Society for Case Research Spring Conference MBAA
Isaac Wanasika, University of Northern Colorado Tiina Brandt, Haaga-Helia University of Applied Sciences Keiko Krahnke, University of Northern Colorado
Adam Neumann: The Icarus Syndrome
By 2019, WeWork was the largest and most dynamic office leasing company worldwide. Adam Neumann, the co-founder, had reimagined the business model for office space rental business as a service. Neumann envisaged WeWork as a disruptive tech sharing platform like Uber and Airbnb. Neumann developed a value proposition to include complimentary services. These included CASE, a building analytics modeling firm; Flatiron coding school; Meetup, a group meeting platform; Managed by Q, a service provider platform; Rise by We, a wellness company; WeGrow, a children’s entrepreneurship school; and WeLive, an apartment rentals company with shared facilities. WeWork’s main founding investor was a Japanese conglomerate, Softbank Group Corporation. Prior to the IPO investment, Vision Fund, Softbank’s tech investment Fund, had invested more than $10 million in WeWork. At the helm of Vision Fund was the legendary contrarian investor, Masayoshi Son, simply known as Masa in Silicon Valley. Over the years, Masa had made large bold investments in tech startups. The fund’s strategy involved investing substantial amounts of cash in tech companies to rapidly scale them up and overwhelm competitors. In August 2019, WeWork filed its IPO paperwork. The document exposed perpetual financial losses. It also exposed ethical and governance issues, in addition to questionable strategic decisions that had been made by Neumann. Neumann’s stewardship of WeWork was characterized by self-dealing and opportunism. Softbank called for Neumann’s resignation. Following Neumann’s resignation, WeWork’s value shrunk from $47 billion to $7.5 billion.