Adam Neumann, the charismatic entrepreneur who led WeWork to become one of the world's most valuable startups, stepped down as chief executive officer after a plan to take the company public hit a wall.
Members of WeWork's board had been pressuring Adam Neumann in recent days to resign and take a new role as non-executive chairman. The move is designed to salvage an initial public offering, which had been met with immediate scorn from public investors. A litany of apparent conflicts of interest and Adam Neumann's propensity to burn through capital were chief concerns.
"While our business has never been stronger, in recent weeks, the scrutiny directed toward me has become a significant distraction," Adam Neumann said in a statement Tuesday. "I have decided that it is in the best interest of the company to step down as chief executive."
Two senior WeWork executives, Sebastian Gunningham and Artie Minson, were appointed as co-CEOs. WeWork's parent company, We Co., intends to push ahead with the IPO, but some people briefed on the deliberations said it's unlikely to take place next month as planned. The new CEOs said in a statement that they will be "evaluating the optimal timing for an IPO."
We Co. is under a tight deadline to go public. It must do so by the end of the year in order to secure a $6 billion debt financing contingent on a successful stock offering. The company, which is deeply unprofitable, will need to find an alternative source of capital next year if the IPO falls through.
Gunningham and Minson said they "anticipate difficult decisions ahead" to protect the company's "long-term interests and health," they wrote in an email to staff reviewed by Bloomberg.
WeWork's high-yield bonds initially fell to their lowest level in more than four months, trading at 92.75 cents on the dollar, after Adan Neumann's decision to step aside.
As part of Adam Neumann's departure, he has agreed to further reduce his sway in board decisions, and his wife, Rebekah, will relinquish her role in the business, said the people, who asked not to be identified because the details are private. Adam Neumann's stock now carries three votes per share, from 20 in the initial plan. Rebekah Neumann, who was listed on the IPO prospectus as a founder and CEO of the WeGrow education arm, will leave.
"When Miguel, Rebekah and I founded WeWork in 2010, we set out to create a world where people work to make a life and not just a living," Adam Neumann wrote in an email to employees. "As we take this next step in our company's journey, I am equally ready to listen, grow and continue working relentlessly on my commitment to all of you."
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