Boomerang CEOs: Buying Back Their Dead Startups
Steve Burns stood in a bankruptcy courtroom watching strangers bid on the electric truck company he’d built. Lordstown Motors,
Steve Burns stood in a bankruptcy courtroom watching strangers bid on the electric truck company he’d built. Lordstown Motors, once valued at $1.6 billion, was being sold for parts. The highest bid: $10.2 million. Burns won. The buyer was LAS Capital, a company he controlled. The boomerang CEO had just bought back his failed startup for less than 1% of its peak value.
He’s not alone. Adam Neumann tried to buy WeWork out of bankruptcy for $650 million, a company once valued at $47 billion. Alexander Hjertström bought his Swedish air purifier startup Airinum from its bankruptcy trustee. The former CEO of EV startup Canoo is doing the same thing right now. These boomerang CEOs are turning career suicide into legitimate business strategy.
The New Math of Failure
The economics are simple. A startup worth $100 million to investors might be worth zero to them after missing growth targets. But to a founder who can run it lean, that same company generating $30,000 monthly revenue is a solid business.
The legal framework makes it possible. In bankruptcy proceedings, trustees must sell assets to the highest bidder. When no one else wants the whole package, founders often face little competition. They know the technology better than anyone, which patents matter. They know which employees to rehire.
Take Lordstown Motors. When the company filed for bankruptcy in 2023, it had delivered only 37 trucks. It owed millions to suppliers. The production cost exceeded the retail price. No sane investor wanted it. But Burns saw $145 million in assets, a complete truck platform, and relationships with government clients including NASA. His winning bid of $10.2 million barely covered wind-down expenses.
The WeWork Attempt
Adam Neumann showed everyone how to try, though he hasn’t succeeded yet. After being ousted from WeWork in 2019 with a $445 million exit package, he watched his company spiral toward bankruptcy. In 2024, he tried to buy it back.
He offered $650 million, then promised to beat any competing offer by 10%. He claimed to have financing from hedge fund Third Point, which Third Point denied. The bankruptcy judge ruled his bid didn’t address WeWork’s $4 billion debt load.
But Neumann’s attempt revealed the boomerang CEO psychology. In a statement, he said WeWork was “failing to take advantage of a product that is more relevant today than ever before.” Translation: I built this thing, I understand it better than you, and I can fix what you broke.
He’s already moved on to Flow, his new $1 billion real estate startup backed by Andreessen Horowitz. The company is quietly developing properties in Miami. Industry insiders say Flow will either “compete or partner” with WeWork.
The Swedish Success Story
Alexander Hjertström’s journey with Airinum shows how it works when it works. The air purifier startup hit the pandemic jackpot in 2020, generating $122.5 million in revenue with $28 million profit. By 2021, revenue had crashed to $80 million with a $30.6 million loss. By 2023, it was bankrupt.
Hjertström spent two months working with the bankruptcy trustee. When interested parties only wanted pieces, he assembled a proposal to buy everything for “minimal costs.” He brought in two former board members and two key employees as co-investors.
“There were eight years of hard work, sweat, and tears behind it,” Hjertström said. The new company launched with revenue between $6-10 million in its first partial year. Not the pandemic heights, but profitable. He convinced most suppliers to continue working with him, though some demanded shorter payment terms.
The Uncomfortable Truth
The rise of boomerang CEOs reveals something important about Silicon Valley: most venture-backed startups are perfectly good businesses destroyed by impossible expectations. The technology works. The customers exist. The revenue flows. But growing 10x year-over-year forever isn’t possible, so the company dies.
By buying assets out of bankruptcy, founders eliminate the venture capital stack that made the original business impossible. Consider a typical failed startup that raised $50 million at a $200 million valuation. Investors own preferred shares with liquidation preferences. The company needs to sell for at least $50 million just for investors to break even.
Post-bankruptcy, the same company has no venture debt, no preferred shares, no liquidation preferences. A founder can buy it for $1 million and run it profitably at $50,000 monthly revenue. What was a venture-scale failure becomes a lifestyle business success.
Steve Burns made $66 million selling Lordstown stock before it collapsed. He bought the assets back for $10.2 million. Even if LandX Motors only breaks even, he’s ahead $56 million. The boomerang CEO model isn’t about saving companies. It’s about arbitraging the gap between venture expectations and business reality.
The Backlash
Not everyone sees boomerang CEOs as innovative. Critics call it failure rewarded. The SEC went after Burns even after his buyback, settling fraud charges for $175,000 and banning him from serving as a public company officer for two years. He’d sold shares for $66 million based on inflated claims, then bought the company back for $10 million after it crashed.
The most striking pattern among boomerang CEOs: they rehire their old teams. At LandX Motors, 13 of 16 employees previously worked at Lordstown. The same team that crashed one startup reassembles to try again with the same technology, the same vision, sometimes even the same name. The only thing that changes is the capital structure.
Investors are adding “non-buyback” clauses to founder agreements. Some venture firms blacklist boomerang CEOs entirely. But the model keeps spreading. Investment firms now specialize in buying failed startup assets. Some founders are planning for boomerangs from day one, structuring companies to fail fast and buy back cheap.
Looking Forward
The boomerang CEO model works best for complex technical products where founders have unique knowledge, B2B companies with existing customers, and hardware startups where equipment represents real value. It doesn’t work for cash-burning marketplaces or software companies where engineers have scattered.
Every failed startup is now a potential comeback story. Every bankruptcy is a buying opportunity. Founders who crashes a company is one loan away from owning it again.
The only question is whether they’ll build something better the second time around. History suggests they won’t. But at these prices, they don’t need to.
