By Herbert Lash
NEW YORK (Reuters) - Adam Neumann showed he can capitalize on troubled times a decade ago, tapping into demand for workspace by those forced out of jobs in the aftermath of the financial crisis to grow WeWork into a global brand commanding a $47 billion valuation.
Yet his plans to take WeWork's corporate parent the We Company public have backfired, as his company becomes the poster child for a bubble in venture capital fundraising that has pushed some start-ups to unsustainable valuations.
The We Company is contemplating slashing its valuation to as low as $10 billion from the $47 billion billing clinched in a private fundraising round in January backed by Japan's SoftBank Group Corp, people familiar with the matter said on Friday.
The sharp drop comes amid investor criticism of widening losses and Neumann's firm grip on the company.
Neumann, 40, is under pressure to proceed with the initial public offering (IPO) to raise cash to keep WeWork's operations going. The New York-based company rents workspace to clients under short-term contracts, even though it pays rent for them itself under long-term leases.
It is by far the biggest crisis Neumann has faced in his career, after arriving in New York at the age of 22 following service in the Israeli military.
He failed in several ventures before selling his first co-working firm, Green Door, for $300,000 with business partner Miguel McKelvey a decade ago. Neumann and McKelvey used the proceeds from that sale to start WeWork, with its first customers coming to the lower Manhattan site just off Chinatown in February 2010, after seeing ads in Craigslist.
Community was a driving force behind the new venture, launched at a time when millions who had lost jobs during the 2008 financial crisis were looking for flexible work space.
"It quickly became apparent that people were ready for a new approach to work, not just their workspace," Neumann said in a blog post in 2016, marking the launch in Berlin of WeWork's 100th site.
Neumann's parents divorced when he was a boy and he moved 13 times as a child and adolescent, living awhile in Indianapolis where his mother, an oncologist, finished her medical residency. He has called his childhood challenging because of the moves.
They returned to Israel where he lived in kibbutz Nir Am, near the Gaza Strip, and later served in the Israeli military, which he says taught him to be something greater than himself.
Neumann's experience on a kibbutz and McKelvey's growing up in a five-mother commune in Oregon have been cited as a reason the pair hit it off. McKelvey is an architect with the title of chief culture officer at WeWork.