Adam Neumann is an Israeli businessman, billionaire, and the CEO of WeWork, an American real estate company that provides office space for startup companies, a company he co-founded with wife Rebekah Paltrow Neumann.
Neumann is in danger of being replaced as WeWork’s CEO after facing pushback from investors following the company’s postponement of it’s Initial Public Offering (IPO), widening losses ($1.6 billion in 2018), and growing concerns about his management style and behavior. According to the WSJ, the company’s biggest investor, Japanese conglomerate Softbank, is looking to replace the Neumann and would like him to move aside.
Neumann and his wife are facing backlash recent Wall Street Journal article detailed their erratic, impulsive, sometimes reckless management style.
Neumann’s removal is not a guarantee. He has more allies than enemies on the board and could potentially fire the entire board thanks to shares he controls that carry extra votes.
But WeWork has $2 billion in 2018 and analysts believe they will run out of cash on hand later this year. Softbank has invested $9 billion into the company and they need their cash to keep going.
Neumann’s charismatic, unconventional leadership style and inspiring charisma is at the heart of everything WeWork does. However, he has also been met with criticism from investors worried about his behavior and spending habits.
Adam Neumann was born and raised in Israel where he attended Israeli Naval Academy and served as an officer in the Israeli Navy. He moved to New York at 21 to “have fun and make a lot of money” and attended the Zicklin School of Business at Baruch College in New York City.
Here’s what you need to know:
1. He Had Several Failed Businesses Before Starting WeWork
Neumann started his entrepreneurial career while attending Baruch College. His first idea was a line of women’s shoes with collapsable heels that never got off the ground.
He started his second business, Krawlerz, out of his Tribeca apartment. Krawlerz was a clothing line for babies that featured padding in the knees to make crawling more comfortable. The slogan was ““Just because they don’t tell you, doesn’t mean they don’t hurt.” This business also flopped.
It was around this time he met his now-wife Rebekah Paltrow Neumann who told Fast Company the first time she met him, “he was really, really thin, and he was shaking ’cause I think he was smoking too many cigarettes,”
Adam told the rest of the story in the interview, ” ‘Well, I’m an entrepreneur, and money is tight right now; it’s all in inventory.’ She said to me, ‘Well, maybe you’re in the wrong business, because if you were doing the right thing, you would be able to afford dinner.’”
The couple started dating shortly after and worked closely together building WeWork.
2. He Loves Marijuana
According to The Wall Street Journal, last summer Neumann and some friends took a vacation to Israel in a Gulfstream G650 private jet. According to people familiar with the incident, the group was smoking weed throughout the flight there.
When the group left the plane, the flight crew found a “sizable chunk” of marijuana “stuffed in a cereal box for the return flight”. The jet’s owner was justifiably angry and didn’t want to face any trouble from flying marijuana across foreign borders. The jet’s concerned owner recalled the aircraft after the discovery was made, leaving Neumann briefly stranded in Israel.
The WSJ also said that several friends and former executives say he loves the drug and frequently smokes it while on airplanes.
3. He Threw a Huge Party Immediately After Laying off 7% of His Staff
In one of the weirder anecdotes of Neumann’s behavior, The Wall Street Journal reported that in 2016 the WeWork CEO laid off 7% of his staff in order to cut costs. He held an all-hands meeting with company employees where he expressed regret and remorse for what he had to do but that it was in the best interests of the company.
As the meeting was ending, “employees carrying trays of plastic shot glasses filled with tequila came into the room, followed by toasts and drinks.”
Neumann also invited Darryl McDaniels of hip-hop group Run-DMC to play a set for the staff. Workers danced to the 1980s hit “It’s Tricky” as tequila poured non-stop and the meeting turned into a raucous party. The jarring shift in mood following the depressing announcement left a lot of employees “stunned and confused.”
4. He’s Known for His Radical Ideas
Neumann is known for constantly making outrageous claims and having crazy ideas. In a story for New York Magazine’s Intelligencer, Neumann talked to a “political pro” about his desire to run for president of the United States.
The pro pointed out that he would have to change the constitution in order for that to happen and suggested he should run for Mayor of New York City instead. Adam replied, “Once you’ve reached my level of success, only president will do.”
Neuman has also talked about running to be Prime Minister of Israel and once quipped that if he ran for anything, it would be president of the world.
He’s also mused to friends and colleagues about becoming the world’s first trillionaire and finding the ability to live forever.
In addition to his private musings, he is sometimes impulsive with his decisions regarding employee policies at WeWork. In 2018, he banned employees from eating meat on WeWork company property in the name of sustainability. WeWork later changed to policy to saying employees couldn’t expense meals with meat, but they could eat it in company offices.
In a statement, a spokesperson for WeWork said ““This policy only applies to events paid for by WeWork. Members and employees are welcome to bring in meat for meals, and members are welcome to serve meat at events they host … we are working with vendors to align our commitment for previously scheduled events, and meat will not be served at events hosted by WeWork moving forward.”
Employees have said they witnessed Neumann eating meat at work following the announcement.
5. He Trademarked the Word “We” Then Charged WeWork to Use It
Adam Neumann is a managing member of We Holdings LLC which owned the trademark rights to the word “we.” Ahead of their Initial Public Offering, WeWork rebranded itself as “The We Company” in order to branch out into different businesses. In order to rebrand itself around “We”, they paid Neumann $5.9 million so they could use the word.
New York University marketing professor Scott Galloway described the situation as such “Adam also owned the rights to the ‘We’ trademark, which the firm decided they must own and paid the founder/CEO $5.9 million for the rights. The rights to a name nearly identical to the name of the firm where he’s the founder/CEO and largest shareholder. YOU. CAN’T. MAKE. THIS. S—. UP.”
Following a predictable backlash, Neumann ended up giving the money back to the company. WeWork described the situation in a Securities and Exchange Commission document filed earlier this month, “The issuance to We Holdings LLC of the partnership interests was unwound and the partnership interests were returned to the We Company Partnership,” the document said. “The We Company continues to hold all of the assigned rights to the ‘we’ family trademarks.”