Adam Neumann’s rapid ascent to real estate stardom and his swift downfall
The Daily Beat’s review of The Cult of We focuses on Adam Neumann’s rapid acceptance into the elite world of commercial real estate. We also share a few of the authors’ extraordinary tales of hubris – even for Neumann himself.
Timeline: How Adam Neumann broke into the Real Estate World
Adam Neumann’s first space was at Josh & Jack Guttman’s 155 Water Street in Dumbo. Ironically, the 2008 deal was a joint partnership where they split the profits, which is the same business model now employed by many in the co-working sector.
- Neumann and his co-founder Miguel McKelvey then decided they wanted to rent space directly from landlords and sublease it, but couldn’t find a landlord to hand over a building to two kids with an unproven concept. They ultimately convinced Abraham Talassazan to let them experiment on his troubled 154 Grand Street in Nolita.
- In his late twenties at the time, real estate investor Joel Schreiber met Neumann by happenstance when touring a building in the Bronx. Within a day of meeting, Schreiber agreed to invest $15 million at a $45 million valuation.
- In 2012, David Zar was looking for a tenant to fill 349 Fifth near the Empire State Building. This became WeWork’s second location and the lease was guaranteed by Schrieber.
- Real estate investor Marc Schimmel, an ex-boyfriend of Madonna who met Neumann at the Kabbalah Centre, was the next to invest in the startup.
- By the end of 2012, Neumann was already friendly with Boston Properties’ Mort Zuckerman and began borrowing his jet. He successfully ingratiated himself with the industry elite, including executives at Forest City Ratner and Rudin Management.
- Regus CEO Mark Dixon had someone from his company rent a WeWork space. Dixon and his team concluded that WeWork had an identical business model.
Entities controlled by Neumann have extracted more than $2.1 billion from the company since its founding. Here are some anecdotes that reflect peak delusion:
- When meeting the Crown Prince of Saudi Arabia, Neumann said, “You, me, and Jared Kushner are going to remake the region.” After the murder of Saudi government critic Jamal Khashoggi, Neumann said that the Prince Mohammemed needed better guidance. Who could offer such counsel? With zero hesitation, Neumann replied, “Me.”
- Neumann believed a Middle East peace treaty would one day be signed in a WeWork office space.
- When advisers suggested he hire a more experienced executive to advise him as Mark Zuckerberg had done by bringing on Sheryl Sandberg, Neumann responded, “I am both Mark and Sheryl. He wasn’t.”
- In 2018, Neumann told executives he believed WeWork was going to be a $3 trillion company. To help achieve this goal, he started an internal real estate firm (ARK) and pondered buying Cushman & Wakefield and CBRE to dominate the services business. SoftBank’s Masa believed Neumann wasn’t “crazy enough” and the Unicorn would be worth $10 trillion by 2028.
“The Cult of We: WeWork, Adam Neumann, and the Great Startup Delusion by Wall Street Journal reporters Eliot Brown and Maureen Farrell, is available for purchase July 20, 2021, by Crown, an imprint of Random House, a division of Penguin Random House LLC.