After a disastrous attempt at going public, the chief executive of WeWork’s parent company, Adam Neumann, is stepping down, the company confirmed Tuesday.
Neumann and Miguel McKelvey, who serves as chief culture officer, cofounded co-working space operator WeWork in 2010. Together, they scaled the company to more than 100 cities around the world and raised billions of dollars from investors on the broad, vague selling point of “community.”
Over the years, they expanded beyond co-working and into co-living, health and wellness, and education. In January, they rebranded to The We Company, an umbrella to the various businesses.
But Neumann’s role at the company has been the subject of intense scrutiny in recent weeks. When The We Company filed its IPO paperwork in August, it set off a wave of criticism centered 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.
Over the weekend, there were reports that some board members, including its largest investor SoftBank, wanted to oust Neumann as CEO, just days after the company announced that it would delay its Wall Street debut.
In a statement, Neumann said that “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.”
The Wall Street Journal and New York Times first reported the news about Neumann.
Neumann will stay on as non-executive chairman but he will no longer have majority voting control, a source familiar said. He will have three votes per share, down from 20 votes per share, as outlined in the company’s original IPO paperwork.
Artie Minson, formerly co-president and chief financial officer, and Sebastian Gunningham, formerly vice chairman, will be co-CEOs. The changes are effective immediately, the company said.
In revised paperwork earlier this month, the company had made a number of changes to the oversight of its business in a bid to appease investors. Those included decreasing the super voting shares of its founders and early investors from 20 votes per share down to 10 votes per share, as well as empowering the board with the ability to remove the chief executive officer.
It is unclear if The We Company will go public anytime soon, even with the leadership change.
In a joint statement, Minson and Gunningham said, “our core business is strong and we will be taking clear actions to balance WeWork’s high growth, profitability and unique member experience while also evaluating the optimal timing for an IPO.”
While previously valued at as much as $47 billion on the private market, The We Company was most recently reportedly considering seeking a valuation in the $20 billion range for its IPO before ultimately delaying its plans.
The company’s revenue of $1.5 billion in the first half of this year is more than double what it brought in during the same period of 2018. But its losses have also soared, with We reporting a net loss of $904 million in just the first six months of this year and a total of $4.2 billion since the start of 2016.