Pressure mounts on Wework chief as board weighs coup
SAN FRANCISCO/NEW YORK: Adam Neumann has said his mission as Wework’s chief executive officer (CEO) is to elevate the world’s consciousness. Members of his board are now discussing a plan to elevate someone else to run the company and salvage its troubled initial public offering.
The board plans to meet on Monday, people familiar with the situation said. There, some directors are expected to raise the prospect of Neumann stepping down as CEO and becoming nonexecutive chairman, said the people, who asked not to be identified because the discussions are private.
With the drama of a palace coup, Neumann has found himself at odds with Wework’s largest investor, Softbank Group Corp. Masayoshi Son, founder of the Japanese conglomerate, is among those pushing for Neumann to resign, a person familiar with the situation said, after widespread criticisms of the company’s governance and spending. The choice is ultimately Neumann’s, though, as the 40-yearold CEO maintains effective control of management decisions.
The boardroom infighting not only imperils the initial public offering (IPO) but also a $6 billion loan contingent on the deal. The unprofitable company must complete a successful stock offering before the end of the year to keep access to the credit facility.
Wework conceded last week that its plans for going public would have to wait after talks with potential investors lowered expectations for the company’s planned IPO valuation to $15 billion or less, after a previous valuation of $47 billion. Among the concerns they voiced: Neumann’s controversial style and control of the company.
Rarely has so much gone so wrong so fast for a young company in the spotlight.
“It’s Uber-scale mess,” said Kellie Mcelhaney, a professor at the University of California Berkeley’s Haas School of Business, who blames both the board and Neumann for not learning from that company’s earlier mistakes. “He’s really taken a firstmover advantage that Wework had in the space and blown it in a big way.”
The Wework story is beginning to fit squarely into the era of unicorn capitalism: A young and charismatic entrepreneur disrupts an industry, runs afoul of elders and investors, sometimes winning but sometimes failing to live up to their own hype.
Institutions including Benchmark Capital, one of Wework’s investors, pushed out Uber Technologies’ Travis Kalanick before the ride-hailing company went public.