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WeWork co-founder, Adam Neumann, is stepping down as chief executive of the troubled shared office business, three people informed of Tuesday's decision, a staggering drop for the entrepreneur who has overseen the meteoric rise of one of the most valuable emerging beginnings of the last decade.
Under pressure from board members and investors in recent days, Neumann will become non-executive chairman of WeWork's parent company, We. WeWork will appoint two current executives, Sebastian Gunningham and Artie Minson, acting co-CEOs, said one of the people. The company will look for a permanent general manager.
This resignation is the most important step taken by the company to conquer Wall Street after its IPO. The company postponed the sale of shares last week after reducing its estimated market value to $ 15 billion, against $ 47 billion when selling its shares in January.
Investors were concerned that Mr. Neumann, a charismatic but unpredictable leader, exercised too much control over the company through special voting shares. They were also confused by the transactions we concluded with Mr. Neumann and the entities he controlled.
The decision was made during a lengthy council meeting Tuesday and after the deliberations of Mr. Neumann with his closest confidants in recent days. On Sunday, he met with JPMorgan Chase CEO Jamie Dimon and later dined with Bruce Dunlevie, a partner at Benchmark Capital and a director of We.
It is unclear whether Mr. Neumann's departure as CEO will be enough to reinforce the interest in We's actions. Investors also expressed concerns about the company's business model. We have spent billions of dollars developing ourselves and it is unlikely that we will make a profit in the near future.
Mr. Neumann and WeWork have been a driving force in the flexible office space sector, which is transforming the commercial real estate market. Individuals and businesses flock to sites run by WeWork and others, attracted by shorter leases and well-designed spaces.
But as the company grew at breakneck speed, it lost billions of dollars and failed to convince investors that it could become a sustainable business. A more experienced director who has run businesses with a firm hand could help defeat skeptics. In 2017, under pressure from investors, Travis Kalanick resigned from his position as General Manager of Uber. He was replaced by Dara Khosrowshahi, a former CEO of Expedia, who strove to improve Uber's culture and prepare the company for an I.P.O.
Mr. Neumann's management style was sometimes impulsive: he once unilaterally declared that WeWork would ban meat from society, forcing leaders to quickly explain why.
He also invested in properties that rented space at WeWork. Although Mr. Neumann later divested his interests in the properties to an investment arm of WeWork, the transactions aroused the concern of investors that he was trying to get rich at the expense of the company.
The resignation of Mr. Neumann is a blow to his main outside investor, SoftBank, the Japanese company that has invested billions of dollars in WeWork and other start-ups. The CEO of Softbank, Masayoshi Son, gave the founders a lot of leeway to develop their business. He also considered the excesses until investors in the public markets recede.
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