Adam Neumann, WeWork’s beleaguered cofounder and CEO, is stepping down.
Neumann's leadership has come under fire in recent weeks after coworking space company We Co.'s bid to go public was postponed as the company's valuation plummeted. He will stay in leadership as nonexecutive chairman of the board.
He will be replaced by two co-CEOs: Artie Minson, formerly the company’s copresident and chief financial officer, and Sebastian Gunningham, who was vice chairman.
The news was reported by the Wall Street Journal on Tuesday and was later confirmed by the company.
We Co. was valued at $47 billion as recently as January, according to Pitchbook. It publicly filed for an IPO in August, though the plan was delayed after investors expressed skepticism about the company's valuation and concerns arose about Neumann's leadership.
In a news release, Neumann said that the scrutiny directed toward him “had become a significant distraction” and that it was in the company’s best interest for him to step down.
Neumann's departure casts the future of We Co. in doubt. In its IPO prospectus, the company said its success "depends in large part on the continued service of Adam Neumann."
“If Adam does not continue to serve as our chief executive officer, it could have a material adverse effect on our business,” the company wrote.
Still, the 40-year-old Neumann has been a controversial figure for the company, in part due to proclivities like walking around the office barefoot and making alcohol a big piece of the start-up’s culture, according to reporting by the Wall Street Journal. Goals include becoming a trillionaire, establishing WeWork on Mars and even becoming “president of the world,” the Wall Street Journal reported.
Neumann has majority voting rights, as well as the power to fire WeWork's board. His risky practices of borrowing against his stock, as well as holding stakes in companies that lease to WeWork, has resulted in worries about potentially problematic self dealings.
WeWork paid Neumann nearly $6 million for his trademark rights to the word "We" before he returned the money, according to company filings. We Co.'s prospectus contains the word "Adam" 169 times.
“Adam is a unique leader who has proven he can simultaneously wear the hats of visionary, operator and innovator, while thriving as a community and culture creator,” according to a company filing with the SEC. “Given his deep involvement in all aspects of the growth of our company, Adam’s personal dealings have evolved across a number of direct and indirect transactions and relationships with the company.”
Since its founding, WeWork has raised more than $12 billion in funding but has never turned a profit. It burned through $2 billion last year, according to its prospectus. Multiple outlets recently reported that some board members had lost confidence in Neumann and were contemplating his removal.