There’s speculation that up to half of WeWork employees could lose their jobs in the company reshuffle, with shareholders criticising SoftBank’s influence over the situation.
Late on Tuesday evening (24 September), WeWork’s board of directors announced that co-founder Adam Neumann would be stepping down from the role of CEO.
Neumann will be replaced by two co-CEOs – WeWork’s Artie Minson, who was formerly co-president and CFO of the company, and Sebastian Gunningham, who was formerly vice-chair. A spokesperson for WeWork said that these changes are effective immediately.
‘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’
– ADAM NEUMANN
‘A significant distraction’
Neumann will remain at WeWork as a non-executive chair of the board. In a statement regarding the reshuffle, he said: “As co-founder of WeWork, I am so proud of this team and the incredible company that we have built over the last decade.
“Our platform now spans 111 cities in 29 countries, serving more than 527,000 members each day. 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.”
Minson and Gunningham released a joint statement about their new appointment: “We would like to thank Adam for his vision and his passion in building WeWork over the past nine years.
“Our innovative membership model, beautiful designs and inventive community offerings have changed the way individuals and enterprises around the world think about their workspaces. It is an incredible honour to lead WeWork during this important moment in the company’s history.”
Minson and Gunningham noted that one of their responsibilities in the coming weeks will be “evaluating the optimal timing for an IPO”.
Rebekah Paltrow Neumann, wife of the former CEO and cousin of Gwyneth Paltrow, will also step down from her role in the company. She was rumoured to play a massive role in the construction of WeWork’s IPO prospectus, a document that was laden with red flags about the company’s future.
As Neumann steps down, there is increasing concern about the future of the other 15,000 individuals working in WeWork – in particular, the 9,000 staff members who joined the company in the last two years.
The Information reports that as many as 5,000 employees, or a third of the workforce, could be laid off to reduce costs at the company to facilitate a more successful IPO.
Two “well-placed sources” told TechCrunch that the scope of the layoffs could be very significant, estimating that up to half of WeWork’s employees could lose their jobs over time to lower the company’s expenses.
Neumann, who has ceded his majority super-voting shares (which allowed him 20 votes, compared to the one vote that all other investors had), may not have a say in the matter.
Even with Neumann ousted, SoftBank still stands to lose a large sum of money from the events that have unfolded over the last few weeks.
A source close to WeWork told Vox’s Recode: “To me, this is as much of a SoftBank fiasco as it is an Adam Neumann fiasco.”
One of WeWork’s shareholders criticised the company’s board of directors for a “total fail” on governance, telling Recode said SoftBank’s influence should have been limited.
The publication also spoke to Zach Weinberg, co-founder of Flatiron Health, which was acquired for $2bn last year. Weinberg said: “This is not a systemic risk where all these venture firms are doing all these deals at crazy prices. It just happens to be the biggest one. Irrational pricing driven by one giant player is not good for everybody. This is a resettling.”