In January 2019, WeWork was worth 47 billion dollars on paper. In September of that same year, founder Adam Neumann was removed from leadership. In November 2023, the company filed for Chapter 11 bankruptcy protection in the United States, with 15 billion in assets and 18.6 billion in debt. It is the best-documented case of someone losing their own company, and the mechanism is always the same.
No one is fired for making mistakes. They're fired for losing control of the board
A founder doesn't lose their position because the company posted a loss. They lose it when whoever holds voting power stops believing they are the best person to lead. In WeWork's case, the exact moment came during preparation for the IPO, when mandatory disclosure documents made public what had previously only circulated internally:
- A loss of 1.6 billion dollars in 2018, double the previous year, with no clear path to reverse it.
- Dealings between the founder and his own company: he leased properties he owned to WeWork, and even received payment for use of the "We" trademark when the company changed its name. The payment was reversed after it became public.
- A governance structure that gave him disproportionate voting power, which unsettles investors rather than reassuring them.
SoftBank, the main investor, had already grown frustrated with decisions made unilaterally. The public offering was withdrawn, the founder stepped down, and the investor took control.
The epilogue matters
The company survived the founder, but not the business model: leasing buildings on long-term contracts and subleasing them on short-term contracts breaks down when demand falls. The bankruptcy filing came four years after his departure.
Neumann tried to buy back the company during the proceedings, with an offer of around 500 million dollars, and was turned down: creditors preferred a deal worth around 450 million that gave them a stake in the restructured company. In other words, he lost the company twice, and the second time had nothing to do with his behavior.
What this teaches a small company
The scale is different, but the mechanism is identical. Three things bring down the founder of a small company, and none of them is a lack of technical skill:
- Mixing the company's cash with your own. Leasing property to your own company, paying personal expenses through the company's tax ID, charging for use of the brand. As long as you're the only one watching, it looks like organization. Once a partner, investor, or heir comes in, it becomes a conflict of interest.
- Not writing down who decides what. Without a shareholders' agreement, the rule shows up during the first dispute, and by then it's too late.
- Confusing the company with yourself. When the business depends entirely on the founder, they become irreplaceable and fragile at the same time, because any pushback turns into a personal matter.
Prevention is tedious and cheap: keep accounts separate, have a written shareholders' agreement, document important decisions, and keep what's yours in your own name — domain, accounts, and data. It's the same point about who controls what that comes up in who owns Google. Having your own system and your own address, instead of depending on a third party's account, is part of that, and it's covered in custom software development.
Frequently asked questions
Why was Adam Neumann forced out of WeWork?
He was pushed aside in September 2019, while the company was preparing to go public, when the mandatory filings revealed a 1.6 billion dollar loss in 2018, his personal business dealings with the company itself, and a governance structure that gave him outsized voting power. Investors lost confidence, and control shifted to SoftBank.
What happened to WeWork afterward?
The company survived its founder's exit, but not the underlying model of signing long-term leases on buildings and subletting them on short-term contracts. In November 2023 it filed for Chapter 11 bankruptcy in the United States, with 15 billion dollars in assets and 18.6 billion in debt.
Did Adam Neumann try to buy WeWork back?
Yes. During the bankruptcy proceedings he put forward an offer worth around 500 million dollars, which was turned down. Creditors instead went with a roughly 450 million dollar deal that secured them a stake in the restructured company.
How can a small business owner avoid losing control of their own company?
By keeping business and personal finances separate, drafting a partnership agreement that spells out who decides what before the first disagreement, documenting key decisions as they're made, and keeping company assets — the domain, ad accounts, social profiles, and databases — registered in the company's own name rather than a personal one.