe just to save what can still be saved. In order not to write off the already invested billions. Perhaps also, in order to raise as few doubts as possible about Softbank's ability to judge: After all, the Japanese are still invested in other start-ups through their innovation fund.

Anyway, Softbank will own around 80 percent of the bailout. The aid package is thus de facto a takeover of power. Measured by the purchase price, the start-up is now valued at a total of eight billion dollars - a fraction of the announced market value.

Von Neumann softbank says goodbye with a golden handshake. According to the news agency Bloomberg he is allowed to sell shares worth up to $ 1 billion to Softbank; He also receives millions in credit and advisory fees in the three-digit millions. Overall, the farewell package should have a value of 1.7 billion dollars.

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High severance pay: So expensive were the "golden handshakes"

In the start-up itself, there are now opportunities to position WeWork strategically. Some of the leased property would still bring good income, says Meyer the SPIEGEL. They'll focus on that now. The rest is likely to be repelled.

It is also discussed to lease the WeWork booking software and administrative staff to property owners. "Other companies could then rent space in vacant properties according to the WeWork principle," says Meyer. The income from it could be shared.

He still believes in WeWork, Meyer says again. For customers and business partners, however, the start-up will probably have to do all the trust work. With the new billion injection new owner Softbank has bought at least for this time.

* Name changed by the editor

Source: spiegel

All business articles on 2019-10-23

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