WeWork’s co-founder and chief executive officer Adam Neumann is expected to step down, according to a new report from The Wall Street Journal. WeWork’s vice chairman Sebastian Gunningham, as well as the company’s president & chief operating officer Artie Minson will serve as interim co-CEOs, The New York Times reports.
The eclectic executive has faced increasing pressure to relinquish his throne after another report from the WSJ highlighted his drug use and desires to become Israel’s prime minister, among other strange behaviors.
We’ve reached out to WeWork for comment.
SoftBank, the Japanese investor that has funneled billions into the star co-working business, is said to have encouraged — rather, enforced — Neumann’s reported transition out of the CEO role ahead of the company’s anticipated initial public offering. Per the WSJ, moving to the chairman seat would “allow [Neumann] to stay at the company he built into one of the country’s most valuable startups, but inject fresh leadership to pursue an IPO that would bring We the cash it needs to keep up its torrid growth.”
WeWork revealed its unusual IPO prospectus last month after raising more than $8 billion in equity and debt funding. The New York-based company had been valued at a whopping $47 billion, thanks largely to SoftBank’s repeated investments, despite financials that show losses of nearly $1 billion in the six months ending June 30.
Wall Street investors were skeptical of the eye-popping valuation, leading to reports WeWork would seek a valuation of below $20 billion, a magnificent defeat for one of the most valuable private companies in the world, and ultimately, causing the company to delay its float altogether.
To appease Wall Street, WeWork amended its S-1 filing to include the appointment of an independent lead director and its first female board member, Frances Frei. Additionally, the company decreased the strength of Class B and Class C shares so Neumann would not have 20 times the voting power of other shareholders, and removed Neumann’s wife from succession planning at the company.
The WeWork IPO saga draws many parallels to Uber’s pre-IPO struggles. Both companies were led, for years, by outspoken executives, Neumann and Travis Kalanick, respectively. Both men were ousted, in essence, by disgruntled board members.
Given WeWork’s struggle to complete a public listing and Uber’s disappointing performance on the public markets, perhaps private market investors will realize Silicon Valley’s pixie dust doesn’t carry the same weight on Wall Street.
