SoftBank To Push For WeWork CEO To Step Down

Investors and board members are growing weary of the behavior by WeWork’s CEO and co-founder Adam Neumann, and they are looking to force him out as the company moves toward an initial public offering (IPO), The Wall Street Journal reported Sunday (Sept. 22).

SoftBank Group — WeWork’s biggest investor — is planning to meet with other stakeholders who are looking to oust Neumann as he continues to delay the company’s public offering, a source told the WSJ.

The board meeting could happen this week, and leaders might ask Neumann to instead serve as We’s nonexecutive chairman, the sources said. He could then remain at the company while steering it toward the IPO it needs for growth.

Analysts are forecasting that WeWork will exhaust its current funds early in 2020. The company has already spent $2-plus billion in 2018.

Adding to the dim outlook, on Sept. 18 the WSJ reported that 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.

The ousting of Neumann won’t be easy, however, as there are some board members not associated with SoftBank who want to keep Neumann as CEO, two people familiar with the matter told CNBC.

WeWork was valued as high as $47 billion during private fundraising rounds, but it dropped to between $15 billion and $18 billion when the IPO was considered. SoftBank has invested more than $10 billion into WeWork.

SoftBank Group now faces the prospect of having to write down its $10-plus billion investment because of the lower valuation, or pump more cash into the venture to buy some time.

The lower valuation will hurt SoftBank because right now it’s looking for capital from investors for a second Vision Fund. SoftBank returns have already been impacted by less than stellar returns for Uber and Slack, which both recently went public.