The CEO of WeWork, Adam Neumann, has left his position as CEO. Neumann’s departure from the position comes after the company’s plans to go public has been scrapped.
WeWork is a New York-based startup company that has built a network of 212 shared working spaces worldwide.
Neumann has also found himself embroiled in various issues such as his alleged drug use and other bizarre behavior.
He will be replaced by vice-chairman Sebastian Gunningham and chief financial officer Artie Minson. According to the company, the new co-CEOS will remain in their roles permanently. Neumann, on the other hand, will become the non-executive chairman of the company.
In a statement, Neumann said: “As co-founder of WeWork, I am so proud of this team and the incredible company that we have built over the last decade. Our global platform now spans 111 cities in 29 countries, serving more than 527,000 members each day. While our business has never been stronger, in recent weeks, the scrutiny directed toward me has become a significant distraction, and I have decided that it is in the best interest of the company to step down as chief executive. Thank you to my colleagues, our members, our landlord partners, and our investors for continuing to believe in this great business.”
Apart from leaving the CEO position, Neumann’s voting shares have been reduced in power. Neumann is the largest individual stakeholder of WeWork with about 115 million shares which gave him a lot of control in the company. However, since his power has been lessened, it went from 10:1 to 3:1. This means that he will no longer have majority voting control in the company.
Neumann is not the only one leaving his position in the company. His wife, Rebekah Neumann, has also left her position. She was the co-founder and CEO of WeWork’s conscious entrepreneurial school, WeGrow.
Before her most recent positions, Rebekah Neumann was also the chief impact officer and chief brand officer of WeWork.
Adam Neumann has been facing mounting pressure to step down after the company’s initial valuation of about $47 billion was reduced to less than $15 billion. This has led to the postponement of the planned initial public offering of WeWork has been delayed.
Despite the delay, the company said that it would still push through with its plans to go public this year. If WeWork does not want to risk losing the $3 billion raised in the offering and the $6 billion credit facility with banks like J.P. Morgan, it has to complete the deal before it expires on December 31.
The funds are crucial because they are needed to support the continued operations of the company. In the first six months of 2019 alone, WeWork has lost more than $900 million.
Before Neumann resigned, a former board member at Goldman Sachs, Exxon, Novartis and Target, Bill George said: “WeWork should postpone its IPO indefinitely until it can restructure its governance.”
“Adam Neumann should give up some control to return WeWork to a more normal governance structure, and likely this will mean a CEO change. He should listen to Masa Son, who is one of his major financiers and very sharp – and very powerful,” added George.
In a report, the alleged removal of Neumann from power was led by SoftBank CEO, Masayoshi Son. In January, Softbank invested $2 billion into WeWork.
Son has always been a champion for Neumann. However, the relationship has turned sour reportedly because of Softbank’s continued frustration over Neumann’s frequent brushoff, moving forward with the IPO, using phrases that he was asked to remove from WeWork’s S-1, and many other instances.