WeWork founder gives up control
NEW YORK WeWork co-founder Adam Neumann agreed on Tuesday to resign as chief executive and give up majority voting control, after SoftBank Group Corp and other shareholders turned on him over a plunge in the U.S. office-sharing startup’s estimated valuation.
The decision came after WeWork parent We Company postponed its initial public offering last week following pushback from perspective investors, not just over its widening losses, but also over Neumann’s unusually firm grip on the company.
This was a blow for SoftBank, which was hoping for We Company’s IPO to bolster its fortunes as it seeks to woo investors for its second US$108-billion Vision Fund.
SoftBank invested in We Company at a US$47-billion valuation in January. But investor skepticism led to the startup considering a potential IPO valuation earlier this month of as low as US$10 billion, Reuters reported.
We Company had vowed to press ahead with an IPO by the end of the year. But there was little sign that IPO investor sentiment would change.
What was the venture capital world’s biggest upset then morphed into one of corporate America’s most high-profile boardroom dramas. SoftBank managed to muster enough opposition to Neumann in a meeting of We Company’s seven-member board on Tuesday to convince him to step down. Reuters had reported on Monday that he had engaged in talks about changes to his role.
“In recent weeks, the scrutiny directed towards 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,” Neumann said in a statement.
Artie Minson, chief financial officer of WeWork parent We Company, and Sebastian Gunningham, a vice-chairman for the New York-based startup, will become co-chief executives, the company said.
Neumann will stay on the board as non-executive chairman, the company added.
Minson will oversee We Company’s finance, legal, human resources, real estate and public communications, while Gunningham will take responsibility for product, design, development, sales, marketing, technology and regional teams.
Neumann also agreed to reduce the power of his voting shares, losing majority voting control, according to the sources.
Each of his shares will now have the same voting rights as three We Company common shares, not the 10 common shares previously, the sources said.
We Company said on Tuesday it was now evaluating the “optimal timing ” for an IPO. Reuters