WeWork’s co-founder, Adam Neumann , is stepping down as chief executive of the embattled shared office space business, three people briefed on the decision said on Tuesday, a stunning fall for the entrepreneur who oversaw the meteoric rise of one of the most valuable start-ups to emerge in the last
Under pressure to leave from board members and investors in recent days, Mr. Neumann will become nonexecutive chairman of WeWork’s parent, the We Company. WeWork will name two current executives, Sebastian Gunningham and Artie Minson, as interim co-chief executives, one of the people said. The company will conduct a search for a permanent chief executive.
The resignation is the most significant step the company has taken to win over Wall Street after a botched initial public offering. The companydelayed the share salelast week after earlier reducing its estimated market value to (as little as $) billion, from the $ 47 billion valuation it sold shares at privately in January
Investors have expressed concern that Mr. Neumann, a charismatic but unpredictable leader, exercised too much control over the company through special voting shares. They werealso unnervedby deals We Company reached with Mr. Neumann and entities he controlled.
The decision was made on a lengthy board call on Tuesday and after deliberations between Mr. Neumann and his closest confidants in recent days. On Sunday, he met with the chairman and chief executive of JPMorgan Chase, Jamie Dimon, and later in the day had dinner with Bruce Dunlevie, a partner at Benchmark Capital and a director of the We Company.
It is not clear ifMr. Neumann’s departureas chief executive will be enough to bolster interest in We’s shares. Investors have also expressed concerns about the company’s business model. We has been spending billions of dollars to expand and is unlikely to turn a profit in the foreseeable future.
Mr. Neumann and WeWork have been the driving force in the flexible office space business, which is transforming the commercial real estate market. Individuals and companies are flocking to locations run by WeWork and others, attracted by shorter leases and nicely designed spaces.
But as the company has expanded at a breakneck speed it has lost billions of dollars and failed to convince investors that it can become a sustainable business. A more seasoned chief executive who has run businesses with a steady hand might help win over skeptics. In 2017, under pressure from investors, Travis Kalanick resigned as chief executive of Uber. He was replaced by Dara Khosrowshahi, a former chief executive at Expedia who set about trying to improve the culture at Uber and preparing the company for an I.P.O.
Mr. Neumann’s management style was sometimes impulsive: He once unilaterally declared that WeWork would ban meat from the company, which forced executives to quickly come up with a rationale for why.
He also invested in properties that leased space to WeWork. Though Mr. Though Neumann later sold his stakes in the properties to an investment arm of WeWork, the deals raised concerns among investors that he was trying to enrich himself at the company’s expense.
Mr. Neumann’s resignation comes as a blow to its biggest outside investor, SoftBank, the Japanese company that has plowed billions of dollars into WeWork and other start-ups. Softbank’s chief executive, Masayoshi Son, has given founders wide leeway in expanding their businesses and looked the other way at excesses until investors in the public markets push back.