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WeWork’s Adam Neumann to step down as chief executive

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WeWork co-founder Adam Neumann has agreed to step down as chief executive of the lossmaking property company after some of its biggest backers lost faith in the 40-year-old executive.

Mr Neumann has been named non-executive chairman. Sebastian Gunningham, the company’s vice-chair, and finance chief Artie Minson will take over as co-chief executives.

The fall from grace of Mr Neumann is a stunning reversal at the young, hyped venture-backed firm where the cult of the founder was once especially strong. It compares in recent years only to the toppling of Uber’s chief executive Travis Kalanick.

In a statement, Mr Neumann described his presence at the company as a “significant distraction”.

“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,” he said.

The reshuffle comes days after WeWork shelved its much anticipated initial public offering.

WeWork has been gripped by turmoil after the IPO was derailed and it was revealed that a bloc of directors was pushing for Mr Neumann’s demotion. SoftBank, WeWork’s largest outside investor, had pressured the group to delay its IPO after public investors refused to bankroll the company.

The frosty response from institutional investors that can make or break an IPO ultimately pushed WeWork to delay the listing, which put in doubt as much as $10bn of capital that it had expected to raise in the offering and a related loan package.

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Investors raised concerns over the company’s business model as well as the firm grip Mr Neumann had over WeWork and its operations. While the company sought to address those concerns ahead of its listing, and went so far as to reduce the power of Mr Neumann’s voting stock, investors said the reforms did not go far enough.

Mr Neumann, who earlier told employees he had been “humbled” by the aborted IPO, said in a statement: “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.”

He has agreed to further reductions in his power. His special voting shares, which had earlier held as much as 20 times the power as regular shares, will be cut down to 3 times the power, one person said. He will also only control a minority of the board appointments and will not have say over the make-up of board committees, they added.

A person who worked closely with the Israeli entrepreneur said that Mr Neumann’s outsized personality had been one of the major problems with getting WeWork in shape to become a publicly listed company sooner.

In Tuesday’s statement, WeWork board member Lew Frankfort said: “Adam is that very rare breed of entrepreneur who has the vision and drive to conceptualise an enormous business opportunity and then attack it relentlessly.”

Both Mr Frankfort and fellow director Bruce Dunlevie, a partner at Benchmark and early investor in WeWork, praised Messrs Minson and Gunningham as executives who would lead “the next phase of growth”.

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Mr Minson, 48, joined the company in 2015 as president before he was named chief financial officer a year later. He has been WeWork’s liaison to Wall Street as the company chartered its IPO, and was instrumental to the company’s negotiations with SoftBank.

Mr Gunningham, 57, has previously held positions at Amazon, Oracle and Apple and has been leading WeWork’s automation efforts since March 2018.

Mr Neumann joins a string of well-known multibillion-dollar start-up founders such as Apple’s Steve Jobs and Twitter’s Jack Dorsey to be ousted from the leadership of the company they started from scratch amid bruising disputes with key investors.

Via Financial Times

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