& # 39; A giant question mark & ​​# 39 ;: Can WeWork & # 39; s Adam Neumann reassure investors? | business

"We dedicate this to the power to us – greater than any of us, but inside each of us," the prospectus for office-sharing company WeWork announces its upcoming stock sale.

On Monday, co-founder Adam Neumann will begin trying to sell that vision to potential investors. The signs are not good.

After years of hype, Neumann's plan to become one of the world's richest entrepreneurs on the back of a 22% stake in WeWork, now known as We Company, has been severely hit. The value of the company has been cut from $ 47bn to as low as $ 15bn. Even their main investor, the Japanese, Saudi Arabian SoftBank, has reportedly argued against pushing ahead with the sale, a delay that threatens a $ 6 billion loan needed to fund an aggressive global expansion of the brand.

Neumann's dream of building a multi-billion dollar worldwide real estate company based on the trust and community spirit of "we" and the vision "to raise the consciousness of the world".

Stock sales come as investors become increasingly skeptical of profit-free tech, or technology-related, companies that have built their businesses on piles of Silicon Valley cash.

These investors have been fueled by offers from ridesharing companies Uber and Lyft and seen as Neumann, whose first quarrel for entrepreneurship was a collapsible high heel for women and a baby romper with reinforced knees, has marketed the "we" concept with an evangelism that often turns into faux-spiritualism.

To believe in "we" investors, we must overlook $ 3 billion losses over the past three years and hold on to a belief in Neumann, whose nearly complete control of We through a two-class equity structure gives investors cause for concern .

But Neumann lacks nothing if not self-confidence.

Forty years old, 6ft 5in tall and sporting a mane with dark hair, Neumann grew up on an Israeli kibbutz and moved to New York in 2001 to "have fun and make a lot of money" when he told a commencement ceremony at the college where he met his wife, Rebekah, née Rebekah Paltrow, sister of actress Gwyneth.

Any confusion about the extent of Neumann's ambition was put to rest earlier this year when he told New York Magazine that WeWork's size and scope could help it tackle some of the world's biggest problems, including migration and refugees .

"I need to have the greatest valuation I can, because when countries shoot at each ot her, I want them to come to me," he said.

Much of Wey's new age spiritualism seems to come from his wife. Rebekah Neumann introduced him to Kabbalah, the esoteric Jewish faith once followed by Madonna. Rebekah Neumann has said when she met Neumann that he was too thin and smoked too many cigarettes. She asked him to ditch the suitcases from poorly adapted rompers and stop talking about money. "We are going to talk about well-being, happiness, fulfillment, and if the money is to follow, they will," she told him.

And it has, to a degree that has worried some investors and corporate governance experts. Part of investors' concern for WeWork is the unusually large amount Neumann has already withdrawn from the company – $ 700 million – in a series of unorthodox personal loans, real estate contracts and stock sales ahead of the initial public offering (IPO). [19659002] Neumann also owns at least four buildings that he rents to WeWork, thus collecting $ 20 million in rent from his own company. And WeWork still owes Neumann an incredible $ 236.6 million in "future undiscounted minimum rental payments".

Until last month, when an attempt to reassure potential investors caused a rethink, he also raised $ 7.9ma a year to lease the brand "we" to the company.

Further, WeWork's IPO prospectus explicitly warned investors: “Adam's voting control will limit the ability of other shareholders to influence the activities of the business, and as a result we can take measures that shareholders other than Adam do not consider beneficial. "

In other words, if you don't like it, get lost.

"The disclosures have pulled behind this pristine brand image and undermined investor confidence," said Eric Schiffer, CEO of investment firm Patriarch. "Given the prospect of losing $ 6 billion, they would be crazy not to move forward, and quickly."

The Wall Street Journal reported Friday that we were taking steps to reassure investors. The company tells investors it will reduce the power of Neumann's voting rights to 10 votes a share from 20 votes per share and eliminate the role his wife would serve in electing Neumann's successor if he cannot serve.

The question that investors are now is whether they buy the idea that Neumann is a visionary like Elon Musk or Mark Zuckerberg. For Schiffer, the answer is no. “Musk has a proven track record; Neumann's story doesn't show that. He had an idea that might prove successful, but that's a big question mark. ”

There is no doubt that Neumann has had an impact on office rent. His idea was to rent real estate on long-term leases, package it with some millennial styling (beer taps, lots of plants and cool sofas) and rent it out in the short term. Started in 2010 from a single building in New York's Grand Street, Neumann found that it was a clear army of backpacking, portable, ear-budgeted young urban professionals who needed a place to drink coffee, work with startups, network and bring in partners.

As of June 30, WeWork reported that it has 527,000 members and 528 locations, up from 485 in March, and said it plans to open 169 new locations. In London, it owns or rents more places than any company except the government. Larger companies (including the Guardian) are now leasing WeWork space.

Of course, Adam and Rebekah Neumann are not dumb enough to rent. They own an impressive array of properties, including a townhouse in New York's West Village.

But like many so-called "unicorns", private companies valued at more than $ 1 billion, the only way to survive is to expand. There is no guarantee that WeWork will ever achieve profitability, as stated in the prospectus. Investors are worried, especially as the company's expansion is focused on China, an unknown amount at the best of times, and especially now, potentially heading into a global recession and when competitors are copying many of their moves.

The unfolding drama has already hit Neumann's fortunes. At one point, some WeWork value as a listed company soon estimated $ 65 billion by valuing Neumann's stake at $ 14 billion.

At that $ 15 billion valuation that looks more likely, Neumann's stake would be worth $ 3 billion – not enough for a listing on the 500-member Bloomberg Billionaires Index – but still not bad for a decade of work.

Over the next few weeks, Neumann and We Company will see how their neo-utopian vision aligns with the harsh realities of the public market. "We are captivated by the unlimited potential of Vi," Neumann said recently.

Wall Street seems less secure.