WeWork founder Adam Neumann has stepped down as chief executive of The We Company, after a month of public turmoil for the once high-flying co-working company.
The high-octane 40 year old has been under pressure from directors and investors since spearheading a botched attempt to take the closely-watched company public.
In the six weeks since the The We Company released its Form S-1, the company has conceded to major governance changes, reportedly slashed its valuation to as low as US$15 billion and postponed its offering, initially planned for this month.
Criticism centred on everything from the company's staggering losses and the lack of a woman on its board to the unchecked power of Neumann and his numerous potential conflicts of interest.
The company’s losses have ballooned as it has spent huge sums taking on new leases and refurbishing its locations.
In the first half of the year, it's operating losses totalled US$1.4 billion, about twice as much as it lost in the same period last year.
Analysts also criticised deals in which Neumann took US$700 million in stakes in buildings and leased them to WeWork, an arrangement that might have allowed him to personally profit at the company’s expense.
Neumann, who controlled a majority of the shareholder votes, was ultimately the one who decided to step down, doing so after he lost the support of some of his key backers, including SoftBank, the Japanese technology giant, which is WeWork’s biggest outside investor.
Neumann and co-founder Miguel McKelvey opened the first WeWork in Manhattan’s SoHo neighbourhood in 2010.
Together, they scaled the company over nine years to more than 100 cities around the world and raised billions of dollars from investors attracting a private valuation of US$47 billion as recently as January.
Neumann convinced investors like SoftBank, Benchmark Capital and real estate billionaire Mort Zuckerman, that software, smart design and community could make WeWork as valuable as the hottest tech companies.
The company's revenue of US$1.5 billion in the first half of this year doubled what it brought in during the same period of 2018.
However, its losses have also soared, with the company reporting a net loss of US$904 million in just the first six months of this year and a total of US$4.2 billion since the start of 2016.
Neumann has drawn increasing amounts of scrutiny in recent months amid a series of revelations about his personal finances and dealings with the company.
In the wake of WeWork’s scuttled IPO the company’s investors and board reportedly began serious discussions on Neumann’s future role at the company.
Those talks culminated with his resignation and agreement to reduce his voting power from 10 votes per share to just 3. He will remain as WeWork’s non-executive chairman.
“As co-founder of WeWork, I am so proud of this team and the incredible company that we have built over the last decade,” Neumann said in a statement.
“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.
“Thank you to my colleagues, our members, our landlord partners, and our investors for continuing to believe in this great business.”
While he is not longer the company's chief executive, his wealth is still closely tied to the company.
In addition to his WeWork stake, Neumann has a sizeable real estate portfolio, including two homes in downtown Manhattan and one outside San Francisco that was designed to resemble a guitar.
His commercial holdings including four buildings in which WeWork leases space.