WeWork

WeWork taps co-CEOs to tackle pre-IPO turbulence

September 24, 2019
A newly appointed team of co-chief executives will be in charge of taking WeWork public, signaling the complex task facing the company.

Co-founder Adam Neumann has stepped down as CEO and will remain a non-executive chairman, the company announced Tuesday. His wife, Rebekah, will leave her post as chief brand and impact officer and CEO of WeGrow.

In Adam Neumann's place, WeWork president and CFO Artie Minson will serve as co-CEO alongside vice chairman Sebastian Gunningham. The moves mark a key step toward moving WeWork past the pre-IPO turmoil that has dragged its January valuation of $47 billion to estimates as low as $10 billion.

Also Tuesday, The Information reported that the New York-based co-working company is considering laying off up to 5,000 employees, or about a third of its workforce, as part of a broader push to cut costs. Scaling back expansion plans and eliminating non-core business operations are also under consideration, according to The Information, which said an internal email from Minson and Gunningham confirmed "difficult decisions [are] ahead," without elaboration.

WeWork declined to comment beyond confirming the CEO replacement.

Co-CEO replacements

News of the shake-up follows recent implementation of restrictions on Neumann's authority, as documented in an amended S-1 revealed September 13. The two men replacing him, by comparison, are widely viewed as more brand-safe and level-headed.

Arthur "Artie" Minson joined WeWork as president and COO in 2015, at a time when the company had only 42 locations across 15 cities, compared with its current roster of 111 cities worldwide. Previously, Minson served as CFO for Time Warner Cable from May 2013 to June 2015, following his role as COO at AOL from 2009 to 2013.

Gunningham joined WeWork as vice chair and chief automation officer in March 2018 after an 11-year run as senior vice president at Amazon Marketplace. He previously was a vice president at Oracle and Apple.

The decision to appoint two individuals as co-CEOs may be a much-needed choice considering the circumstances, according to David Larcker, a corporate governance professor at Stanford University's Graduate School of Business.

Larcker said he believes the decision to tap co-CEOs suggests the scope of challenges facing the company is too vast and complex for a single executive to take charge of alone. "It's the kind of situation where you really want more people involved instead of less to figure out what was going on," he said.

Behavioral issues

Tuesday's upending news prompted Neumann to publicly acknowledge the recent negative attention placed upon him. "While our business has never been stronger, in recent weeks, the scrutiny directed toward me has become a significant distraction," he said in a statement. "I have decided that it is in the best interest of the company to step down as chief executive."

Such scrutiny came as a surprise considering Neumann's actions were already well-known. For example, Neumann's role as a landlord to some WeWork establishments was previously approved by the board of directors and disclosed to investors. Further, the proposed dual-class structure that would squarely put voting control in Neumann's hands is not unusual among tech IPOs, with the likes of Facebook and Pinterest exhibiting such a structure.

Despite this well-established knowledge, the rapid devaluation of the company points to a worsening shift in investor sentiment following 2019's IPO disasters of Uber, Lyft and others. "We're starting to see more of the big unicorns come public and their performance hasn't been great," Larcker said. "People are getting a bitter taste in their mouths."

Seeking to address the company's IPO troubles, Neumann has reportedly held snap meetings recently with SoftBank's Masayoshi Son, who is believed to have spearheaded efforts to dump Neumann, in addition to lead IPO underwriter JP Morgan and WeWork director Bruce Dunlevie.

Alexander Davis contributed to this article.

Featured image courtesy of WeWork

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