Rp. 733 trillion startup goes bankrupt, this is the fate of its founder

Jakarta, CNBC Indonesia – A start-up company, namely the co-working space company WeWork, has officially closed down. However, the company’s bankruptcy did not make its founder, Adam Neumann, also bankrupt.

In fact, Adam Neuman, according to CNBC International, is the central figure behind the rapid growth and collapse of WeWork.

WeWork, which Neumann founded in 2010, was once a startup favored by investors and reached a valuation of US$ 47 billion (Rp. 733 trillion) in 2019. Now, when it filed for bankruptcy, the company’s valuation was “only” US$ 45 million (Rp. 702 billion).

Neumann resigned in September 2019 after governance problems at WeWorks were exposed during its IPO process. It turns out that the CEO often enriches himself in strange ways, such as giving himself company shares worth US$ 6 million to pay for copyright, said We.

Various reports also described Neumann’s unusual management style, including a culture of debauchery. Ultimately, WeWork’s IPO failed.

However, Neumann is not like other startup founders whose wealth evaporates along with the valuation of the company they founded. This 44 year old man is actually accumulating wealth ahead of WeWork’s transformation into a public company.

After failing at its IPO, WeWork underwent a merger process with a SPAC, which is a shell company established as an entry point for companies that want to go public.

As part of the merger, SoftBank reportedly gave Neumann US$ 480 million (around Rp. 7.5 trillion) to buy half of all his shares. Neumann received this payment after he took SoftBank to court because the startup investor canceled plans to buy all of Neumann’s WeWork shares at a price of US$ 1 billion (Rp. 15.62 trillion).

“It’s very hard for me, just watching from a distance, WeWork’s failure to take advantage of a product that is actually very relevant today,” said Neumann, quoted Saturday (18/11/2023).

Neumann also received US$ 185 million (Rp. 2.9 trillion) as part of a non-competition clause (which prohibits Neumann from negotiating with other potential buyers) and US$ 106 million (Rp. 1.6 trillion) as part of an outside lawsuit settlement. court.

In total, despite being kicked out of WeWork years earlier, Nuemann earned US$ 770 million (Rp. 12 trillion) during the merger process.

Apart from that, Neumann still has shares in WeWork whose value is estimated to reach US$ 722 (Rp. 11.29 trillion) when WeWork goes public.

After WeWork went bankrupt, the remaining shares were worth zero. However, it is possible that Neumann has already sold his remaining WeWork shares.

“As the founder of WeWork who spent a decade building a business with extraordinary people, the news of this bankruptcy is disappointing. It is very difficult for me, only to be able to watch from afar, WeWork’s failure to capitalize on a product that is so relevant today. I believe, “with the right team and strategy, a reorganization can make WeWork successful again,” Neumann said in a statement to CNBC International.

Now, Neumann is busy with his new startup which is also involved in the real estate sector, called Flow. The company, which has reached a valuation of US$ 1 billion, has the ambition to “find solutions to inequality in the home rental market by creating a community atmosphere and helping renters build assets through your home.”

Flow reportedly now has 3,000 residential units in various cities in the United States. According to CNBC International, Flow’s business model remains unclear but appears to be a replica of the co-working business model that WeWork pioneered in the residential market.

In an interview with CNBC International, Neumann stated that Flow is another form of a similar story [dengan WeWork]. “When people live in a community, when people live together, when there are differences, there is always common ground,” Neumann said.

(fsd/fsd)