- This comes just days after The Wall Street Journal said shareholders were in favour of ousting him as CEO
- Neumann was subjected to pressure from board members linked to significant investor SoftBank
- The losses of the company have ballooned as it has spent enormous amounts on leasing and refurbishing its sites
Adam Neumann, co-founder and chief executive of WeWork, has stepped down as CEO and will serve as the board’s non-executive chairman, the firm revealed in a press release on Tuesday following a Wall Street Journal report.
Sebastian Gunningham, vice president of WeWork, and Artie Minson, president and chief operating officer of the company, will serve as co-CEOs.
As WeWork’s co-founder, I’m so proud of this team and the amazing business we’ve constructed over the past decade,” Neumann said in a press release. “While our business has never been stronger, the scrutiny aimed at me has become a major distraction in recent weeks, and I’ve decided it’s in the company’s best interest to step down as chief executive.”
Neumann’s resignation arrives just days after The Wall Street Journal said shareholders were in favour of ousting him as CEO, including SoftBank CEO Masayoshi Son, its biggest investor company.
Ultimately, Mr Neumann, who controlled a majority of the shareholder votes, decided to step down. But he did so after losing some of his main backers’ assistance, including SoftBank, the Japanese technology giant, the largest outside investor of WeWork.
Last Monday, WeWork shelved plans for its initial public offering to the earliest of next month owing to investor worries about its company model, valuation and governance standards, allowing Neumann’s shares to have twenty times the voting authority of normal shareholders.
Before this announcement, Neumann was subjected to pressure from board members linked to significant investor SoftBank as per individuals with an understanding of the issue.
Neumann also encountered Jamie Dimon, CEO of JPMorgan Chase, on September 22. Dimon is the company’s lead underwriter for the IPO, and the meeting weighed on Neumann’s choice to step down, said the sources.
He has come under scrutiny as the head of the fast-growing company for perceived self-dealing. WeWork revealed in its prospectus to go public that it had rented from companies in which Neumann “had or had a substantial stake in the property.”
“Since the announcement of our I.P.O., too much of the focus has been placed on me,” he said in a note to employees.
Earlier, Adam Neumann turned WeWork into one of the world’s most valuable startups mainly by the strength of his outsize character. He convinced investors to offer him billions of dollars and staff to think the shared-office business was changing the world.
The office-space provider in January achieved a $47 billion valuation, but that could fall to as low as $10 billion when the company wished to go public earlier this month.
WeWork is now considering a sharp slowdown in development. According to one individual briefed on the issue, it could lay off as many as 5,000 staff. As of June 30, according to its regulatory filings, it hired more than 12,500 staff.
The losses of the company have ballooned as it has spent enormous amounts on leasing and refurbishing its sites. Its working losses averaged $1.37 billion in the first half of the year, about twice as much as he lost last year in the same era. WeWork is losing $219,000 every hour of every day. The firm used almost $1.5 billion to operate its business and grow in the first half of the year, and at the end of June, it had just under $2.5 billion in cash.
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