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"We dedicate this to our power – more than any of us, but within each of us," says the prospectus for the upcoming share sale of WeWork's office-sharing company.
On Monday, co-founder Adam Neumann will start trying to sell this vision to potential investors. The signs are not good.
After years of hype, Neumann's plan to become one of the richest entrepreneurs in the world with a 22% stake in WeWork, now known as We Company, has been hit hard. The value of the company has been reduced from $ 47 billion to $ 15 billion. Even their main investor, the Japanese, SoftBank, backed by the Saudis, would have opposed the sale, a delay that threatens a loan of $ 6 billion, needed to finance an aggressive expansion of the brand globally.
Neumann's dream of building a multi-billion dollar global real estate company based on the trust and community spirit of "us" and the vision of "raising the consciousness of the world" is a dream.
The sale of the shares came as investors became increasingly skeptical of non-profit or technology-related companies that built their businesses on Silicon Valley stacks. .
These investors were scorched by carpool companies' offerings, Uber and Lyft, and were seen by Neumann, whose first steps in entrepreneurship were a collapsible acute heel for women and a baby romper with reinforced knees. often goes into false spiritualism.
To believe in "us," investors will have to forget the losses of $ 3 billion over the last three years and continue to believe in Neumann, whose almost total control of We via a two-class stock structure worries Investors.
But Neumann lacks nothing but self-confidence.
Neumann, 40, grew up in an Israeli kibbutz and moved to New York City in 2001 to "have fun and earn a lot of money," as he announced at the same time. a ceremony at the college where he met his wife, Rebekah, born Rebekah Paltrow, sister of the actor Gwyneth.
Any confusion about the magnitude of Neumann's ambition was dispelled earlier this year when he told New York magazine that the size and scale of WeWork could solve some of the world's biggest problems, including migration and refugees.
"I need the highest valuation possible because when countries are shooting at each other, I want them to come to me," he said.
Much of the spiritualism of the new age of We seems to come from his wife. Rebecca Neumann introduced him to Kabbalah, the esoteric Jewish religion once followed by Madonna. Rebekah Neumann said during her meeting with Neumann that he was too thin and was smoking too much cigarettes. She told him to give up the suitcases of ill-fitting rompers and stop talking about money. "We are going to talk about well-being, happiness, fulfillment, and if the money is supposed to follow, it will do it," she told him.
And this has, to some extent, worried some investors and experts in corporate governance. Investors' concern about WeWork is related to the unusually large amount Neumann has already taken from the company – $ 700 million – in a series of unorthodox personal loans, real estate leases and purchase sales prior to its introduction in stock exchange.
Neumann also owns at least four buildings that it rents to WeWork, earning a $ 20 million rent from its own company. And WeWork owes Neumann an incredible $ 236.6 million in "Upcoming Undiscounted Minimum Lease Payments".
Until last month, when efforts to appease potential investors led to rethinking, he also raised $ 7.9 million a year by leasing the "we" brand to the company.
In addition, WeWork's initial public offering prospectus explicitly warned investors: "The control of Adam's vote will limit the ability of other shareholders to influence the business of the company. As a result, we can take action that shareholders other than Adam do not consider beneficial. "
In other words, if you do not like that, lose yourself.
"The revelations have ambushed this blank brand image and undermined investor confidence," said Eric Schiffer, managing director of the investment firm Patriarch. "Given the prospect of losing $ 6 billion, they would be crazy not to move forward, and quickly."
On Friday, the Wall Street Journal announced that we are taking steps to reassure investors. The company told investors that it would reduce Neumann's voting power to 10 votes per share, or 20 votes per share, as well as the role his wife would play in choosing Neumann's successor if he can not. to serve.
The question now facing investors is whether they get the idea that Neumann is a visionary like Elon Musk or Mark Zuckerberg. For Schiffer, the answer is no. "Musk has a proven track record. Neumann's story does not show it. He had an idea that could succeed but it's a giant question mark. "
There is no doubt that Neumann has had an impact on the rental of offices. His idea was to rent real estate on long-term leases, award them with millennial style (beer taps, lots of cool plants and sofas) and rent them out in the short term. Neumann started in 2010 from a single building on the Grand Street in New York. He discovered an army of young backpacking urban professionals, with a laptop and a listening ear, who needed a place to drink coffee, work in startups, network and search for partners.
As of June 30, WeWork has announced that it has 527,000 members and 528 sites, up from 485 in March, and plans to open 169 new sites. In London, she owns or rents more spaces than any business, except the government. Large companies (including The Guardian) are now renting WeWork spaces.
Adam and Rebekah Neumann, of course, are not stupid enough to rent. They own an impressive number of real estate, including a townhouse in the West Village of New York.
But like many so-called "unicorns", private companies valued at more than $ 1 billion, the only way to survive is to grow. There can be no assurance that WeWork will ever achieve profitability, as stated in its prospectus. Investors are worried, especially as the company's expansion is centered on China, a stranger in the best of times and especially now, which is likely to sink into a global recession and whose competitors are copying many of his movements.
The drama unfolding has already affected Neumann's wealth prospects. At one point, some felt that the value of WeWork as a publicly traded company could soon reach $ 65 billion, or $ 14 billion in value for Neumann.
If the valuation of $ 15 billion now seems more likely, Neumann's stake would amount to $ 3 billion – not enough for a 500-billion-dollar Bloomberg index – but no less for a decade of work.
In the coming weeks, Neumann and We Company will see how their neo-utopian vision fits into the harsh realities of the public market. "We are captivated by the unlimited potential of Us," Neumann said recently.
Wall Street seems less safe.
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