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CEO of WeWork, Which Has Lost an Unfathomable Amount of Money, Is Stepping Down

The boardroom coup is the latest attempt to salvage a doomed IPO.

by Edward Ongweso Jr
Sep 24 2019, 6:03pm

Michael Kovac / Contributor

Adam Neumann, the eccentric co-founder of WeWork, is stepping down as CEO after a torrent of news cycles that read like pulp fiction, the New York Times reported. The Times reports that pressure came from investors and board members, and Neumann will stay on as the nonexecutive chairman of WeWork's parent, the We Company.

In a press release, Neumann said "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."

This is a long time coming.

For years, Adam Neumann has insulated himself and the company from reality. WeWork, which runs a series of coworking spaces around the world, has pumped up its perceived value over the course of the last few years. Earlier this year, the company announced an IPO that has since been called off.

The company’s IPO filing opened with a prayer to the “energy of We,” energy that was unable to yield a tangible plan to achieve profitability. One estimate showed that WeWork has spent $5,197 per customer per year. Last week, the Wall Street Journal reported that Neumann had Run of Run-DMC play “It’s Tricky” to remaining employees immediately following a round of layoffs. And then, there was the umbrella saga, in which WeWork members were locked out of their office for days because of an unfortunately placed umbrella (this was basically a sideshow, but worth noting nonetheless.) After weeks of intense ridicule and criticism, WeWork halved its valuation from $47 billion to around $20 billion, then halved it again to less than $10 billion.

Already, Neumann’s exit (not the one where he sold $700 million of his WeWork stock before the IPO) is drawing comparisons to the rise and fall of Uber’s co-founder and CEO Travis Kalanick. Yes, there are similarities: both founders thrived precisely because of a founder cult, a “growth at all costs” mentality that burned through billions, sky-high valuations that were fairy tales, and constant attempts to label themselves as tech companies to pump valuation.

The real common thread, however, is SoftBank, the Japanese conglomerate that has invested in both companies (and most of Silicon Valley) and driven up their valuations at the expense of, literally, everyone else. It’s hard to imagine that WeWork or Uber, both as companies and as extensions of their founders’ wills, could’ve gotten away with so much if not for SoftBank. It’s also getting increasingly hard to see how SoftBank can keep this act up for much longer

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Silicon Valley
venture capital
CEO
softbank
adam neumann