WeWork's CEO drama has one industry insider calling it an 'Elon Musk situation'
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- WeWork CEO Adam Neumann stepped down from the startup on Tuesday, as its IPO remains delayed.
- The founder will remain on the company's board as non-executive chairman.
- That's good for the company, Santosh Rao of Manhattan Venture Partners, told Business Insider, given that the company is fueled by his vision and charisma.
- "It's almost like an Elon Musk situation," he said.
WeWork's CEO Adam Neumann is stepping down from the startup amid its delayed initial public offering.However, the controversial executive will remain executive chairman of the company that he's built over the past five years, putting him in a position to provide advice and vision while absent from day-to-day decisions.Advertisement
That has one venture capital expert comparing him to Tesla's polarizing chief executive, Elon Musk.
"Startups deserve to have the visionary on board," Santosh Rao, head of research at Manhattan Venture Partners, told Business Insider on Tuesday. "But this is a weird situation. He will be there but he's not going to run the company.""It's almost like an Elon Musk situation," he continued. "The company runs on his charisma and vision, so I think this is a good middle ground."
Earlier this month, Manhattan Venture Partners, an investment firm and research shop that focuses on later stage, Pre-IPO companies, initiated coverage on WeWork shortly after its IPO documents were filed with US regulators. In its report, Rao said WeWork was worth about $28 billion, about half of the company's originally targeted value.That valuation target was said to fallen drastically in recent weeks, as low as $10 billion, amid skepticism of Neumann's web of loans, real-estate deals, and family involvement with the company."Maybe if WeWork had come out before Lyft and Uber, they would have got a pass," Rao told Business Insider earlier this month. "But now, seeing how the appetite for companies without a path to profitability has gone down, I don't think they will get the benefit of the doubt."Advertisement
Both Uber and Lyft have stumbled out of the gate following their public-market debuts earlier this year. Many investors from later private rounds are now in the red, as the stocks have fallen 20% and 43%, respectively, in the months since.
Two WeWork executives, Artie Minson and Sebastian Gunningham, will be filling Neumann's shoes as co-CEO's, the company said.Read more: WeWork will replace Adam Neumann with two new CEOs. Here's everything we know about Sebastian Gunningham and Artie Minson.Advertisement
"As co-founder of WeWork, I am so proud of this team and the incredible company that we have built over the last decade," Neumann said in a statement.
"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."Get the latest Tesla stock price here.Advertisement