How Adam Neumann Build WeWork, The Office Of The Future
WeWork is anything but a regular, old-school real estate company. With a community of over 400,000 users, the company offers working individuals and companies flexible office space we could only dream of a decade ago.
But how did WeWork rise from a single 3,000 square feet office in a vacant building in SoHo, to the biggest coworking company in the world, with locations in 123 cities around the world?
Founded in 2010, WeWork is the baby of the eccentric visionary and entrepreneur Adam Neumann and his friend and trained architect Miguel McKelvey - the duo that transformed office life and put the spotlight on the individual who wants to live more collectively.
Being a part of a community has been in our core since the beginning of humankind and Adam and Miguel recognized that and used it to make a big profit.
Oh, and they offered free unlimited beer for everyone while doing so!
Wanna know more? Read the entire story here:
Adam Neumann's Rough Childhood and How it Brought Him To New York City
Born in 1979 in Tel Aviv, Israel, Adam Neumann's parents divorced when he was just seven years old, causing him to move to the US along with his mom and sister. As a youngster, he was severely dyslexic, so he learned to read and write in third grade.
In 1990, the family returned to Israel to live on an Israeli kibbutz, one of the many collective community settlements in Israel. Adam often credits living in the kibbutz as the idea behind WeWork. Living near the Gaza Strip was anything but easy, but Adam managed to graduate from the Israeli Naval Academy and served in the military for 5 years.
He was discharged from the military with the rank of a captain, but he moved back to New York in 2001 to 'get a great job, have tons of fun and make a lot of money' - as he put it in a recent interview.
After 'clubbing every night and hitting on every girl in town', Neumann decided to enroll at Baruch College at the City University of New York in 2002.
This is when things started getting interesting.
An Office Building Party That Would Change Adam's Life
Adam got the idea of WeLive, a grouped rental apartment with shared spaces and services like cooking, cleaning, and laundry during college. He presented the WeLive idea in an entrepreneurship in-school competition. The professors liked the initial idea, but killed it in the second run of the competition, thinking Adam would never be able to change the way people live.
These comments didn't kill Adam's creative mindset - even boosting it!
Even though he was just a few points shy of graduating, Adam dropped out of college to dip his toes in the entrepreneurship world. He launched a children's clothing company named 'Krawlers', from the words 'knees' and 'crawling'. It turned out to be quite a success because later on, he renamed it to 'Egg Baby', the luxury baby clothing brand we know today.
Miguel's entrepreneurship history was slightly different. After graduating from the University of Oregon with a BS in architecture in 1999, he went to visit a friend in Tokyo, Japan. During his visit, Miguel founded 'English, baby!', a website and social network for students who wanted to create and take foreign-language online courses. He even had 25 employees - that was some casual visit to Tokyo, right?
However, Miguel's next move was New York - he moved to New York City to work at Jordan Parnass Digital Architecture, where he became the manager of international retail roll-out.
The two of them met at a party in the mid-2000s. Beyond the many things that connected the two, the crucial thing was their similar backgrounds and competitive mindset.
The interesting part?
Miguel's company shared the same office building with Adam's company, and this is the place where the two of them regularly met.
Green Desk: Adam and Miguel's First Real-Estate Company
As the two became friends, Miguel convinced Adam to move Egg Baby's offices to the same building he was working in Dumbo, Brooklyn. Adam often cites that he was misguided at the time, putting all of his energy into all the wrong places - that's why Miguel's guidance was crucial.
In 2008, the two brainstormed an idea for renting out empty office space to other companies and came up with the idea for Green Desk - a company that still exists today. Although he had never been in real estate, his real estate idea started to grow on Adam. One day, he saw a vacant warehouse on Water Street and instantly fell in love with it. When he approached the landlord and asked him for the building, he responded:
"You're in baby clothes. What do you know about real estate?"
Adam's response to that was: "Your building is empty. What do you know about real estate?"
The landlord saw that he met his match, he made a deal with Adam and the idea about the real-estate business was off to a great start!
However, Green Desk offered much more than the regular real-estate companies. Adam and Miguel also shared an interest in design and community cultivation. Their enthusiasm resulted in launching a company that offers sustainable co-working spaces, with a strikingly modern design, furniture made out of recycled materials, and green office supplies. Their idea of attracting customers (or members, as they called them) was to offer free unlimited coffee or beer.
Adam and Miguel divided the floors of the empty building into semi-communal offices and started renting them out to small startup companies and working individuals. The 'members' could rent out a 'hot' desk or a small office, month by month, and the duo would charge them a premium for that.
The benefits members had over leasing a space from a 'regular' real-estate company included high-speed internet access, fully furnished offices, and a stocked kitchen with healthy food - just what small companies and individuals need.
Additionally, the 2008 economic crisis helped Green Desk. The real-estate market failed, the economy was in an abyss, and many people that were laid off from their workplaces started new businesses out of Green Desk.
The Missing Piece In The Corporate World
Green Desk's success made Adam and Miguel have a eureka: wasn't sustainability that made people come to Green Desk, but the feeling that they're a part of a community.
The two co-founders realized that although the idea was profitable, Green Desk was focused on the eco-friendly part of a common office space business. The real profit came from creating a community that connects starting companies and freelancers and gives them the feeling of being a part of something big.
Something clicked between them, so in 2010, Adam and Miguel decided to sell their stake at Green Desk and start WeWork.
Even though their credit scores were low, they still had $300,000 in their bank accounts. While they didn't have a building, they managed to rent one floor of a building in New York's SoHo district on a trial basis. Adam credits the idea for a communal life to his time in Israeli's kibbutz, and he felt that the US corporate market lacks the warmth and closeness people have in Israel.
The initial idea for WeWork was to offer office rentals as a part of an ecosystem where members can also rent out apartments, have access to gyms, and even barbershops.
However, things didn't go as smoothly, and Adam and Miguel had to settle for just a 3,000 square foot tenant-style building in SoHo with creaky floorboards and exposed brick.
But they didn't make all this by themselves: real-estate developer Joel Schreiber partially funded WeWork with $15 million, which bought him 33% interest in the company. WeWork's flagship location in SoHo was an instant success and turned profitable just one month after it launched.
By 2012, WeWork opened in four more locations, which prompted top venture capital company Benchmark to invest $17 million. This only meant one thing: WeWork was turning into something big!
By 2014, WeWork had 1.5 million square feet of space, 10,000 members, and was considered 'the fastest-growing space lenders in America.'
The Infamous $47 Billion Company Value
From 2014 onwards, the company grew immensely! By the end of 2014, WeWork started operating in London, followed by other cities outside the US in 2015. Adam's initial college idea was coming to life: by 2016 WeWork introduced WeLive - a service that provides furnished tiny apartments.
The following year, 2017, was extremely good for The We Company. Adam announced a new service named WeGrow, which was a 'conscious entrepreneurial school' for young children, bought a building in New York City for $850 million and opened the first WeWork gym named 'Rise by We'.
With everything going smooth, Adam filed IPO paperwork for The We Company, WeWork's parent company, and announced the filing later in 2019.
Following the S-1 filing, the company was valued at $47 billion.
However, not everything was as great as it looked. The S-1 filing revealed that the company had been in spiraling losses over the last 3 years, and Adam volunteered to forgo a salary in 2018.
Just a month after the initial IPO filing, the company considered a valuation of about $10 billion, which was followed by a delay of WeWork's IPO. The board of The We Company considered Adam's management style to be to blame for the downfall of the company, so he stepped down as WeWork's CEO in September 2019.
The company began selling off businesses and laying off employees and started looking for investment lifelines. The biggest investor, Softbank, offered Neumann an exit package valued at $1.7 billion.
The future of WeWork might be uncertain, but one thing is for sure: Adam Neumann has become a billionaire by transforming something as basic as people's need to be a part of a community into a business!