WeWork: Adam Neumann builds a $47B 'community company' from subleased office space

WeWork began as a recession experiment. In 2008, architect Miguel McKelvey and entrepreneur Adam Neumann persuaded their Brooklyn landlord to let them divide an empty building into semi-communal offices and rent them out; the space, Green Desk, was an instant hit. They sold their share and opened the first WeWork in 2010 on the corner of Grand and Lafayette, modeled less on a traditional office than on a boutique hotel.

The core business stayed simple: lease space from landlords — the company owned almost no real estate — slice it up, and rent it back in smaller portions with an upcharge for design, happy hours and short flexible leases. What distinguished WeWork from hundreds of co-working rivals was Neumann's insistence that it was not a real-estate business at all. He called it a 'community company' and 'the world's first physical social network', arguing its valuation rested on energy and spirituality rather than a multiple of revenue.

That framing unlocked capital on a scale no co-working rival could match. Neumann raised more than $12 billion in venture funding, capped by SoftBank's $4.4 billion investment in 2017, when Masayoshi Son told him to make the company 'ten times bigger than your original plan'. By the time of the June 2019 profile, WeWork counted 466,000 members in 485 locations, had grown revenue from $75 million in 2014 to $1.8 billion, employed 12,000 people, and become Manhattan's largest tenant and America's most valuable start-up at $47 billion, with an IPO filing underway.

The doubts were as large as the numbers: a $1.9 billion loss, a 'community-adjusted EBITDA' metric that stripped out marketing, construction and design costs — dubbed by the Financial Times 'perhaps the most infamous financial metric of a generation' — and a roughly $44 billion valuation gap with profitable rival IWG, which had three times the locations. Even employees told the reporter they would be happy at half the valuation. Whatever the outcome, the article concluded WeWork had already reshaped commercial real estate, with incumbents and rivals adopting flexible space and shorter leases.