UPDATED, Sept. 24, 2019, 5:04 p.m.: Adam Neumann stepped down Tuesday as WeWork’s CEO as the company moved to salvage a planned initial public offering — if not the company itself.
The chief executive’s exit concludes talks that began in recent days between Neumann and his company’s investors and board members. The Wall Street Journal first reported the news.
“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,” Neumann said in a statement. He will move into the role of non-executive chairman.
The removal of the eccentric Neumann — whose identity is entwined with that of WeWork’s — from the top post comes less than a decade after he founded the firm with Miguel McKelvey. Launched in Soho in 2010, WeWork now has locations in 111 cities and is the largest tenant in New York, Washington, D.C., central London and other locations. Earlier this year it rebranded as the We Company.
At the start of 2019, it received a $47 billion valuation from its largest investor, Japanese conglomerate SoftBank. But in recent weeks, botched plans for an IPO have caused that figure to plummet and raised questions about its viability. The company has leased space at a mind-boggling pace and must come up with tens of billions of dollars to keep it.
Artie Minson, the company’s CFO, and Sebastian Gunningham, its vice chairman, will replace Neumann as co-CEOs; the company said it will not search externally for a chief. In a statement the two executives said it is “an incredible honor to lead WeWork during this important moment in the company’s history.”
In recent days Neumann had faced a wave of pressure to resign — particularly from SoftBank, which has poured $10 billion into the office-space startup over the last few years. Chief among his opponents is SoftBank’s founder Masayoshi Son, who had previously been a champion of Neumann’s leadership. In its statement Tuesday, WeWork did not address SoftBank’s role in Neumann’s departure.
The company could make other drastic changes in coming weeks. WeWork executives have discussed with its lenders laying off up to one third of its workforce, or as many as 5,000 employees, according to the Information.
Bruce Dunlevie, who represents early investor Benchmark Capital on WeWork’s board, said in a statement that he is “thrilled to have Artie and Sebastian take the baton from Adam to lead the next phase of growth.” Benchmark, also an investor in Uber, was reportedly behind the push to oust CEO Travis Kalanick ahead of the ride-sharing startup’s IPO.
A recent Journal profile brought to light a litany of erratic behavior and proclamations by Neumann. Those reports followed a bungled plan for an IPO as investors were turned off by disclosures in the company’s prospectus. The startup’s S-1 filing with the U.S. Securities and Exchange Commission revealed that it faces massive losses and has issued huge loans to executives. Neumann alone had taken almost $1 billion in personal loans and credit lines from WeWork and its lenders. Minson, one of the two new co-CEOs, was also among those who borrowed millions from the company.
After criticism from investors and broader market, WeWork reduced Neumann’s voting power and said it would unwind a $5.9 million payment to him for the use of the “We” trademark.
Updated: This story has been updated to include further details of Neumann’s departure. It has also been updated to state that the company will not search for an external CEO.