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In The Mess That WeWork is Called, CEO Neumann Fights For his Job

Adam Neumann

The pressure on WeWork founder Adam Neumann is increasing. Several board members are considering a coup to drop him off while he tries to limit the damage. It is expected that a meeting will be held this week about the future of WeWork.
That future is uncertain. In recent weeks, scandal after scandal has come out about the lessor of shared workspaces. Co-founder Adam Neumann is controversial. His association with both the people and the finances of WeWork is condemned .

Stormy growth 

It all started in 2010. Adam Neumann and Miguel McKelvy opened the first WeWork department. In popular SoHo, Manhattan, shared workplaces were opened for entrepreneurs, freelancers, startups and small businesses.

Afterwards years of stormy growth. Some investors are worried about the expenses of the company. Branches in Central and South America are opened, as well as locations in China and India. In September 2018, WeWork becomes the largest private office owner in Manhattan, after becoming the largest office owner in London and Washington DC. 

Controversial founder

It seems like a success story, but there are many fringes. In the summer of 2018, founder Neumann (40 years old) flies to Israel with friends. He smokes marijuana on board a private jet and leaves some of the drugs behind. The company from which he hires the plane refuses to fly him back.

In July of 2019, WeWork indicates that it wants to go to the stock exchange. A little later the company receives a $ 6 billion loan. A condition for this loan is that the company has completed the IPO before the end of the year and that a minimum of 3 billion is thereby raised.

From 60 billion to 15

A few months ago it was whispered that WeWork might be worth 60 billion after the IPO, but that is not going to work. That amount has since collapsed to 15 billion - or even less . Neumann did not show up last week at a meeting with SoftBank, one of the largest investors in WeWork.
The problems have been piling up in recent weeks.

 Two major WeWork deals in London seem to be collapsing. In New York a number of people are fired and the Wall Street Journal comes with a remarkable story about Neumann's 'over the top' style, which stirs up quite a bit of dust.

Dismissal meeting with shots of tequila

For example, there was apparently a meeting in 2016 where a dismissal round was discussed. Neumann asked several managers to dismiss 20 percent of WeWork employees every year. Rebekah Neuman, Adam's wife and co-founder, wanted those employees to be sent off after a few minutes of conversation.

Neumann thought that there were a lot of 'B players' in the company. Shortly after the meeting, shots of tequila were served . It concerns 100 dollar bottles of Don Julio 1942, Neumann's favorite brand.. After the meeting about dismissal, the bottles were not only on the table: the staff present were also treated to a performance by rapper Darryl McDaniels from Run-DMC.

Neumann does not shy away from a big drink at a morning meeting either. According to him, it is his way of connecting with his employees, and he keeps the moral high.

Neumann borrows money from a company

The objections of shareholders are also increasing with regard to finances. The paperwork for the IPO showed that Neumann regularly borrowed money from WeWork. That started with a loan of 7 million dollars, with a reasonable interest rate of 0.64 percent. Neumann quickly repaid the loan and paid a total of 100,000 euros in interest.
In April 2019, the company lent $ 362 million to Neumann at an interest rate of less than 3 percent. With that money he bought shares in WeWork. In August, Neumann repaid the loan by transferring the shares to the company.

Neumann receives rent from WeWork

In addition, the documents show that various Neumann family members work for the company. The main well-being of WeWork is Avi Yehiel, Neumann's brother-in-law. He received a little less than $ 200,000 a year. Another family member was hired for "less than $ 200,000" to present eight events for the company.

This year, WeWork also changed its official company name to We Co. The company wanted to officially register the "We" as a trademark. That trademark was already registered by We Holdings LLC, which manages shares and property for the owners. The company transferred $ 5.9 million to use "We" this year. Simply put: Neumann's company pays a lot to Neuman for the use of the word "We" in the name.

To top it all off, WeWork also pays rent to CEO Neumann. He owns four buildings where WeWork rents and then leases business space. In total, about $ 4.2 million was transferred from rent to WeWork. In the coming years, about 237 million dollars will be transferred to rent, you can read. The company does not receive a discount from the founder.

IPO postponed

The much-discussed IPO is postponed due to all the commotion . The price is simply too low, the investors think. There are also doubts about the above mentioned links between WeWork and Neumann. At the insistence of investor Softbank, this IPO is being moved to the end of October.
Neumann himself finally says that he will be 'humble' by the postponement of the IPO. He tells the Financial Times that he still has a lot to learn about running a stock exchange company. 

Coup attempt before IPO

Neumann has by far the most voting rights at WeWork, although he has surrendered part of his voting rights to meet the criticisms. He does not receive a salary for his work, just like his wife. If he leaves the company, he is not entitled to a severance payment.

Long story short: it is therefore a gang at WeWork. And it seems that the company is not over yet. According to the Wall Street Journal  , members of the board plan to dispose of Neumann as the big boss in order to save the IPO and regain investor confidence.

The founder of Softbank, the largest investor in WeWork, is involved in that coup attempt . An important point: Neumann has so much power within the company that he could send the entire board of directors home. So it remains to be seen how it will end with WeWork.

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