WeWork CEO Adam Neumann says scrutiny was significant distraction for company

Drug-taking on flights, wild festival-themed staff parties and Run-DMC office concerts. How Adam Neumann achieved mythological status.

Neumann quit because he had become a distraction. Well, yeah … Picture: AP Photo/Mark Lennihan

It’s been quite a year for the former pin up boy of the global start-up community.

A couple of weeks ago, Adam Neumann was piloting his office space-sharing company WeWork towards a giant initial public offering which would have made him a multi-billionaire.

But as investors fell off the hyped company and its launch on the share market was delayed, Mr Neumann’s bizarre and hugely costly decisions left his position as chief executive untenable and he resigned on Tuesday.

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Earlier this month, some bankers had touted WeWork’s valuation as high as $95 billion, which would have made the former CEO’s 22 per cent stake worth an eye-watering $20 billion.

But the company had to continually cut its valuation target over doubts about its prospects from potential investors and is now under pressure to postpone its market debut.

Fidelity Investments cut its valuation earlier this month on WeCo, the start-up’s parent company, and it was predicted its value fell as low as $22 billion, according to Bloomberg.

So where did it all go wrong?

Where did all my billions go? Picture: Jean-Baptiste Lacroix/Getty Images for AFP

Since The Social Network took us behind the curtains of Facebook and Mark Zuckerberg’s rise, the wild antics of young start-up pioneers has been synonymous with parties, warped ambition and lots and lots of money.

But Mr Neumann’s dirty laundry list of bizarre incidents and booze-fuelled anecdotes reach mythological proportions, as detailed in a recent report in The Wall Street Journal.

The long-haired CEO once spent an international flight on a private jet smoking marijuana and when the plane touched down in Israel, crew members found a cereal box stuffed with weed.

When the plane’s owners found out, he ordered the crew to fly home immediately to avoid any drug trafficking offences, leaving Mr Neumann stranded.

The casual drug taking may explain some of his other rumoured thoughts and ambitions, such as his hopes to live forever and wanting to be president of the world.

Neumann quit because he had become a distraction. Well, yeah … Picture: AP Photo/Mark Lennihan

His eagerness for parties are well-known. Apparently he would walk around the office barefoot listening to Rihanna and once hosted a “summer camp” for employees outside of London, which was a music festival-themed party where “bartenders handed out free rosé by the bottle”.

Other parties were more inappropriate.

Like the time Mr Neumann reportedly fired 7 per cent of his staff. And once the announcement was made, trays of tequila shots were handed out and Run-DMC’s Darryl McDaniels performed a set as employees danced to “It’s Tricky”.

The unusual behaviour extends to his wife, Rebekah, who allegedly had multiple employees fired after meeting them for only a brief encounter because “she didn’t like their energy”.

The Wall Street Journal details plenty more. So the question really shouldn’t be where did it all go wrong? But rather how did he end up ruling one of the world’s most hyped start-ups?

WeWork spaces are famously modern and bright.

WHAT HAPPENED TO THE PUBLIC OFFERING?

Earlier this month it was reported some investors were worried about scepticism surrounding the company’s business model and wanted its planned IPO to be pushed to 2020.

After WeWork filed to go public recently it was revealed Mr Neumann had been paid a staggering $US5.9 million ($AU8.6 million) by his own company.

The reason for the payment? The use of the word “we”.

The payment came about when WeWork “reorganised and rebranded” as The We Company in January ahead of its initial public-offering filing.

Mr Neumann, 40, owned the trademark “We” through a private company, We Holdings LLC, which then sold the use of the word to WeWork.

The controversial move was panned by a range of experts, including New York University marketing professor Scott Galloway, Axios’ Dan Primack and Trition Research Inc CEO Rett Wallace.

NO MORE NEUMANN

Neumann will remain as chairman of the company he started in 2010 and also continues to control a majority of voting shares.

“As co-founder of WeWork, I am so proud of this team and the incredible company,” he said.

“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.”

The company named chief financial officer Artie Minson and former vice chairman Sebastian Gunningham as co-CEOs.

“We would like to thank Adam for his vision and his passion in building WeWork over the past nine years,” Minson and Gunningham said in a statement.

“Our core business is strong and we will be taking clear actions to balance WeWork’s high growth, profitability and unique member experience while also evaluating the optimal timing for an IPO.”

— With wires

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