Shared workspace company WeWork founder Adam Neumann may have been ousted as CEO and disgraced but every move he makes, business or personal, still puts him in the media spotlight. A recent example of this was his investment and partnership with Israeli car sharing service GoTo Global, which made headlines in Israel and worldwide.
The media enthusiasm was inevitable - the founder of of shared workspaces and shared homes in WeLive had completed the puzzle with his involvement in shared transport.
Neumann was recently in Israel for five months with his wife Rebekah and five children, and an entourage of assistants, agents, childcare staff. During that time, Neumann himself held business meetings with startups and companies in a range of areas. "He is currently involved in no less than 15 startups," said one source close to him.
It is not only Israeli shared economy companies that attract Neumann. In the past he invested in a company that generated artificial waves for people practicing surfing, his own sporting hobby, and in EquityBee, which has developed a platform to connect employees with equity options in startups and investors. At the start of the year he invested in gaming company Moon Active, which has developed the popular casual game Coin Master. Neumann has a family connection to the founder and CEO - Samuel Albin, the son of Galia Albin, happens to be his cousin.
According to reports in the US, in between making investments, Neumann has also been helping President Trump's son-in-law Jared Kushnir produce a movie about the potential economic changes in Gaza and the West Bank as part of the Deal of the Century launched last year in Bahrain. On top of all that he has also been involved with Israeli soccer team Hapoel Petah Tikva.
Neumann was reportedly persuaded to become a sponsor of the soccer team by former player Avi Yehiel, who recently became the club's CEO. Yehiel happens to be married to Neumann's sister the model Adi Neumann. Until recently Adi Neumann lived in New York and Avi Yehiel was a WeWork employee.
Of course Neumann is also deeply involved in his lawsuit against SoftBank, which he filed in the US in April against the principle investor in WeWork for backing out of its plans. Last year SoftBank had been planning to take control of WeWork by offering to buy $3 billion worth of shares from existing shareholders. Neumann had been planning to sells shares as part of this plan for $970 million and receive a compensation package of $1.7 billion.
Puzzling spiritual matters
Until a year ago, Neumann was considered to be a miracle maker. WeWork, which he had founded in 2010, was set for an IPO at a huge company valuation of $47 billion. But then the company's financial reports were revealed, showing the alongside global expansion and fast-growing revenue, the losses were laso growing. Between January and June 2019, the company reported operational losses of $1.3 billion, double the loss for the corresponding period of 2018.
Furthermore, problematic aspects of Neumann's financial behavior were published. He had preferential shares and was involved in party at interest deals. For example, the company rented from him four properties (out of the 528 that it was operating) and in 218 alone he received $1.61 million for leasing them. Rights for the We brand had been acquired from a company controlled by Neumann for $5.9 million (Neumann returned the money after criticism on the matter). He had also taken hundreds of millions of dollars in loans and credit from the company.
Some of Neumann's puzzling spiritual beliefs were also revealed. The prospectus for WeWork's IPO opened with the declaration, "We dedicate the prospectus to the energy of the company - greater than each one of us but within each one of us." Another unusual clause made a link between Neumann's preferential voting rights and his commitment to donate $1 billion to charity over a decade. Apparent a worthwhile move but whoever delved deeper into the matter quickly found that his preferential rights were worth a great deal more.
All this wasn't so surprising for those who understood the spiritual element in Neumann's life. As part of his spiritual search, he devoted a lot of his life, even before he founded WeWork, to studying Torah and Kabbalah, and this was how he met his wife Rebekah.
His mother Dr. Avivit Neumann-Orbach, an oncologist at Haifa's Rambam Hospital, recalled when interviewed on Radio FM103 last year, "The first time I saw him lay tefilin I was shocked and he was very insulted. But I respect his connection to religion."
If all this was not enough the "Wall Street Journal" reported last September about Neumann the party animal, fueled by tequila, his favorite drink, and how he liked to smoke cannabis on the company's private jet.
This unconventional behavior was linked to WeWork's growing losses. These losses would have been acceptable if WeWork was a tech company as it had been branded but more and more people came to see it as a real estate company, simply renting space on long term leases and leasing it out for a profit on shorter term leases. Neumann's genius had also been to brand its tenants as a 'community' with 500,000 members around the world in over 100 cities. This gave WeWork a kind of halo and boosted its valuation.
But after WeWork published its financial report, its value fell towards the anticipated IPO. When the valuation fell as low as $8 billion everything came to a halt and the IPO was cancelled. SoftBank, the biggest investor, pulled the rug out from beneath Neumann and ousted him. He was not given major compensation and that matter is now going through the courts.
Compensation aside, Neumann, once the rising star saw his reputation torn into tatters. His mother told 'Calcalist' that when everything was doing well for Adam Neumann he was a little celebrity but after his fall he became a big celebrity. She said, "He attended events and the wives of billionaires wanted to take selfies with him. He told me that nobody loved him as much as they did until after his fall."
Three months after his 'fall' in November 2019, Neumann left New York with his wife and children. His wife Rebekah (a cousin of US actress Gwyneth Paltrow) is a partner to Neumann's vision and is officially one of the cofounders of WeWork. She also founded WeGrow, a network of entrepreneurial schools, and another brand in the We empire.
"The New York Post" reported that Neumann had 'escaped' New York to get away from the 'negative energy. The local media reported that Adam and Rebekah Neuman simply took their kids out of school and left. One of his friends said, "he thought the media was down on him and he wanted to get himself and his family far away until the noise died down."
At first the family flew to Costa Rica where, according to reports, Neumann spent his time surfing. After that they came to Israel. His mother told the media they were only coming here for a short while. "To come back to where you were born for a time-out is the right thing. People embrace him here and make him feel good. I'm certainly glad that my grandchildren are near and I go to play with them."
On arrival the family lived on Chelouche Street in Tel Aviv's Neve Tzedek neighborhood. Neumann rented the house under a friend's name and not his own. He stayed there for a couple of months and checked out buying a home in the area. During the day he held meetings with businesspeople and representatives of philanthropic funds seeking donations, in offices that he rented in Rothschild Boulevard -not in a WeWork office building.
But the 250 square meter house in Neve Tzedek was too small for five children and a large entourage with Adam Neumann busy all day. The children had no friends and did not know Tel Aviv.
So the family moved to a much bigger house in Arsuf north of Herzliya. The Neumanns rented a 500 square meter penthouse in an apartment block, designed by the architect Asaf Gottesman on a cliff 100 meters from the sea. The rent was NIS 100,000 per month and Neumann liked the place so much he even considered buying it.
But in the spring the Neumanns suddenly upped and left for the US. Onme of the neighbors said that during the Covid-19 lockdown they found it difficult to stay at home with small children and their staff. Rebekah was cut off from her family and life was difficult. Others say that Adam Neumann was eager to get back to the US to conduct his lawsuit against SoftBank.
One Israeli acquaintance says that Neumann still feels he has much to contribute to the world. "What interests him is to do things that have an impact and that have social significance. He very much believes that there will be profound changes in social habits that will require other needs. In that field he feels that he has an advantage over others because he knows the subject well because of the geographic deployment of WeWork and its target population. He believes that he has a lot to contribute to the new economic era that is coming. Social gaps is an issue that has always bothered him a lot and he is focusing on the topic of remote learning and the future world of housing."
Another acquaintance claims that Neumann acknowledges that he made a mistake with WeLive. "He wanted to bring the kibbutz to the city." Neumann grew up on a kibbutz and thinks it is a community with many good things that he tried to copy. So his model included relatively small living areas for tenants and large public shared areas. But in retrospect he discovered that young people less like the idea of a kibbutz in the city and are more enamored of the original idea of a kibbutz in the countryside. In the era of Covid-19, wanting to leave the city has become even more marked.
It was these same principles of shared living that brought Neumann to invest in GoTo Global, which offers shared transport - bikes, motorbikes, scooters and cars - in 12 Israeli cities using one app. Neumann has invested $10 million for a 33% stake.
Neumann was born in Yerucham in the Negev and after his parents divorced he moved with his mother and sister to Indianapolis in the US. They returned to Israel and settled on Kibbutz Nir-Am near the Gaza strip where Neumann spent his teenage years. He served in the Israel Navy and then joined his sister in New York where they set up several businesses selling baby clothes and beach towels and more.
In Brooklyn he met and became close friends with Michael McKelvey. The pair became close friends and soon founded WeWork.
Neumann's vision for We Work may have gone off the rails but back in the US after recharging his batteries in Israel, it is unlikely that we have heard the last of him.
Published by Globes, Israel business news - en.globes.co.il - on August 3, 2020 © Copyright of Globes Publisher Itonut (1983) Ltd. 2020