WeWork: The Devastating Fall of A $47 Billion Unicorn

In 2019, the curtains were pulled back on the most valuable startup in the United States: WeWork. And the truth rocked the investment world. Once valued at $47 billion, WeWork was in fact nothing but a glorified real estate company – one that was losing more than $1.6 billion a year. The question is, how did some of the world’s biggest investors get blindsided by the startup? Why did it take so long for the company to go public? And how did WeWork’s hard-partying CEO, Adam Neumann, get away with it all? In this video, we’ll look at the medley of factors that led to the company's astounding rise and fall.

Architect Miguel McKelvey met Adam Neumann at a rooftop party in New York City in 2006. Shirtless, loud, and speaking in an Israeli accent, Neumann stood out from the crowd, to say the least.

The two men struck up a friendship – and a few months later, Neumann sought McKelvey’s advice on finding an affordable space for his baby-clothes business. McKelvey suggested the building he worked in, 68 Jay Street.

Once Neumann had moved in, it became clear that he wasn’t really interested in children’s clothing. His real mission, above all, was to get rich. Before long, he’d roped McKelvey into his quest.

The key message here is: With nothing more than a pitch, Adam Neumann and Miguel McKelvey created a company worth $45 million.

McKelvey was often a sounding board for Neumann’s business ideas. One of these, while not totally original, had the potential to be very profitable: Neumann wanted to rent ready-to-use office space to technology companies. The kicker was that tenants would pay more for fully equipped, flexible offices than they would for standard office space, and Neumann would pack the offices tightly together to maximize profit. McKelvey was sold – and together, the two men pitched the idea to their landlords at 68 Jay Street.

It wasn’t difficult to convince them. Brooklyn was full of entrepreneurs and small companies looking for flexible office solutions, and the Great Recession of 2008 meant that even big companies like banks were looking to downsize when it came to office space. The landlords joined the scheme as partners, offering Neumann and McKelvey a floor in one of their buildings, a former pipe factory. McKelvey worked on the floor plan, business plan, and website – and in 2008, GreenDesk was born.

Yet Neumann was already looking to the future. In 2009, he and McKelvey sold their stakes in GreenDesk to the landlords for $500,000 each. They then got to work expanding their concept, searching for space they could rent and slice up to create small offices. Before they’d even finished securing the funds for their first building, they were already on the hunt for new investors for further spaces.

This led them to real estate developer Joel Schreiber. Although they didn’t yet have a single customer, Neumann and McKelvey told Schreiber that WeWork was worth $45 million. Incredibly, Schreiber not only decided to invest in the company – he didn’t even bother to negotiate! He agreed to invest $15 million in exchange for a one-third stake in the company.

It was more money than the two entrepreneurs had ever seen.

When Adam Neumann and Miguel McKelvey launched their real estate business in Brooklyn, the world was still lurching into the Great Recession – a time when large firms were emptying out their massive offices, while tech startups flourished. As WeWork rented spaces to these startups, Neumann used salesmanship and tech-inspired branding to attract the same bold investors that were funding his tenants. By 2019, Neumann’s obsession with growth had led WeWork to become the most valuable startup in the US – but as he continued to ignore the importance of profits, he saw his empire crumble within the very same year.

This wework documentary is based on The Cult of We: WeWork, Adam Neumann, and the Great Startup Delusion book by Eliot Brown and Maureen Farrell and WeWork: Or the Making and Breaking of a $47 Billion Unicorn documentary.

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