It has not been the best couple of months for WeWork co-founder and former-CEO, Adam Neumann. After being ousted as the CEO from the company he started, the run of bad luck continues for the Israeli-American entrepreneur, as he now finds himself ousted from the list of billionaires.
Bloomberg reports that Neumann’s net worth, as it stands currently, is a measly $450 million — a 97% decrease from what it used to be just last year: $14 billion!
So how does one go about losing 97% of his net worth in a matter of months? There are a variety of different reasons, all of which will be discussed below.
How Did Adam Neumann Lose 97% Of His Net Worth?
Adam Neumann seemed to have hit rock bottom with his September 2019 ousting as the CEO of WeWork, but things continue to unravel for Neumann as news first broke via Bloomberg that Adam Neumann has been pushed off the billionaire’s list after one too many setbacks.
The Israeli-born entrepreneur was reportedly worth as much as $14 billion before his doomed attempt to take his company public in September 2019. Since then, it has been a slow downturn for Adam, who is reportedly worth somewhere between $450 million and $750 million as of April 2020.
Things took a turn for the worse when SoftBank Group Corporation, the Japanese conglomerate holding company and WeWork’s biggest external investor, pulled out of buying WeWork’s shares worth $3 billion in a deal that could have potentially saved the company from its recent doldrums.
The owner of SoftBank, Masayoshi Son, pulled out of the deal because several of the conditions of the tender offer were not met. In a statement, Rob Townsend, Senior Vice President and Chief Legal Officer of SoftBank, put out a statement that said:
“SoftBank remains fully committed to the success of WeWork and has taken significant steps to strengthen the company since October, including newly committed capital, the development of a new strategic plan for WeWork and the hiring of a new, world-class management team.
The tender offer was an offer to buy shares directly from other major stockholders and its termination has no impact on WeWork’s operations or customers. The tender offer closing was conditioned on the satisfaction of certain closing conditions the parties agreed to in October of last year for SoftBank’s protection. Several of those conditions were not met, leaving SoftBank no choice but to terminate the tender offer.”
Adam was himself set to make a cushiony $970 million by selling his share of the stakes in WeWork, but when the deal fell through, he was left with the majority stakes in a company that is on its dying breath.
To make matters worse, the COVID-19 pandemic is tanking global stock markets, and with people self-isolating at home, the mere idea of shared office space is unfathomable.
The net effect of all this is that as of April 2020, Adam Neumann’s net worth is estimated to be somewhere between $450 million and $750 million, a 97% deficit from what it had been just a year ago: $14 billion!
Adam Neumann, in 2020, revealed that he is planning to sue Softbank as they cost him $3 billion from backing out of their investment deals.
Why Was Adam Neumann Ousted From His Own Company?
WeWork was founded in 2010 by Adam Neumann and Miguel McKelvey, who determined that they could make money by leasing shared workspace for tech startups and established organizations.
The first WeWork office was based in New York’s SoHo district. By 2019, it had gone on to become an international conglomerate with offices in 500 locations across 29 countries.
Things were going swimmingly well for the company, and as recently as January 2019, WeWork was valued at $49 billion.
September 2019 was when it all began to unravel! Adam spearheaded a decision to take the company public: a decision Neumann thought would skyrocket the value of his company.
In the effort to go public, some things were revealed during the financial review of the company that reported some disturbing truths about the company’s business practices and its true valuation.
The company was making money, but also hemorrhaging money at a worrying rate: investing in numerous tech startups and buying high-end properties to lease.
Then there was Adam’s reputation. Adam, who was once hailed as a visionary and a boss everyone would love to have, became a liability due to his over-achieving ambition. His leadership, his decadent lifestyle, and his propensity towards nepotism were all called into question.
In light of the debacle, Adam made the decision to step down from his position as CEO. In a statement, Adam said:
“While our business has never been stronger, in recent weeks, the scrutiny directed toward me has become a significant distraction, and I have decided that it is in the best interest of the company to step down as chief executive,”
Who Is Adam Neumann?
Adam Neumann was born on April 25, 1979, in Tel Aviv, Israel. Born to Israeli parents, Avivit and Doron Neumann, Adam moved to the USA with his mother and younger sister, Adi, when his parents got divorced.
They ended up returning to Israel in 1990, whereupon Adam attended the Israeli Naval Academy and served in the Israeli Navy for five years.
Adam did end up returning to the USA and attended the Zicklin School of Business at Baruch College in New York.
Adam is married to Rebekah Neumann. They co-founded WeWork together with Miguel McKelvey. To date, Adam and Rebekah have five children together.