Adam Neumann, co-founder and CEO of WeWork, will step down from his position, according to a report by The Wall Street Journal.
The news comes on the heels of the announcement that the company’s once highly touted IPO was postponed, and illustrates how quickly Neumann has lost his footing.
Neumann will remain the non-executive chairman of the company. The official announcement is expected to come as soon as Tuesday (Sept. 24).
The IPO was postponed amid questions about how much the company is worth. The company’s value dropped from $47 billion earlier in the month to around $15 billion. The company delayed the IPO by several months, according to The New York Times.
“WeWork is the most extreme, almost ludicrously funny, example of a trend that’s been building for a while,” said Len Sherman, an adjunct professor at Columbia Business School. “But the public markets are finally saying, ‘No mas.'”
SoftBank Group now faces the prospect of having to write down its $10 billion-plus investment because of the lower valuation, or to pump more cash into the venture to buy some time.
The lower valuation will hurt SoftBank, as it is currently looking for capital from investors for a second Vision Fund. SoftBank’s returns have already been impacted by less than stellar performance for Uber and Slack, which both recently went public.
Private company valuations are mirrored by what has been happening in the public markets. For many investment vehicles, IPOs exist as an exit strategy. But where the company has had a double-digit percentage stake in Uber, and Uber shares are down roughly 25 percent since the IPO, again write-downs loom – at least if trends continue. As reported earlier in the year, SoftBank bought stakes at a bit more than $33 and $48, and the stock closed at $33 on Monday (Sept 23).
There is also the looming issue of the hard-partying corporate culture at WeWork. Neumann recently had to reschedule a private plane he commissioned because the crew allegedly found marijuana on board. Neumann also told people he was going to live forever, serve as Israel’s prime minister, become president of the world and be the world’s first trillionaire.