Most companies have a business model. WeWork had a "vibe."
Adam Neumann (the founder) didn't just rent office space. He sold "community." He sold "elevation of the world's consciousness." He also sold $10 billion worth of smoke and mirrors to SoftBank.
Community Adjusted EBITDA
This is my favorite financial metric of all time. "EBITDA" means "Earnings Before Interest, Taxes, Depreciation, and Amortization." It's a standard way to measure profit.
Neumann invented "Community Adjusted EBITDA." This effectively meant: "Our profit, if you ignore all the costs of marketing, administration, and actually running the buildings."
(Narrator: By this metric, my lemonade stand is more profitable than Apple.)
The Fall
The IPO filing was a disaster. It revealed that Neumann was charging the company rent for buildings he owned personally. It revealed he trademarked the word "We" and sold it to the company for $5.9 million.
The delusion was so strong it shattered reality. The valuation went from $47 billion to bankruptcy.
Conclusion
WeWork was the ultimate "Emperor Has No Clothes" moment for Silicon Valley. Just because a founder has long hair, walks barefoot, and talks about changing the world doesn't mean they have a specialized tech product.
Sometimes, they're just a landlord with a really good font choice.
