How WeWork paid Adam Neumann $5.9 million to use the name 'We'

Adam Neumann

Adam Neumann

• One of the most draw-dropping transactions revealed in WeWork's S-1 filing involved a $5.9 million payment made to another company controlled by WeWork's CEO.
• We paid Neumann's other company $5.9 million worth of securities in order to own and use the name "We."
• One tech finance pundit, NYU Professor Scott Galloway, has skewered the company over this transaction.
• Read all of BI's WeWork coverage here.

As we previously reported, WeWork's founder Adam Neumann has not only locked up tight control of the company, now known as We, he has found myriad ways of extracting millions of dollars from it in stock, cash, loans, and other assets.

One of the most draw-dropping transactions revealed in the company's S-1 paperwork filed last week is this: his company paid him millions to own its own name.

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More specifically, in July 2019, just before sharing its financials to the public as part of its IPO process, the company reorganized into what it calls an "UP-C" structure, which renamed the company "We."

When that happened, the newly named We paid Neumann's private company, called We Holdings LLC, $5.9 million worth of "partnership interests" to acquire the trademark of "We." The S-1 says the value of this trademark was "determined pursuant to a third-party appraisal."

However, the S-1 doesn't say why the board thought that Neumann's other company owned the trademark in the first place. After all, the name of his private company, We Holdings, was derived from the name of the original company, WeWork. And it's not an unrelated entity.

We Holdings acts as a holding company for the Class B shares owned by Neumann and his cofounder, and Miguel McKelvey.

Read: Here's who gets rich if WeWork has a successful IPO

Those Class B shares carry 20 votes per share over the main company, We. That's a high number of votes, even by Silicon Valley standards where so called "super voting" shares are typically 10 votes per share.

In Neumann's case, his shares have 20 times the voting power over all others. And it's worth pointing out, too, that Neumann controls all the votes attached to all the Class B shares, even if he doesn't actually own the shares themselves, the S-1 says through various footnotes.

He also controls all the votes attached to the 20-votes-per share Class C shares, whether or not he owns those shares directly. They are controlled by another related company in this UP-C structure, called "We Company Partnership" which, interestingly, also uses "We" in its name.

So it's not an exaggeration to say that a company controlled by Neumann paid another company controlled by Neumann $5.9 million to use the word "We" used by both of them, and by others in their family of related companies.

NYU professor Scott Galloway wrote about this $5.9 transaction, in his analysis of the company which he called "WeWTF" where he advised straight out: "don't buy this stock."

Galloway wrote, "Adam also owned the rights to the 'We' trademark, which the firm decided they must own and paid the founder/CEO $5.9 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. SH*T. UP."

We, the company, declined comment.

Are you a WeWork insider with insight to share? We want to hear it. jbort@businessinsider.com, DMs on Twitter @Julie188 or on Signal.