The bankruptcy of WeWork, a provider of co-working space, was announced this week which elicited a response from co-founder and former CEO Adam Neumann, who departed the firm four years ago and has since moved on to a new endeavor in the real estate sector.
Neumann founded WeWork in 2010 with a value proposition that appealed to small businesses and startups that wanted a smaller footprint. It grew rapidly and first tried to go public in 2019 when it had an estimated valuation of $47 billion – but investors balked at its high debt level and massive losses.
He was ousted later in 2019 amid frustration by investors with his spending but was provided a massive golden parachute that amounted to nearly $1.7 billion. Following negotiations with SoftBank, which provided a bailout to the firm when its first bid to go public failed, the deal was renegotiated to allow WeWork to go public in 2021 – although it failed to turn a profit.
WEWORK CO-FOUNDER ADAM NEUMANN CALLS COMPANY’S BANKRUPTCY ‘DISAPPOINTING’
“As the co-founder of WeWork who spent a decade building the business with an amazing team of mission-driven people, the company’s anticipated bankruptcy filing is disappointing,” Neumann said in a statement Monday. “It has been challenging for me to watch from the sidelines since 2019 as WeWork has failed to take advantage of a product that is more relevant today than ever before. I believe that, with the right strategy and team, a reorganization will enable WeWork to emerge successfully.”
Neumann’s role in the WeWork saga was chronicled in the Apple TV+ miniseries “WeCrashed” starring Jared Leto and Anne Hathaway, which premiered in early 2022 and was based on a podcast produced by Wondery.
WEWORK FILES FOR BANKRUPTCY: HOW THE COMPANY TUMBLED AFTER A VALUATION OF $47B IN 2019
Last year, Neumann launched a new company called Flow that will operate in the residential real estate space and is scheduled to formally launch its operations this year. It received an initial investment of $350 million from Andreessen Horowitz, which received a stake in its real estate portfolio according to The Wall Street Journal.
At the Fortune Brainstorm Tech event this summer, Neumann said he was “very proud of what was achieved” by WeWork as it disrupted the office space category, which he called the second-largest category in the world – and now he wants to take those lessons learned and apply them to residential real estate.
Neumann explained that “Flow is building a consumer-facing residential brand” and doing it “through integrating technology, community and a world-class operating team that puts the resident first.” He said Flow owns 3,000 apartments and has over 150 employees – mostly engineers and product designers – and will operate in a vertically integrated manner.
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“We own the buildings, we operate the buildings, we build the technology, we build a community and we build the teams that are running them,” he said. “And when you bring all of that together, the moment a resident is happier, more fulfilled and stays longer, the building’s churn goes down,” which he said is the number of times residents leave a building. “Happier residents, more fulfilled residents equals more profitable buildings.”
“Flow is very comfortable being a residential, consumer-facing real estate company. It is the largest asset class in the world. It has no brand that we know of. And proptech in that category is still very early because whenever you solve these problems, everyone is solving them as a single-point problem, as opposed to actually solving them as a vertical integration problem,” Neumann explained. “So the way we’re going after it is going to take longer. We’re gonna have to build a very solid foundation. But when we do, I think our solution is going to actually help solve problems like loneliness, community.”
FOX Business’s Breck Dumas contributed to this report.