Board vs founder: Civil war at WeWork leads to CEO’s ouster

The IPO that never was
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The IPO that never was

We Company is now considering slowing its expansion so it burns through less cash and would require less funding in the absence of an IPO in the near team. Neumann also agreed to reduce the power of his voting shares, losing majority voting control, according to the sources. Neumann, whose net worth is pegged by Forbes at $2.2 billion, developed a cult following among many We Company employees. While his investors were willing to entertain his eccentricities over the decade he led WeWork since its founding in 2010, his free-whiling ways and party-heavy lifestyle came into focus once he failed to get the company's IPO underway. During the attempts to woo IPO investors this month, Neumann was criticized by corporate governance experts for arrangements that went beyond the typical practice of having majority voting control through special categories of shares.

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WeWork, Uber: A similar story panning out
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WeWork, Uber: A similar story panning out

The palace intrigue at one of the world's largest startups echoes the chaos surrounding Uber Technologies Inc., when the board orchestrated the removal of co-founder Travis Kalanick two years ago. At Uber, after a scandal-plagued year, board member Bill Gurley of Benchmark helped force Kalanick's resignation, with participation from other investors. Today, the story unfolding at WeWork includes some of the same cast members: Bechmark is a major WeWork investor.

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What WeWork can learn from Uber
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What WeWork can learn from Uber

The overthrow of Kalanick at Uber could offer lessons for the situation at WeWork. Benchmark sought to drive Kalanick out with help from the courts and other major investors. The VC firm sued Kalanick, accusing him of defrauding investors, and threatened to publicly air claims of mismanagement. Kalanick agreed to resign in 2017 after a confrontation with two Benchmark partners. Benchmark's lawsuit was dropped the next year. In both cases, investors' machinations have been complicated by the founders' power within their companies. Kalanick wielded control over Uber by holding stock with strong voting rights, similar to Neumann's. At Uber, the board effectively stripped Kalanick of that power by changing the structure of the shares, so that when the company went public, all its shares were worth one vote each. Neumann, too, has disproportionate power over WeWork that is being whittled down.

A toxic environment
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A toxic environment

Though there are similarities between the controversies surrounding Kalanick and Neumann, the two men's methods are different. Kalanick came under fire for allegations of fostering a toxic workplace culture, including reports of sexual harassment by employees at the company. In contrast to Kalanick's hard-charging tactics, Neumann often speaks about "elevating the world's consciousness," and promoting a sense of community. But Neumann has drawn investors' ire for perceived self-dealing, including acting as a landlord to WeWork and profiting from a trademark on the company's name. Both CEOs have also faced blowback over the raucousness of company parties and the free-flowing availability of alcohol.

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