WeWork

Adam Neumann Is Officially Out as WeWork’s CEO

The CEO’s fall from grace comes after WeWork’s planned IPO crashed and burned—and resulted in a slew of damaging revelations about Neumann’s leadership.

By Alison Durkee

September 24, 2019

Adam Neumann attends WeWork Presents Second Annual Creator Global Finals at Microsoft Theater on January 9 2019 in Los...

WeWork founder Adam Neumann is officially going down with his company's botched IPO. The company announced Tuesday that the controversial tech exec, whose leadership has become a source of contention in the wake of a failed Wall Street bid, will be stepping down as WeWork's CEO, though he will stay on as parent company We's non-executive chairman. He will also be stripped of his majority control over the company, with Neumann's voting shares reduced from 10-to-1 to 3-to-1. “While our business has never been stronger, in recent weeks, the scrutiny directed toward me has become a significant distraction,” Neumann said in a statement, “and I have decided that it is in the best interest of the company to step down as chief executive.”

Neumann's fall from grace comes in the wake of WeWork's planned IPO crashing and burning, with the company’s valuation plummeting from an estimated $47 billion valuation to less than $15 billion before its offering was postponed altogether. We's stock market stumble prompted a wave of new criticism about Neumann, with one Wall Street Journal exposé reporting that the CEO had once gotten kicked off a private plane for carrying too much marijuana; laid off 7% of employees for financial reasons before immediately throwing an in-house, tequila-fueled Run DMC concert; and claimed WeWork could “solve the problem of children without parents”—among other revelations. As my colleague Gabriel Sherman reported on Monday, the CEO had become increasingly flaky as of late, neglecting to attend board meetings “because he had control of the company” and skipping or showing up late to other crucial meetings, including arriving at a meeting with the head of Abu Dhabi’s sovereign wealth fund late and apparently hungover. And that's not to mention Neumann's increasingly wild pronouncements, from claiming he convinced Rahm Emanuel to run in 2020 on the “WeWork agenda” to claiming that JP Morgan Chase CEO Jamie Dimon is his “personal banker.” “Adam’s fantasyland became a reality,” a former WeWork executive told Sherman.

But for as problematic as Neumann's leadership seemed to be, Sherman noted, WeWork was “built on the egomaniacal glamour and millennial mysticism of Neumann and his wife,” Rebekah Paltrow Neumann, who's also stepping down from her roles in the business. So what happens to the company without Neumann at its helm? WeWork has announced that the company's new co-CEOs, effective immediately, will be current co-president and CFO Artie Minson and vice chairman Sebastian Gunningham, with a search underway for a permanent successor. The new CEOs said in a statement that they “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,” which the New York Times reports could include slowing WeWork's rapid growth by laying off as many as 4,000 to 5,000 employees.

Will their efforts be enough to dig the company out of the hole that Neumann got them into, and finally spur their elusive IPO? Or, as Marx Realty CEO Craig Deitelzweig told Sherman, does the company's business model built around long-term leases and short-term tenants mean that WeWork won't be “a viable business” no matter who's in control? That remains to be seen—but as things stand now at WeWork, as one executive told Sherman before Neumann's departure, “It’s an all-around shitshow.”