The Strategist

WeWork founder is leaving the company

09/25/2019 - 09:30

Co-founder of WeWork, Adam Neumann, agreed to resign as CEO of the company. Members of the board of directors demanded his resignation after WeWork postponed initial offering of shares due to weak interest of investors.

Adam Neumann, co-founder of WeWork, resigned as CEO of the company and will continue to work in it as a non-executive head of the board of directors. This was reported in WeWork’s press release.

“Although our business has never been more powerful, careful attention directed at me in recent weeks has become a significant distraction, and I decided to resign as CEO,” Neumann said.

The positions of the co-directors of the company will be taken by its financial director Artie Minson and the former vice chairman of its board of directors Sebastian Gunningham. They thanked Neumann for "the vision and passion with which he approached WeWork in the last 9 years."

In January, WeWork was valued at $ 47 billion. Only Uber could boast the largest estimate among U.S. startups preparing for an IPO. The largest investor in the coworking network is the Japanese company SoftBank, which through its Vision Fund has already invested or promised to invest a total of $ 10.7 billion in WeWork. However, in preparation for the listing, WeWork's rating was first lowered to $ 20 billion, and then went even lower. Last week, FT reported that investment banks JPMorgan Chase and Goldman Sachs began to ask investors their willingness to invest based on a valuation of $ 15–18 billion. Reuters wrote about a possible reduction in valuation to $ 10–12 billion. As a result, WeWork postponed the initial offering of its shares.

After that, the company "was in a state of confusion," and some members of the WeWork board of directors indicated the need for Neumann to leave, writes the Financial Times. The Wall Street Journal reported that, in particular, SoftBank representatives advocated for this. Investors voiced concern about Neumann's chosen business model and the power he has in the company, FT emphasizes. In addition, The Wall Street Journal, which earlier told about the corporate culture of WeWork, added fuel to the fire. In particular, the newspaper, citing sources, wrote that alcohol was part of this corporate culture, staff reductions were noted in violent parties, and Neumann somehow smuggled marijuana into Israel.


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