September 24, 2019
When WeWork, the office-space startup renamed We Company, was valued at $47 billion, skeptics expressed concern that, in 2018, it lost $1.6 billion on revenues of $1.82 billion. Still, many stuck with co-founder/chief executive Adam Neumann. But when We Company faced its IPO, more concerns were voiced about its business model and profit potential. After mulling over reducing its valuation by half, WeWork postponed the IPO. Now, said sources, some board members and investors are discussing the ouster of Neumann.
The Wall Street Journal reports that, in an earlier article, it revealed “new details about unusual personal deals Neumann had cut with the company” as well as the fact that he “smokes marijuana on private jets, aspires to become a trillionaire, wants to live forever and would like to serve as president of the world.”
The 40-year old Neumann is “by all accounts an exceptional salesman,” and WSJ describes his appeal to investors by comparing him to the “wildly ambitious” Henry Ford who “also harbored some bold, utopian, and sometimes abhorrent, views about how the world worked and how people ought to live.” In the process, Ford “roughly doubled the basic pay for his workers to $5 a day … [and] capped the company workweek at five days and 40 hours.”
Now, according to Gallup polls, having a rewarding job is no longer last on the list of what workers want: “it’s climbed to the top.” “Modern workers,” says WSJ, “aren’t just content to be happy at home … they want work to be fulfilling, too.” Silicon Valley startups were the first to answer that need.
Neumann, WSJ adds, is “different from most young CEOs” in that he is attempting to disrupt work, promising “entrée to a vibrant community” in exchange for rent payments. In addition to flexible leases for work spaces, Neumann has “made a foray into developing and leasing shared living spaces” and suggested the company could help solve major social issues.
The New York Times reports that, according to sources, SoftBank, the biggest investor in WeWork, is among those favoring Neumann’s removal. NYT adds that “the discussions have come as some major money managers have said that they would not invest in WeWork unless an experienced operator was brought in,” adding that “We’s botched IPO could prove to be one of the biggest flops on Wall Street.”
Sources said that board members and investors have “not yet approached Neumann about their concerns … but Neumann has indicated that he is not interested in relinquishing any more power.” He had previously agreed to reduce his voting power and add a lead independent director.
As WeWork Stumbles, Its Smaller Competitors Cash In, The Wall Street Journal, 9/24/19
WeWork’s Adam Neumann Steps Down as CEO, The Wall Street Journal, 9/24/19