The 'We' Company founder Adam Neumann has had a terrible run this month, and while it's hard to feel bad for a billionaire, Neumann has seen his net worth plunge to just a fraction of what it was just one week ago.
On Wednesday, the value of WeWork plunged to a new low of $15 billion, less than one-third of the $47 billion the startup was valued at during its most recent private funding round. Meanwhile, Neumann has watched the value of his 22% stake in the company he founded plunge from $14 billion to just $3 billion. That's not high enough to earn a place in Bloomberg's ranking of the world's 500 richest people.
The prospects for WeWork's IPO started sinking with a flurry of reports that started with WSJ reporting late last week that the company was considering taking the company public at a valuation of between $20 billion and $30 billion.
Its valuation has only continued to sink.
"Regulatory filings show that early investor Fidelity Investments cut its valuation on We Co. to $18.3 billion in March, well before Wall Street began to scale back its own expectations for an IPO. The predicted valuation is now as low as $15 billion, according to people with knowledge of the matter."
According to Bloomberg the company's valuation has shrunk as investors have gotten cold feet about a planned WeWork IPO. Some of the factors that have spooked investors include: its unusual corporate structure and other governance issues, as well as concerns that the company might never become profitable.
Moreover, investors are skeptical about Neumann's leadership, and are concerned that he has been using WeWork as a personal piggy bank. The founder and CEO was recently forced to reimburse his company for a $5.9 million fee that the company paid to him for rights to its name.
Also, Neumann has been criticized for borrowing hundreds of millions of dollars to buy buildings, then leasing them back to his own company, and for selling some of his stake ahead of the deal.
Neumann moved to New York after spending five years in the Israeli Navy. In 2002, he enrolled in Baruch College, where he studied marketing and entrepreneurship. After a couple of failed product launches, including a women’s shoe line and baby pants with built in knee pads, he dropped out of school to pursue his entrepreneurial ambitions full time.
WeWork was founded by Neumann and Miguel McKelvey a decade ago, after the two got the idea for the company after sharing an office space in Brooklyn. Both founders shared a background of living and working in communal spaces; Neumann spent part of his childhood on a Kibbutz, while McKelvey grew up on a commune in Oregon.
Since its founding, WeWork has raised more than $12 billion and opened locations in more than 100 cities. During a 2017 interview with Israeli newspaper Haaretz, Neumann said that he viewed WeWork as a 'kind of capitalist kibbutz'.
The latest news about Neumann's fortune prompted a flurry of twitter wits to weigh in, perhaps to inspire investors like Soft Bank, which have lost billions of dollars thanks to their WeWork stake.
When your paper net worth was $14B versus when it’s a meager $3B pic.twitter.com/jnZRZXk5uO— Hipster (@Hipster_Trader) September 11, 2019