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WeWork's Co-Founder And CEO To Quit Office Ahead Of IPO Launch


09/25/2019


WeWork's Co-Founder And CEO To Quit Office Ahead Of IPO Launch
The founder and chief executive of the office renting company WeWork, Adam Neumann, will be stepping down from the post because it's in the "best interests" of the company.
 
The company said that this resignation would be applicable with immediate effect. He would however continue to hold the position of a non-executive chairman of the company.  The company further said that criticism and scrutiny of Neumann’s leadership style and decisions had "become a significant distraction."
 
It was just a few weeks ago that WeWork was forced to postpone its planned public listing because of concerns among investors about the potential of the company to make profits as well as corporate governance of the firm.
 
"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," Neumann said in a statement.
 
WeWork's Artie Minson, formerly co-president and chief financial officer, and Sebastian Gunningham, formerly vice chairman, have been named as co-chief executives of the company, said the board of directors of WeWork.
 
Neumann had imbibed his own image of a company while building up WeWork and had focused on a making the company a buzzy, multi-billion dollar company that upended the space renting industry. He built a corporate culture where alcohol flowed freely with his stated mission to "elevate the world's consciousness".
 
Currently the company has more than 500 offices in over 29 countries in the world from just one single office in new York in 2010. In the most recent investment round, the company was valued at $47bn by Japanese investment giant Softbank.
 
But when WeWork decided to launch its initial public offering, the brash charisma of Neumann which had once been the point of attraction for investors, turned out to be considered to be a liability for the company. According to recent reports, the valuation of the company has dropped to $10bn and $12bn form about $47bn close to its IPO launch. There were reports from within the company about the erratic decision making of Neumann and his hard-partying habits had become the corporate culture at the company. 
 
The manner in which the boundaries between his own personal finances and that of WeWork were blurred by Neumann was the most alarming of the issues against him for the potential investors.
 
One such example is that the company was a tenant in some properties owned by Neumann. There was also criticism of Neumann getting a personal loan where he used company stock as a collateral security buy virtue of him having voting control of the company.
 
"I think many investors are uncomfortable with Neumann's relationship with the company," Sam Reynolds, a technology analyst, said.
 
WeWork "is a property company trying to sprinkle tech company fairy dust over itself," said Richard Kramer, founder of Arete Research. "That won't work with investors."
 
The company is expected to be remain as a privately held one in the foreseeable future according to Reynolds "I think the IPO will be delayed indefinitely," he said. "WeWork certainly has a future, but not as a public company."
 
(Source:www.business-standard.com)