Adam Neumann might act like a messiah but WeWork's nosedive proves he can't walk on water

The CEO was adamant that his brand was a tech disruptor, when in fact it was just a traditional property play, and a not-very-good, easily replicated one at that, writes Chris Blackhurst

The co-founder and CEO was ousted from the company last month (Reuters)

Four years ago, I met Adam Neumann, the founder of WeWork, the shared workspace company. He, at that time, did not just talk big, he talked huge. As well he might. Since its launch in 2010, WeWork had opened sellout sites in New York and London, and was expanding at a ferocious speed. Already, back then it was being spoken of as a $10bn (£8bn) corporation.

Neumann, tall with jet black, wavy hair and a pumped-up physique, cut a charismatic figure – he was deliberately messianic in image and the way he talked. At 36, he wasn’t just providing his clients with desks, where they could plot their own tech and creative ideas, he was speaking about transforming the entire global office culture, offering a whole new work-life balance. Said Neumann: “We treat [tenants] the way we want to be treated ourselves. For us and them, working is about much more than achieving material goods.”

They were not any old punters as such, but members. They had to apply to join, and they were vetted. “No call centres, we don’t want people who will just man phones and sell.”

WeWork was on a mission. Millennials, Neumann declared, “switch nine jobs on average. What we’re doing is helping them find what they love doing”. He continued: “Do you know that in the US, 35 per cent of all workers are independent workers. That’s 45 million people. And it will rise to 40-42 per cent by 2020. In London, currently, it’s 30 per cent, but the trend is in the same direction. More and more people are working for themselves. Why? Because they want to do something more meaningful.”

His objective, he said, seriously, was “to change the world. Are we going to fulfil that potential? I don’t know, but I do know we’ve got a spectacular business model”. Today, Neumann is out of that business. He’s been ousted, and an IPO, valuing WeWork at $47bn, has been canned.

Potential investors took fright at that valuation figure, and they were further spooked by Neumann’s management style and governance issues. It was revealed that the hippyish, right-on, non-materialistic boss had taken $700m out of the company before the IPO. They were also unimpressed with shares being divided into two classes, aimed at giving Neumann and his associates total control even after the IPO.

There were reports of marijuana smoking on the company private jet, and business meetings fuelled by tequila shots. His successors appointed to sort out the mess are reportedly planning substantial job cuts and other cost-saving measures, including the sale of that $60m jet bought last year, as they try to stem WeWork’s massive losses – $3bn over the past three years alone.

Chris Lane, an analyst at Sanford C Bernstein and Co, reckons the figures are so bad that the company could run out of money some time after the first quarter of 2020. Among the other disclosures was that Neumann was talking about trying to make himself immortal. To be fair, he did not mention it when we met. He was full of enthusiasm, though, for his concept, anxious to show off the detail: how WeWork customers, sorry members, had access to well-appointed bars, cafes, breakout areas furnished with comfy sofas, meeting rooms, IT support and more, as well as their own desks of course, in return for rent. It was more trendy Soho House than bog-standard office block.

People at work inside a Washington, DC WeWork office (Getty)

That, however, was also the point. What WeWork was actually supplying was not unique. Indeed, Soho House, while not promoting itself as a shared workspace, did allow members to work on their laptops at its tables. But not just Soho House. Anyone could get hold of an old office building, strip it down, give it a makeover, install cabling, cool desks and chairs, beer fridges and a barista machine, and they would get close to replicating the WeWork style. Similarly, any coffee bar or pub lounge could also allow clientele to use their laptops.

Sure enough, in the short time since I saw Neumann, rival shared workspace facilities have sprung up all over. Walk along any high street and you will see people galore hunched over their laptops in bars, encouraged by the owners, while former offices are also busy promoting shared working.

Neumann was anxious his brand should be seen as a tech disruptor star, and enjoy the high ratings attached to that label, rather than as a traditional property play – and a not-very-good, easily replicated one at that. WeWork, he insisted, was not just about renting out square footage, but about “meeting the needs of like-minded individuals, creating a community that they can feel part of”.

He accepted, begrudgingly, there was nothing to stop me finding a building and trying to do the same. But he claimed, I would not be able to match WeWork’s scale, and I would lack what Neumann termed its “secret weapon – we know how to provide exactly the right culture”.

People, he said, had “a choice. They can stay at home and work from there, from a study. Or they can come into WeWork and be surrounded by people they can talk to, who can help them, who they can bounce ideas off.”

No matter how bold or idealistic his patter, cut it away, and you find a straightforward property company. Despite Neumann’s boasts, WeWork is not special. The IPO found his brand cast into an unknown, unforgiving, less understanding territory, of explaining to would-be shareholders the underlying financials. They’re interested in the return they can expect, and are not moved by airy-fairy talk about creating communities and changing the world.

What drives investors is performance. And this, without the lurid details of management excess. Neumann may have to focus on trying to be immortal; since, as far as running a publicly listed company is concerned, he is very much over.