WeCrashed: What really happened to WeWork? (2023)

The release of ‘WeCrashed’, a new Apple TV+ miniseries starring Anne Hathaway and Jared Leto, has once again reignited the conversation on the spectacular rise and fall of the ‘unicorn’ start-up WeWork. It has also brought back into memory the boom-and-bust story of the company’s charismatic founder, Adam Neumann, whose larger-than-life persona and wild excesses were the impetus behind the cult-like work culture he wanted to promote.

The story of WeWork’s meteoric rise and fall has been well-documented—before ‘WeCrashed’ started streaming, there were numerous retellings, such as Wondery’s 2020 podcast ‘WeCrashed’ on which the Apple TV+ miniseries is based, Hulu’s WeWork: or The Making and Breaking of a $47 Billion Unicorn, Eliot Brown and Maureen Farrell’s The Cult of We: WeWork, Adam Neumann, and the Great Startup Delusion, or Billion Dollar Loser: The Epic Rise and Spectacular Fall of Adam Neumann and WeWork by Reeves Wiedeman.

The story of how WeWork imploded has always been too alluring for authors and scriptwriters to ignore. In corporate circles, it has also been a popular cautionary tale—a story of transgression fuelled by mindless ambition and greed which culminates in disaster.

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What is the history of WeWork?

WeWork started out as a US real estate company that provided flexible shared workspaces for technology start-ups. Rising to prominence in the financial boom years after the Great Recession, it targeted millennials as it tried to provide them shared office spaces for co-working.

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(Video) The Shocking True Story of WeCrashed

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(Video) The Spectacular Rise and Fall of WeWork

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WeWork started out as Green Desk in 2008, when Neumann and his business partner, Miguel McKelvey rented an empty floor of a Brooklyn building and divided it into cubicles for rent. “Everyone who had been fired from their jobs came. Everyone who didn’t want to be at home because they were depressed,” McKelvey told Wiedeman.

WeCrashed: What really happened to WeWork? (5) Entrance to a WeWork office in Manhattan (Wikimedia Commons)

The founders soon replicated their model in Manhattan and San Francisco as the company gained popularity. Buoyed by its initial successes, the company started “blitzscaling”, acquiring office spaces in multiple cities and growing rapidly, thanks to a massive infusion of $8 billion from SoftBank, which was its biggest investor.

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In fact, it was Neumann’s knack for amassing billions of dollars in venture capital that fuelled the company’s rapid growth. But, as critics pointed out, Neumann did not have a viable and sustainable business model as he kept expanding with little planning. He tried to turn WeWork into a tech giant and experimented with a LinkedIn-style app for the company’s members. Also in the pipeline were plans to launch WeLive—a dormitory-style co-living arrangement, and WeGrow, a private school run by his wife, Rebekah. None of these plans were successful in the long run.

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Despite these failures, WeWork was the most valued tech start-up in the US, with a stratospheric $47 billion valuation. It almost epitomised the remarkable example of Silicon Valley’s audacity as Neumann made bold assertions saying he was not in the market to make money but “change the world”. And then, in 2019, everything fell apart.

How did the remarkable success story of WeWork fall apart?

In the summer of 2019, after nearly 10 years of doing business, WeWork filed for an initial public offering (IPO). The WeWork IPO was the most eagerly anticipated public offering of the year—for a company valued at a staggering $47 billion, it was meant to be another landmark that sealed its cult status. Instead, what unfolded was a story of remarkable capitulation and downfall.

On August 14 that year, the company publicly filed documents for IPO. The filing, called an S-1, exposed WeWork’s narrative of being a grand success story riding on unimaginable profit. Story after story about Neumann’s bizarre dealings, mismanagements and strange behaviour tumbled out of the closet and made instant headlines.

(Video) Adam Neumann in His First Public Interview Since Leaving WeWork | DealBook Online Summit

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The financial documents also showed that WeWork was losing tons of money and its market projections were wildly optimistic.

Within 33 days, the IPO was scuttled and WeWork’s valuation dropped by 70%. After the failed IPO, WeWork was taken over by SoftBank, its largest investor. Neumann also voted to remove himself from the CEO’s role and gave up majority control of WeWork’s stock. He was reportedly offered a $1.7-billion package to leave the company.

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What caused the WeWork disaster?

Rapid expansion on the back of an unsustainable business model, Neumann’s questionable dealings and erratic behaviour have been cited as reasons behind WeWork’s fall.

In its quest to build a “creative office space”, WeWork offered a dizzying combination of every hip trend of corporate culture, with phone pods and nap rooms. Neon-pink signs in its offices read: ‘DO WHAT YOU LOVE’. Neumann was always eager to “sell an experience”, which made the company turn into a real-estate behemoth, that spanned across 800 locations with more than 12,000 employees.

WeCrashed: What really happened to WeWork? (7) WeWork space in San Francisco (Wikimedia Commons)

According to documents first published by Buzzfeed, all this growth since 2015 was based on a business model which was extremely expensive and had little space for profit. Investment documents show that in 2017, WeWork had lost $883 million, despite having a revenue of $886 million. The Financial Times revealed that in 2018 the company lost $1.9 billion on $1.8 billion of revenue. Behind the glamour and glitz of a culture selling a next-generation working experience to millennials was a sinking ship struggling to stay afloat. The bubble was always going to burst.

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(Video) Adam Neumann | FRAUD Behind 'WeCrashed' Apple TV+ | WeWork CEO | Where Are They Now?

What further complicated matters and perhaps accentuated the slide was Neumann’s own questionable personal dealings. Tall, long-haired and charismatic, Neumann’s idiosyncrasies are well-documented—he drank tequila, smoked weed and walked about barefooted in the office. He charmed investors and developed a sort of cult following in corporate circles. That was until the bubble burst and the horror stories started tumbling out.

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One of these stories was that Neumann made millions of dollars by leasing multiple properties in which he has an ownership stake back to WeWork, The Wall Street Journal reported. In a prospectus related to a debt offering, WeWork stated that it had leases with multiple properties owned in part by Neumann. It added that the company paid more than $12 million in rent to buildings “partially owned by officers” of WeWork between 2016 and 2017.

In years before the scuttled IPO, Neumann purchased at least five homes, including a $10.5 million Greenwich Village townhouse and a $60 million Gulfstream jet for WeWork. More troubling was the fact that Neumann reportedly took personal loans from the company at below-market rates to fund his lavish lifestyle. He also went on to purchase the trademark to the name “We”, and WeWork paid him $5.9 million to license it.

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Even as it tried to play down its losses, the company in its filing stated, “We have a history of losses and, especially if we continue to grow at an accelerated rate, we may be unable to achieve profitability at a company level for the foreseeable future.”

Was the company’s ‘questionable work culture’ also to blame?

As WeWork slid towards bankruptcy, story after story that blamed the company’s “questionable work culture” began to emerge. They described in horrifying detail how as WeWork was on its path of descent, Neumann indulged himself with his private jet trips transporting marijuana across international borders and his wife laid off employees on the basis of “bad vibes”.

Even as investment rolled in, Neumann reportedly spent lavishly on private expenses—for instance, he paid $60 million buy a private jet—while not focusing on the company’s immediate needs. Employees complained of widespread burnout but he was largely unsympathetic. In his book, Wiedeman writes, “Adam complained that he didn’t think he was getting what he paid for as it stood. He told one employee he could save money by getting a roommate.”

WeCrashed: What really happened to WeWork? (8) Event held at WeWork Toronto (Wikimedia Commons)

Moreover, a former WeWork employee lodged a civil case alleging that she was sexually assaulted at corporate events, including at the company’s ‘Summer Camp’, and the human resources department did not act based on her complaints. She was later fired for “poor performance”.

The Guardian reported that the employee, in an email, later wrote: “The sexual harassment and assaults of Plaintiff did not happen in a vacuum. They are product in part of the entitled, frat-boy culture that permeates WeWork from the top down.”

(Video) What Happened After WeCrashed To Adam & Rebekah Neumann

She added that during the job interview, Neumann had served shots of tequila and that “company managers and executives heap immense pressure on employees to attend after-work events and place a premium on employees’ participation in the parties that WeWork sponsors.”

Much of ‘WeCrashed’ paints Neumann as the start-up conman who powers his way to the top, attracting huge investments SoftBank, Benchmark and Goldman Sachs. It also focuses on his relationship with Rebekah, with Hathaway telling him “You’re a supernova” and “I am the soul of the company”.

But it is not blind to the company’s toxic work culture. In the third episode, the series shows that WeWork lacked an HR department for a significant amount of time and offered employees stock options in lieu of a proper salary. It also says that the company was “a really bad place to work, especially for women.”

FAQs

What actually happened with WeWork? ›

What caused the WeWork disaster? Rapid expansion on the back of an unsustainable business model, Neumann's questionable dealings and erratic behaviour have been cited as reasons behind WeWork's fall.

What happened to WeWork after Adam left? ›

Adam Neumann and the WeWork board sued Softbank, finally settling their disputes in early 2021. WeWork finally went public in October 2021 at $9 million, which was $38 million less than at its peak.

What happened to the WeWork couple? ›

The Neumanns left New York after being ousted from WeWork.

They pulled their children out of their Manhattan school—which was also owned by WeWork, more on that later—and adopted a jet-setting lifestyle that reportedly took them all over the world by private plane.

Where are Rebekah and Adam Neumann now? ›

Are Rebekah and Adam Neumann still married? Rebekah and Adam Neumann have remained married after being ousted from WeWork in 2019. The couple share six children, according to a 2021 article in Vanity Fair. At one point, some of Neumann's children were enrolled in WeGrow.

How is WeWork doing in 2022? ›

Outlook: The Company reaffirms its full year 2022 revenue guidance to $3.4 - $3.5 billion and Adjusted EBITDA of negative $400 - $475 million. Consistent with previous reporting, guidance for full year 2022 excludes the impact of fluctuations from the Company's original budgeted foreign exchange rates.

How much of WeCrashed is true? ›

At one point, she tells HR that she wants to let someone go because they have “bad energy.” Turns out, this is based on a true story. The real Rebekah notoriously fired a mechanic for WeWork's Gulfstream jet within minutes of meeting him because she didn't like his energy, according to Vanity Fair.

How much money did SoftBank lose on WeWork? ›

Softbank's $23 Billion Loss Looks Like More WeWork Fun - Bloomberg.

Who owns WeWork now? ›

Sandeep Mathrani

What is WeWork worth now? ›

Nine years later, WeWork grew to a $47 billion valuation. The company was under the We Company umbrella, which also includes a co-living venture, WeLive, and the "conscious entrepreneurial school" WeGrow, which announced it would close in fall 2019 at the end of the academic year.

Is we crashed based on a true story? ›

WeCrashed follows the true story of Adam Neumann and the shared workspace company WeWork. Here's what Apple TV+'s show slightly changes. Warning: contains SPOILERS for WeCrashed. Apple TV+'s WeCrashed follows the true story of WeWork's rise and fall, yet in the process, the show changes some things.

Did Adam and Rebekah get the money? ›

In the end, [Adam and Rebekah] got an enormous amount of that money.” (Per Brown and Farrell's reporting, SoftBank renegotiated to clear the way for a public offering.)

What is Adam Neumann doing now? ›

Mr. Neumann is starting a new company called Flow, focused on the residential real estate market, the DealBook newsletter reports. Notably, it has the financial support of Andreessen Horowitz, the prominent Silicon Valley venture capital firm that was an early investor in everything from Facebook to Airbnb.

What happened to Robert Paltrow? ›

Robert Paltrow served time in 2015

In 2015, Paltrow was convicted of tax evasion and sentenced to six months in prison — a reality that is played out in the third episode of "WeCrashed," per Vanity Fair.

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