How WeWork Became the Most Valuable Startup in NYC.

Adam Neumann is the CEO of super-hot office rental company WeWork, the most valuable startup in New York City. This year WeWork ranked third on our Silicon Alley 100 list.

WeWork, which has raised $969 million in funding at a $10 billion valuation, is the 11th most valuable startup in the world.

But Neumann, who was born in Israel and moved to the US in 2001 after serving as a navy officer in the Israeli military, had an interesting venture before he launched WeWork.

“Before I started WeWork, I owned a baby clothing company based in Dumbo, Brooklyn,” he tells Business Insider. The company, called Krawlers, sold clothes with padded knees for crawling babies. “We were working in the same building as my co-founder Miguel McKelvey, a lead architect at a small firm. At the time, I was misguided and putting my energy into all the wrong places.”

McKelvey and Neumann saw that the building they both worked in was partially vacant, and they got the idea to open a coworking space for other entrepreneurs. After a lot of convincing of their landlord, McKelvey and Neumann opened the first floor of a startup called Green Desk in 2008 — an early incarnation of the company that would eventually become WeWork. The focus of the company was sustainable coworking spaces featuring recycled furniture and electricity that came from wind power.

Green Desk quickly took off. But Neumann and McKelvey eventually sold the business to their landlord Joshua Guttman. “Within a week we realized that being green should be a part of anything we do, but community is really the future of work,” Neumann told Business Insider. The two founders knew they had a good concept. They pocketed “a few million” from selling Green Desk, according to The Real Deal, and founded and launched WeWork.

WeWork in its current iteration opened its doors to New York City entrepreneurs in April 2011. Since then, the company has expanded to cities across the country, and recently opened its doors globally too. WeWork’s coworking spaces give entrepreneurs space to work, and come equipped with amenities like free beer, stocked fridges, and Foosball tables.

In total, WeWork has 54 coworking spaces in New York, Boston, Philadelphia, Washington DC, Miami, Chicago, Austin, Berkeley, San Francisco, Los Angeles, Portland, and Seattle, with additional international locations in London and Amsterdam, along with new locations in Tel Aviv and Herzliya in Israel.

wework Soho West
WeWork’s Soho West office

WeWork’s 30,000 clients range from startups — Business Insider uses a WeWork space out in San Francisco — to big companies like Merck and American Express. Individuals can also buy packages starting at $45 and rent a desk for a day.

WeWork has its its critics. It recently settled a dispute over its custodial services. And though WeWork became profitable as of this summer, some skeptics believe its financials may not support its valuation, suggesting it could be part of a new technology bubble. And there are basic concerns about the sustainability of its business model. WeWork, of course, is an alternative to real estate companies for freelancers and companies. And the real estate business can be risky.

One argument against WeWork goes something like this: Lots of startups make up WeWork’s client base, so if there’s a downturn in the market, and it becomes difficult for startups to raise funding, WeWork might have trouble staying profitable — its clients wouldn’t be able to pay the rent.

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