Premium

12 of the most bizarre revelations we found in WeWork's float prospectus

WeWork
Adam Neumann, co-founder and chief executive officer of WeWork Credit: VCG

Office rental company WeWork has long been criticised by some for appearing almost cult-like, and its float prospectus is unlikely to change that. 

The fascinating and convoluted document, which landed on Wednesday, revealed huge losses and rapid growth as it plans for its stock market debut next month.

But it also revealed much more, including the bizarre status of its founder Adam Neumann, the role of his wife, who is also a cousin of Gwyneth Paltrow, and its plans to open private schools. Here are 12 things that caught our eye: 

'The energy of We'

The document contains a strange message just two pages in: “We dedicate this to the energy of we — greater than any of us, but inside each of us.”

It also states that its goal is to “elevate the world's consciousness," and its use of the word “community” a total of 150 times.

The language was quickly mocked on Twitter, with one user writing: “Three sentences into WeWork's 'our story' section of its IPO filings and I have no idea what it does.”

Adam Neumann's status as the ultimate leader

WeWork’s description of Neumann, its co-founder and chief executive, stops short of claiming he can walk on water, but only just: “Adam is a unique leader who has proven he can simultaneously wear the hats of visionary, operator and innovator, while thriving as a community and culture creator,” it says. That’s a lot of headgear.

It has a byzantine ownership structure

This makes hard to know exactly what shareholders will be owning. At the top is The We Company, which investors will buy into, underneath is The We Company MC, We Company Partnership and various WeWork companies and overseas holdings and a separate ARK property business. All of this has been dubbed an “umbrella corporate partnership”, which comes with reported tax benefits.

WeWork gave its founder loans as it paid him rent

WeWork has unusual arrangements that it spells out in its filing. First, its chief executive and founder, Adam Neumann, owns a number of properties the company lets out, which WeWork admits could be a “conflict of interest”. 

Despite, WeWork made cash payments to landlord entities affiliated with Neumann totaling $4.2 million, it also gave him loans. 

In 2016, Neumann borrowed $7 million from WeWork at a annual interest rate of 0.64pc. 

This was just one of several times Neumann borrowed company money. “From time to time over the past several years, we made loans directly to Adam or his affiliated entities,” WeWork wrote in the filing.  It’s not clear from the filing why these transactions happened.

Make of this what you can Credit: WeWork

It may never make any money

In its filing, WeWork says that it may be “unable to achieve profitability at a company level for the foreseeable future” - not a reassuring statement, given it also admits its average income per tenant is falling.

WeWork does not employ its CEO

WeWork’s filing says the company has “no employment agreement in place with Adam”, raising the spectre that the boss could simply walk at any time if he grows tired of the company or pursues one of his many other interests, such as surfing. 

Its founder's wife gets to pick his successor

If Neumann dies, then his wife will play a key role in choosing his successor. Rebekah Neumann will be part of a two or three person selection committee with other board members. The firm suggested two existing board members in its filings, but Neumann could choose alternative board members if those named aren’t available.

His wife is a 'co-founder' who has 'never been paid a salary'

It is not surprising that Rebekah would get a say in the next CEO, though. As well as Adam’s so-called “thought partner”, the filings list Rebekah as a co-founder of the business, as well as chief brand and impact officer. However, it turns out, Rebekah, who is a trained yoga teacher, has never been paid a salary by WeWork. 

It has plans to open its own private schools 

The company also runs a business called WeGrow, which plans to set up private “elementary schools” for children aged between 5 and 10.

It says such schools will be “focused on supporting the growth of children’s minds, bodies and souls through an integrated curriculum,'' adding that education “should not be limited to traditional options”. It only has one school so far, in New York, equipped with tree houses and vertical farms, and where children practice “mindful eating” and “intention setting”. 

The chief executive gave his firm the trademarks for “We” in a $5.9m deal

When WeWork announced in January that it had rebranded to the We Company, the company was keen to get its hands on the trademarks for “We.” Luckily, WeWork’s chief executive already owned those trademarks through one of his companies, We Holdings LLC. So WeWork cut a $5.9m deal with Neumann’s company in order to get its hands on the trademarks in return for shares in other WeWork group company.

If you're in any doubt who controls We Holdings LLC, the document also explains that: “Adam Neumann has sole voting power over all of the shares held by WE Holdings LLC.”

Adam and Rebekah have to give $1bn to charity or lose half their voting rights

WeWork’s husband and wife co-founders are so dedicated to giving $1bn to charity that they’ve introduced an agreement in the company’s filing that will halve the voting power of the company’s highest voting shares if they fail to give $1bn within 10 years. The filing also includes a photograph of part of a tropical forest on its final page. WeWork’s co-founders claim to have already saved this specific region through their previous charitable donations.

Some of the rainforest WeWork has saved Credit: WeWork

We is a tech company

WeWork wants you to know it is not just a company loaning out office space or a boring old property developer. It is all about the tech, that does something, somewhere, apparently. In fact, WeWork uses the word “tech” 123 times in its prospectus. Office, meanwhile, is used just 58 times.