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home Gossip The Saga Continues-Adam Neumann Is Reportedly Suing SoftBank Group For The Reported Loss Of $3 Billion

The Saga Continues-Adam Neumann Is Reportedly Suing SoftBank Group For The Reported Loss Of $3 Billion

Published Mon Apr 27 2020 By Hendrix
The Saga Continues-Adam Neumann Is Reportedly Suing SoftBank Group For The Reported Loss Of $3 Billion

Various tabloids and news outlets are reporting that WeWork’s ex-CEO Adam Neumann plans to sue Softbank, an investor in his former company, who, according to Neumann, went back on a $3 billion share deal. 

Adam Neumann co-founded WeWork with Miguel McKelvey in 2010; the company was supposed to provide workspaces to companies. The model on which the business was based on was, and its subsequent execution of said model was heavily criticized.

But in spite of all the criticism and raised eyebrows, the company at one time was valued at a staggering $47 Billion (Summer 2019).

The journey from the start of the company to its $47 billion valuations to the downfall is a story in itself, but what led Neumann to sue Softbank, read all the details below.

Why Is Adam Neumann Reportedly Suing Softbank?

Adam Neumann was the co-founder and CEO of the company until that is, he had to resign due to mounting pressure from investors and board members on September 24, 2019. Adam was offered a whopping $1.7 billion to resign.

Adam Neumann is reportedly suing WeWork investor SoftBank
Adam Neumann is reportedly suing WeWork investor SoftBank

Image Source: Pinterest

One of the biggest investors in WeWork was SoftBank, a company owned by SoftBank Group based in Tokyo. The company invested in WeWork in 2017, raising the valuation of the company in the year to $20 billion.

The company had funded WeWork investments from its vision fund, which had over $100 billion of money to be invested in new start-ups.

The founder of Softbank Masayoshi Son granted the investment to Adam after a meeting between the two. The meeting also started a business partnership between Adam and Son.

After Neumann’s resignation and SoftBank promised to buy back $3 billion in shares. But the investor reneged on its promise, which caused a huge loss for the board members and Adam.

Adam lost the opportunity to sell as much as $970 million to SoftBank after it pulled back on its deal.

SoftBank: A Short Background

SoftBank Group, at one time, was listed as the 36th biggest publicly traded company in the world and the second-biggest publicly-traded company in Japan after Toyota.

Masayoshi Son is the founder of SoftBank Group
Masayoshi Son is the founder of SoftBank Group 

Image Source: Al Jazeera 

The parent group of SoftBank Corp., SoftBank Group’s net income in 2019, was 13,539,380,800 (¥1.45 trillion). The investments of the company have been huge and mostly in the start-up space.

The Fall Of WeWork

The main attributing factor, as laid out by many tabloids, is the selfish way in which the leaders of the company did business.

The curve showing the valuation of WeWork valuation
The curve showing the valuation of WeWork valuation

Image Source: The Street

An example of this fact would be when Adam Neumann trademarked the word ‘we’ and later sold it to his own company for $5.9 million (shareholders’ and investors’ money was used to pay him).

Adding to this, the reckless way in which the company spent its investors’ money was also a huge contributing factor for the downfall. It was also revealed that the company had been valued 13 times more than another company IWG (International Workplace Group).

International Workplace Group was a company that outperformed WeWork in almost all metrics. IWG had more square footage and better revenue but had a vastly inferior valuation.

Neumann also faced lawsuits due to his personal conduct with shareholder money. Natalie Sojka, an investor, filed a lawsuit against him.

Adam Neumann's Net Worth In 2020

Like the fall of his company, the worth of Neumann has also taken a huge hit. According to Business Insider, he was worth around $14 billion at one time.

In early 2019, the total assets of Adam were valued at $4.1 billion, and he was amongst the richest people in the world.

Then his worth fell to $600 million in October 2019. Similarly, the ex-CEO of WeWork has an estimated net worth of around $450 Million in 2020. The decline of his total assets is in part due to the failure of his company.

After SoftBank pulled back their $3 billion deal to save the dying company, Neumann potentially lost out on $970 million, which also contributed to the stark decrease in his net worth from $14 billion to $450 million.

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