WeWork Co-Founder Adam Neumann Is Trying To Buy the Company

Andrew Ross Sorkin, reporting for The New York Times: Adam Neumann shot to fame by turning WeWork into a cultural and business phenomenon, before being ousted from the work space operator in dramatic fashion. But for the past several months, he has been trying to buy the now-bankrupt business -- with the help of the hedge fund mogul Dan Loeb, DealBook is the first to report. Neumann's new real estate company Flow Global is pushing WeWork to consider its takeover approach, according to a letter his lawyers sent to WeWork's advisers on Monday. Flow which has already raised $350 million from the venture capital firm Andreessen Horowitz, disclosed in the letter that Loeb's Third Point would help finance a transaction.

Flow has sought to buy WeWork or its assets, as well as provide bankruptcy financing to keep it afloat. But Flow's lawyers accused WeWork of stonewalling for months. "We write to express our dismay with WeWork's lack of engagement even to provide information to my clients in what is intended to be a value-maximizing transaction for all stakeholders," wrote the lawyers led by Alex Spiro of Quinn Emanuel, who also represents Elon Musk and Jay-Z.

We work business could never work

[iAmWaySmarterThanYou]

They took out long term leases from building owners.
They rented out space short term to others, primarily targeting startups, individuals, and very small companies.

During good times, there are lots of small business entities who need a space better than their kitchen table.
But times aren't always good. The real world has business cycles up and down.
During down times those smaller customers dry up, but WW still has to pay rent to the building owners even when their spaces are mostly empty.

And exactly as any first year Econ student could have predicted, WW did great until times turned bad then they collapsed.

But not before turning this guy into a billionaire.

Re:

[HBI]

I suspect he and his backers think we're headed to another up cycle. More pump, more dump. That said, I think the business model is like a buggy whip manufacturer. With the issues in commercial real estate at the moment, locking in long term leases sounds like a horrible idea. It'll cost less tomorrow, more than likely.

Re:

[kenh]

I think they are banking on something between "Work From Home" and "Work in our Offices", employees going to near-by intermediary office spaces - I think the last thing I'd be doing now is looking to take over countless high-profile office space leases while we're on the verge of a collapse in the office space market.

Why not take your $350 Million in backing and start over with aggressively cheap deals on surplus office space as companies downsize rather than take over We Work's leases?

Re:

[ceoyoyo]

WeWork is bankrupt. Whoever buys their assets should be able to easily negotiate to take over their leases at current rates, and the property is already set up the way they want.

Re:We work business could never work

[Anubis IV]

I recall seeing a kid talking about how he made money in real estate by leveraging what he had to keep buying more and more and more. It was a veritable house of cards that was wholly dependent on the combination of low interest rates and rising housing costs. Others in the blogosphere who should have known better were holding him up as an example to follow, without regard for the fact that he’d have gone bankrupt in an instant if the market had stalled or declined at any point during the window where he was active. Strangely, I haven’t heard anyone talking about his continued success in the last year or two.

Kudos to anyone who finds success while ignoring basic math, but that isn’t a successful, long-term business strategy: it’s a roll of the dice. If you aren’t accounting—literally accounting with money—for risk, you’re gambling with your own money and operating on luck.

Re: We work business could never work

[felixrising]

You haven't been following residential property prices hey? This model, flawed or not, is very widely spread and is self fulfilling. The more people who do this the more property prices rise as an ever increasing amount of capital is poured into that market. It's a global trend and I don't see any governments doing more than lip service to put the brakes on what has become Bitcoins model for growth. The banks are all in on this like pimps, the real estate business pumps it like drug dealers and the governme

Re:

[pete6677]

You can absolutely make a lot of money that way. But the key to keeping it is knowing when to get out. Most people fail at that step.

Re:

[Pinky's Brain]

Bankruptcy to lower the rent on the leases plus the shitty on premises job markets can probably make it profitable short term. The short term might even last long enough to IPO and dump the trash on pensioners.

Re:

[Merk42]

WW did great until times turned bad

I don't think "company does well until economy is poor" is a situation exclusive to WeWork's business model.

Re:We work business could never work

[xanthos]

FWIW - I recall reading that the original WeWork business model was to use startup money to pay for long term leases in Neumann owned buildings. That way he made money whether WW crashed and burned or not. Highly doubt this arrangement was disclosed up front to the investors. With the post pandemic collapse of the commercial office space market, Neumann must want to relaunch WW to pay his mortgage bills before his loans get called and his paper fortune disappears. As anyone who cooks knows, scum rises to the top.

Re:

[CAIMLAS]

This is literally the business model for most companies with corporate leases. Why should WeWork be any different?

Re:

[kenh]

The questions of the day are these:

- Does WeWork have paying clients?

- Are those clients paying enough for WeWork to pay the rent to Neumann?

I believe they shuttered locations and lost customers, so I cant see what Neumann gains by buying his tenants company - are there really that many people out looking for short-term office space? Really?

Re:

[Whateverthisis]

See, the shocker thing about this is he must have disclosed it to investors. I have done due diligence on companies as an adviser, both to investors and to also white hat/stress test the company prepping for due diligence. First thing you do is if the company has certain assets in play, you own it, and if not, you look at the leases and who owns it. This takes like an hour's worth of work; it's not hard and it allows you to follow chain of custody.

Following that, the founder and/or Board members sign

Carrion isn't just luggage anymore

[gavron]

Adam Neuman, Andreessen Horowitz, and their "friends" are not anyone's savior. They are carrion scavengers. That WeWork (a carcass of a shell of a former dead meat Ponzi scheme company) refuses to respond to them should put that in perspective.

Would YOU return a call from Adam Neuman offering to buy YOUR house or YOUR land or YOUR car so he can restart his Ponzi scheme? Likely not.
Would YOU return a call from Marc Andreesen offering some funds for the same? If you're poor and stupid, maybe. This is not 1993 and Netscape isn't making anyone wealthy today. He's like that guy who was fifth in line for the four hosts of Shark Tank. No Shark. No Tank. No hosting. Just maga conspirarcy nuts.

Adam Neuman. Don't call me. You are a nutjob and you fleeced people out of billiions. Go die in prison.
Andreeson/Horowitz: Imagine if half the companies you founded did good things. Keep imagining, because that's all you get.

Carrion - dead meat rotting on the highway.
These guys - they go after carrion because they are carrion, just not yet.

The TV Show

[bobbutts]

The TV Show was pretty entertaining.

Private ownership

[CAIMLAS]

Private ownership is the only thing which will save many companies from being utterly destroyed by the stock market.

There are certain business models which simply don't work as a publicly traded business: if a company requires their employees to have a good workplace experience and to not throw humans in front of the altar of stock prices, chances are good they won't thrive as a public company.

There are exceptions, like big name tech stocks, but even those companies do some variation of this, and increasing

Start company, watch it fail, buy it back cheap

[Tony Isaac]

Seems like a good deal for the founder!