When WeWork filed to go public earlier this year, we learned an incredible detail about its cofounder Adam Neumann: He was paid a whopping $US5.9 million ($8.7 million) by the company he runs for use of the word “we.”
The logic was laid out as such: Ahead of its initial-public-offering filing, WeWork reorganised and rebranded as The We Company. To rebrand itself around the word “We,” the company paid its own CEO $US5.9 million for trademark rights as Neumann owned the rights to the ‘We’ trademark.
The transaction was handled through a private company that Neumann is a managing member of, We Holdings LLC, which owned the trademark rights to the word “we.” Moreover, WeWork characterised the nearly $US6 million payment as “fair market value.”
In his analysis of the company following its IPO filing, the New York University marketing professor Scott Galloway characterised the situation as such:
“Adam also owned the rights to the ‘We’ trademark, which the firm decided they must own and paid the founder/CEO $US5.9 million for the rights. The rights to a name nearly identical to the name of the firm where he’s the founder/CEO and largest shareholder. YOU. CAN’T. MAKE. THIS. S—. UP.”
On Wednesday, in a newly filed Securities and Exchange Commission document, WeWork walked back that arrangement.
“The issuance to We Holdings LLC of the partnership interests was unwound and the partnership interests were returned to the We Company Partnership,” the document said. “The We Company continues to hold all of the assigned rights to the ‘we’ family trademarks.”
Put more simply: WeWork retrieved the $US5.9 million it paid to Neumann and retained the trademark rights to the word “we.”
Moreover, the filing said the return of the $US5.9 million and retaining of rights was done “at Adam’s direction.” Neumann continues to serve as CEO of The We Company.
It comes with WeWork’s initial public offering shaping up to be not quite as spectacular as first thought.
The New York-based startup is considering seeking a valuation of about $US20 billion to $US30 billion in the IPO, people with knowledge of the matter told Bloomberg. The range could end up closer to $US20 billion, said one of the people, which would be less than half the valuation it secured from its biggest backer just a few months ago.
This story first appeared in Business Insider. Read it here!