WeWork co-founder Adam Neumann agreed on Tuesday to resign as chief executive and give up majority voting control, after SoftBank Group Corp and other shareholders turned on him over a plunge in the USA office-sharing start-up's estimated valuation.
WeWork's former CFO and co-president, Artie Minson, and its former vice chairman, Sebastian Gunningham, were announced as the new co-CEOs of the company.
Skepticism about WeWork's business model mounted after the company delayed a planned initial public offering earlier this month.
In another controversial move, Neumann trademarked the word "We", then sold the rights back to WeWork for about $6 million.
The We Co. directors Neumann believes oppose him are Ronald Fisher, a Softbank vice chair; Bruce Dunlevie of venture firm Benchmark, and Mark Schwartz, formerly of Goldman Sachs, sources said.
The office-space provider in January acheived a $47 billion valuation, but that is expected to fall to as low as $10 billion if/when the company goes public.
Neumann, who co-founded the company in 2010, will stay on in a non-executive role as chairman of the board.
"In recent weeks, the scrutiny directed towards 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. We had been valued at $47bn, despite losing $3bn in the last three years.
Prior to his announcement, Neumann had faced pressure from board members tied to SoftBank, a major investor, according to people with knowledge of the matter. WeWork, now known as We, ushered in a new way to think about designing and leasing office space - but remains far from profitable.
On Friday, Wendy Silverstein, a big name in NY commercial real estate who joined WeWork a year ago as head of its property investment arm, left the company. They were also unnerved by deals We Co. reached with Neumann and entities he controlled.
The company said it still plans to launch its IPO by the end of the year, but it was unclear what steps the company might take in the months ahead to dispel concerns that led to the delay. Larger companies (including the Guardian) also rent WeWork space. The company's financial crisis continues to rage, with reports indicated that a massive round of layoffs, as much as 5,000 people or one-third of the total workforce, will be rolled out later today in the shadow of Neumann's resignation.
Neumann co-founded WeWork with his wife, Rebekah, and architect Miguel McKelvey in NY in 2010. Neumann has continually insisted that WeWork is an "internet company", not just a shared workspace business. Uber Technologies Inc co-founder Travis Kalanick resigned as CEO of the ride-hailing start-up in 2017 after facing a rebellion from his board over a string of scandals, including allegations of enabling a chauvinistic and toxic work culture.