Why WeWork CEO Adam Neumann stepped down?

Yesterday, WeWork shared a notification that WeWork’s co-founder and chief executive officer Adam Neumann has stepped down as CEO and will serve as non-executive chairman of the board. According to a report from The Wall Street Journal, WeWork’s vice chairman Sebastian Gunningham and the company’s president and chief operating officer Artie Minson will serve as co-CEOs.

Neumann said in a statement “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 global 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. Thank you to my colleagues, our members, our landlord partners, and our investors for continuing to believe in this great business.”

As Neumann has stepped down, his wife Rebekah Neumann who has titles including chief impact officer, chief brand officer and most recently, co-founder and CEO of WeGrow, WeWork’s is said to have stepped down as well.

But the bigger question is WHY? Especially, when the SoftBank, the Japanese investor has funneled billions into the co-working business and WeWork made $1.8 billion revenue last year. If everything was going fantastic then what is the reason behind the big move.

Investors expressed concern over the revenue as it looks good that you made $1.8 billion revenue until you get to know that the company lost $1.6 billion. According to a report, the company spent one dollar for every earned dollar in the first half of 2019. This was done without having new funding or lower expenses. Due to this, WeWork could shrink to $400 million by next March from $1.9 billion.

This shrink can lead to a major firing of about 5000 employees. Company is considering firing employees to reduce its workforce to 60 per cent from 12500 people.

Neumann was in big pressure to increase the business ten times. According to a report, investors like SoftBank founder Masayoshi Son, who pumped money in the company, met Neumann and told him “to make WeWork ‘ten times bigger than your original plan’. And Neumann was not ready to go crazy achieving ten times bigger market.

So we can say that Neumann was in a huge pressure so he made his decision, but he is not completely out of the company, he will be serving as non-executive chairman of the board.