WeWork CEO Adam Neumann has agreed to step down as CEO of the fast-growing shared office space company amid pressure from the company’s board of directors, according to reports from the New York Times and the Wall Street Journal.
WeWork’s board of directors had become increasingly concerned about the company’s low valuation and investors’ confidence in the CEO, after the company essentially botched its initial public offering and canceled its pre-IPO roadshow to court institutional investors. WeWork had sold shares privately in January under a valuation of $47 billion, but it was forced to reduce its valuation to as low as $15 billion as the IPO approached.
Update 2 p.m. EST: WeWork has now confirmed the reports.
Neumann will become a nonexecutive chairman of WeWork’s parent company, the We Company.
WeWork has named two current executives, Sebastian Gunningham and Artie Minson, as permanent co-CEOs, a WeWork spokesperson told Fast Company.
“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,” Neumann said in a statement Tuesday. “Thank you to my colleagues, our members, our landlord partners, and our investors for continuing to believe in this great business.”
Neumann may be the classic example of the charismatic evangelist CEO who is the wrong fit for a company entering its second act. Potential WeWork investors may prefer a more experienced and traditional chief executive to guide the company past the rapid growth stage and into profitability.
Aside from the fact that WeWork isn’t likely to reach profitability anytime soon, a recent Wall Street Journal profile contained facts that may have given investors even more pause about the CEO. Neumann reportedly:
- Went “zipping across the Atlantic Ocean in a Gulfstream G650 private jet with friends last summer, smoking marijuana.”
- Expressed interest in becoming prime minister of his native Israel
- Considered running for “president of the world”
- Wants to live forever
- Told employees that one day the company could end world hunger
- Once banned consumption of meat at WeWork (he later clarified that WeWork employees couldn’t expense meals with meat but could eat meat in the office, and he later was seen eating meat himself)
Neumann’s professional judgment and ethics have also been a subject of concern. He changed the company’s name from WeWork to The We Company, then charged the company $5.9 million for use of the “We” trademark, which he owned via a separate entity. Neumann and the company later reversed the move after the information came to light. Neumann has continually insisted that WeWork is an “internet company,” not just a shared workspace business.
Still, Neumann, after cofounding WeWork in 2010, took the company global and now has 528 workspaces in 111 cities in 29 countries and plays host to more than 500,000 members, according to the company’s IPO prospectus.
The company reported that its revenue increased to $1.8 billion in 2018 from $886 million the prior year, but also that its net loss more than doubled to $1.9 billion in the same period.
Update: An earlier version of this story echoed the NYT’s reporting that WeWork had appointed Gunningham and Minson as “interim” CEOs. They are permanent CEOs, the company clarifies.