How WeWork founder Adam Neumann’s wealth grew while the company tumbled. Details

Co-working company WeWork Inc. filed for Chapter 11 bankruptcy in New Jersey on November 6, as per a Bloomberg report. In what is a crash-and-burn story, WeWork saw its net worth sink from nearly $50 billion less than five years back, to below $1/share after news of its bankruptcy filing broke. The stock has tanked 99.8 percent since its initial public offering (IPO).

On November 1, the Wall Street Journal reported that WeWork plans to file its Chapter 11 petition for bankruptcy in New Jersey. The reversal of fortunes came amid a mismanaged IPO attempt, criticisms against founder Adam Neumann's management style, and troubles with its co-working model during the COVID-19 pandemic.

So, how much has Adam Neumann lost since his company tanked? Quiet the opposite it seems. In fact, the former WeWork CEO has remained financially secure while distancing himself from the company's (mis)fortures.

Handsome Reward

Neumann saw his wealth increase despite WeWork's struggles -- with a significant portion being accumulated while the firm prepared its public offering via a special purpose acquisition company (SPAC).

As part of the SPAC process, SoftBank reportedly paid 44-year-old Neumann a substantial sum, as per a CNBC report.

In 2021, Neumann received a reported $480 million for half of his remaining stake in WeWork, it said. Initially, SoftBank had sought to back out of purchasing Neumann's full stake, which was valued at $1 billion, leading to a legal dispute.

In addition to the $480 million, Neumann also reportedly received $185 million as part of a non-compete agreement and a further $106 million as part of a settlement, it added.

In total, Neumann amassed around $770 million in cash from the 2021 SPAC process, despite no longer holding a management role at WeWork, as per the report.

New Ventures

As WeWork's market capitalisation declined, Neumann ventured into real estate tech with "Flow," a company valued at $1 billion. Andreesen Horowitz, a venture capital firm, invested $350 million in Flow. The company aims to address rental housing market inequities by fostering a sense of community among renters and helping them build equity in their homes.

Flow has acquired a portfolio of 3,000 units in major metropolitan areas, and Neumann describes it as a "technology-first" venture. It appears to continue Neumann's approach from WeWork, adapted for the residential market, with potential expansion into financial services. While Flow's website lacks specific details, the company is actively hiring for various positions across the United States.

Neumann's Perspective

In an interview on CNBC in October, Neumann highlighted the influence of his upbringing on his business ventures. He described the WeWork journey as "amazing" and sees Flow as another chapter in the same story, emphasizing the power of community and common ground among people living together.

On WeWork, he told the channel, “As the co-founder of WeWork who spent a decade building the business with an amazing team of mission-driven people, the company’s anticipated bankruptcy filing is disappointing. It has been challenging for me to watch from the sidelines since 2019 as WeWork has failed to take advantage of a product that is more relevant today than ever before. I believe that, with the right strategy and team, a reorganization will enable WeWork to emerge successfully.”

Background

WeWork kicked off in 2010 during the initial venture capital (VC) boom with co-founder Adam Neumann at the helm. It raised billions and often doubled revenue year-on-year, quickly growing into a global company. It was at one point the US' most valuable start-up.

Earlier in August this year, WeWork had warned it feared going bankrupt when shares crashed to near zero after the company said there’s substantial doubt about its ability to stay in business as it burns through cash.

WeWork shares have lost nearly all of their value since its debut in October 2021. The SoftBank-backed company has been suffering from hefty losses, corporate governance lapses, and the management style of the founder-CEO Adam Neumann, Reuters reported. A number of executives have left the company, including CEO Sandeep Mathrani in May and three board members in August 2023.

Japanese conglomerate SoftBank, which is one of the major investors in WeWork, has sunk tens of billions to prop up the startup, but the company has continued to lose money.

However, WeWork’s India division said the bankruptcy would not affect that unit.