In the beginning there was Adam Neumann.
Now, WeWork is facing a future without its energetic leader — who raised billions and opened hundreds of office-space locations, but ultimately led the company astray.
“I had so much respect for him when I got there,” said one former executive. “And I had zero when I left.”
The bitter sentiment is shared by many. In recent years, Neumann’s behavior — which included smoking marijuana on an international flight and expressing a desire to become the world’s first trillionaire — became a constant blight on a business many WeWork employees believed in.
In interviews with The Real Deal, eight current and former WeWork executives described a circle of top staff around Neumann who enabled his actions and feared running afoul of the charismatic CEO. Those criticisms extend to a board accused of being complicit in allowing Neumann to take total control of the company and appeased Neumann’s worst management instincts rather than impose strict corporate standards.
“We were making workspace accessible to people and helping people create business,” said a former executive, who, like others, spoke on the condition of anonymity because they have signed non-disclosure agreements. “But there were a lot of distractions.”
Among the most concerning disclosures involved Neumann’s purchase of buildings financed with loans from WeWork, which he later leased back to the company. Others included taking out almost $1 billion in loans and cashing out stock options, and a $5.9 million payment to Neumann for providing WeWork with the right to use the word “we.”
One executive said Neumann was “no financial guru” yet “surrounded himself with yes people.” Until this week, he had majority voting power.
“They created the monster,” the executive said.
A spokesperson for Neumann and his wife, Rebekah Neumann, said the couple “want nothing more for the company than to succeed. They are going to let management do its job, they are not going to be in the way.” WeWork declined to comment.
Neumann’s removal as CEO Tuesday was a stunning blow for one of the world’s most-hyped startups, which has seen its reported value plunge by at least two-thirds from its once lofty $47 billion. Alongside co-founder Miguel McKelvey, the 40-year-old Israeli opened the firm’s first workspace in Soho in 2010 and has since raised $12 billion to scale the company. It has locations in 111 cities and is the largest tenant in New York, central London, Washington, D.C., and other markets.
The company has postponed its IPO indefinitely as its new leadership seeks to reassure investors that can survive forthcoming huge losses and eventually be profitable.
“Neumann’s energy and style was critical,” said one executive. “It’s what allowed the company — even its good parts — to be what it was.”
But his removal came to be seen as necessary for the public offering to succeed. In announcing Neumann’s demotion to non-executive chairman, the firm said CFO Artie Minson and Sebastian Gunningham, a vice chairman, would become co-CEOs. However, those who worked alongside them said the pair were among the people who tolerated Neumann’s poor corporate practices.
“Artie was supposed to be the adult,” one executive said of Minson, who joined WeWork after leaving his post as deputy CFO at Time Warner. Another said he was Neumann’s “biggest enabler.”
Given Minson’s track record of corporate success, his lack of intervention surprised some executives. They ascribed it to his desire to keep his job and not fall out of line with Neumann.
“It’s a company of survival,” said one person.
One person defended Minson, saying the chief financial officer had in fact crossed Neumann on multiple occasions and “paid a price for it.” One such episode led to Minson’s shift from COO to CFO, according to the person, who added, “Adam runs very hot and cold on people, and then finds a new shiny object.”
But Minson and other executives who remain at the company benefited greatly from relationships with Neumann. Minson received multimillion-dollar loans, not to mention a $600,000 loan that was forgiven (other loans have been repaid). Board member Lew Frankfort and COO Jen Berrent also received millions of dollars in loans, company documents show.
Former executives also cast blame on WeWork’s largest investor, SoftBank, whose CEO Masayoshi Son formed a tight bond with Neumann but ultimately pushed for his ouster.
“Providing Adam with a lot of money and then blaming him for not spending it in the way they thought he should is not fair,” said one former executive. “What did they think was going to happen?”
It was Neumann’s image as a loose cannon and visionary leader that attracted exorbitant investments in the first place, in particular from Son, who once told Neumann he was not being “crazy enough.”
In fact, Neumann’s ambition knew few limits. He often said WeWork’s office space was merely the beginning, akin to Amazon’s book sales and Google’s search bar, said the executives. But his attempts to expand WeWork into other offerings — wave pools, co-living and food companies — failed or proved to be distractions. Few have generated much revenue.
Neumann’s wife Rebekah, who stepped away Tuesday from her position as chief brand officer, contributed to the tension in management decisions, the executives said. In addition to launching an elementary school, WeGrow, Rebekah was later given the title co-founder, and reportedly pushed out the former chief brand officer, SoulCycle co-founder Julie Rice earlier this year.
More recently, it was upon Rebekah’s insistence that the company’s IPO prospectus declared “we dedicate this to the energy of we — greater than any one of us but inside each of us.” The bizarre inclusion to a traditional regulatory filing unsettled some of the executives.
Tuesday’s announcement marked the beginning of WeWork’s attempt to reshape a narrative that had become decidedly negative. In statements, its new co-CEOs spoke of a “new journey.” Board member Frankfort said he was “thrilled” about the “new phase” of the company.
Other changes at the company could include an end to WeWork’s notorious party culture, which has included multi-day outdoor festivals to daily happy hours. (One executive recalled an office party where a glass wall in Neumann’s office was smashed.)
Another issue is a human resources department in disarray. One executive recalled waiting weeks before getting administrative staff; others said they worked without a title for extended periods.
What WeWork’s next chapter will look like remains to be seen. Early reports point to mass layoffs, possibly in the thousands, and the shuttering of secondary business lines.
With Neumann as non-executive chairman of a board overseeing two internal CEOs, and without plans to search for a single chief from outside the company, hope is faint that much will change at WeWork, the former executives said.
One source said that the company in the next few days expects to lay off executives who were seen to be Neumann’s “enablers,” including those who were aware of his more erratic behavior. The source would not provide more details.
Some former executives remain bitter about what they see as a self-absorbed leader and compliant followers costing WeWork a chance to finish reshaping the commercial office industry.
“I don’t know why anyone was paying him for the word ‘we,’” said one. “The only word he knew was ‘I.’”