As I was scrolling across the universe (or at least the Internet) for stories to riff on, I came across news on one of the genuine heroes of modern business. Adam Neumann.
A Wall Street Journal story this week reveals the deposed WeWork founder has quietly been amassing a residential rental property empire with about $1 billion. And he is reportedly doing so with the intention to “shake up” the residential rental-housing market.
Shaken, Not Deterred?
The article offered few details on how Adam plans to shake things up. But we have an inkling of how it will go.
Some people don’t need an office all of the time. But they do need an office some of the time. So instead of leasing a full office for a year at a time or more, why not lease just the amount of space you need at an office for just the amount of time you need it? Maybe it’s an hour, a day, a week, a month, or a year.
If this model works for offices, why not for apartments? Maybe it will be something akin to WeWork meets Airbnb. Where cool urban dwellers get the nomadic flexibility they cannot find with the traditional apartment leasing model.
And if this is the plan, the fact that he appears to be using his own assets is a departure from the WeWork model. WeWork took on annual lease obligations for commercial properties and then sold them off fractionally. And they usually did so on month-to-month terms. So it took on more risk than it was passing on to its customers. This was one of the more widely criticized features of the WeWork business model.
WeWork’s “fake it til you make it” ethos and cult-ish business culture were prominently featured in last year’s hard-hitting Hulu documentary. And they no doubt contributed to WeWork’s downfall. But ultimately it was a bad business model that did the company in. To be fair, WeWork still exists. But it has dramatically restructured itself under new, more sober leadership.
We’ve been hard on Adam here in the past. Let’s face it, he made a pretty easy target. He was an almost cartoonish poster boy for hustle culture. But it must be noted that he appears to have done some soul searching since 2019. That’s when he walked away from WeWork in disgrace and with almost a billion dollars in his pocket.
Speaking at New York Times DealBook Summit in November, Neumann acknowledged WeWork’s grandiosity to some degree and that his ego may ultimately have gotten in the way.
“We had a fun culture, but first let’s start with the fact we built a global brand and in over 110 cities in over 40 countries,” Neumann said at the conference. “We became a household name. So that culture had a lot of things that worked really well. …. But there also comes a moment where you grow out of that to the next stage. I think that could have happened sooner.”
He also admitted that WeWork’s peak $47 billion valuation “went to my head.”
Granted, these acknowledgments were soft-pedaled a bit. But Neumann still deserves some credit for making them. We don’t imagine Travis Kalanick or Elizabeth Holmes would be caught dead admitting to any human frailty unless it was part of a plea bargain.
Let’s see if this humility helps produce a better outcome for Neumann’s latest venture. But one problem from the get-go is that many believe Neumann shouldn’t have walked away so rich from a company that imploded under his leadership. This may lead many to see anything he invests in as the fruit of a poisonous tree. We’ll see how much these moral objections really matter if his apartments play takes off.