Adam Neumann co-founded WeWork and was the CEO taking his unicorn to a blockbuster IPO. But that was before he became the latest victim of a growing global trend where differences in views with VCs and Investors lead to unresolvable rifts and lead startup founders to the exit door.
Amid the growing Founder-Investor Feud globally, WeWork made itself the lastest inductee. Adam Neumann, Co-founder & Former CEO of WeWork once quoted to the press, “I want to elevate the world’s consciousness”. A few days ago, Neumann became the latest victim of the underlying growing trend where founders are increasingly finding themselves at odds with the investors.
Unresolvable differences lead to public disputes and founders’ exits from the companies they ideated and brought to reality.
In recent history, many founders were left with no choice but to quit. The trend is also synonymous with another observation wherein upon reaching a certain level, a number of giant startups with exciting new business ideas experience a sense of rudderlessness. Consequently, this disunity in leadership views also results in devastating effects for the startup.
WeWork is just another hit of Founder-Investor Feud
Perhaps the most famous victim of Founder-investor feud was Steve Jobs. Apple’s renegade co-founder was ousted after a power struggle with CEO John Sculley who was eventually backed by the board instead of Jobs. Their dispute revolved around product strategy. Similarly, global ride-sharing giant Uber also removed its CEO and Co-founder Travis Kalanick over allegations of misconduct in the workplace.
“The founders can take a company to a certain level. In the end, it is the Board that decides the outcome of the CEO or founder’s performance. In most cases, the board gets it right”.Raju Reddy, Co-founder of FalconX
Zenefits, another startup valued at billions of dollars, went through a similar struggle after which the founder Parker Conrad was ousted due to negligence in compliance while selling the HR product. Likewise, Vishal Sikka, the former CEO of IT services giant Infosys resigned after rounds of disputes with the founders to take the company in a different direction instead of the conventional product and platform mindset.
Sachin and Binny Bansal, co-founders of India’s Amazon-competitor Flipkart decided to quit after the e-commerce major was acquired by Walmart. This shows that managing the perception of investors often becomes a thorn in the backs of founders and CEOs who eventually are the ones that lose in the battle of money and passion.
WeWork Crisis and what led to Neumann’s exit
As per numerous reports, Masayoshi Son, the founder of SoftBank, which has already invested nearly $50 billion in WeWork, did not want Adam Neumann to continue as the CEO. It is reported that the WeWork founder and Softbank’s Son had major difference in views, also about their upcoming IPO.
As per Sathya Pramod, Co-founder of Inflection Point Ventures, founders are the ‘stars’ of a startup and its vital they have space to ‘operate and think’. Investors trying to reign in founders is detrimental to the health of a business. However, there does come a stage when the business is too big for founders to go on without caring about the ones who have put their money in the billion-dollar idea.
“After the business gets to a stage, there is some amount of discipline that is expected, especially when you are planning to make the public co-owners of the company. In the case of Neumann, he should have been reigned in a bit earlier.”Sathya Pramod, Co-founder of Inflection Point Ventures
WeWork and Neumann feud was triggered by Neumann going too long to do things his way. Perhaps, he should have resigned earlier.
Adam Neumann’s existence almost makes me feel bad for Elizabeth Holmes. Holmes had to run a genuine fake science fraud to scam billionaires out of their money, Neumann was just like I’m serving coffee out of my exposed brick sublet that’ll be $700 million please Mr. Softbank.— Matt Stoller (@matthewstoller) September 24, 2019
Who really runs the company at a global startup?
“It is always the PE or the funds,” an anonymous source related to WeWork was quoted. That’s what Neumann finally found out – the going is good as long as the valuation is soaring. Neumann lost SoftBank’s support, its biggest supporter, and the fall in valuation of WeWork directly impacted SoftBank’s, Vision Fund.
“When business reaches a stage, someone who has the ability to execute should become the CEO. Founders should take lead and manage the future of the company”.Ankur Garg, Founder of Hotify
WeWork’s valuation was at $47 billion in the private market. But the decline in its valuation to less than half was probably what resulted in SoftBank’s waning confidence in Neumann. Now, it is WeWork’s parent We Co, which is dragging the company down.
Media salivating over “struggle” btwn A. Neumann and @Softbank re stepping down. Adam fired by S-1 last week, he just may not know it yet. Money talks, and @softbank only source of capital. In this case, leverage is control. Prediction: WeChrist out by Fri.— Scott Galloway (@profgalloway) September 23, 2019
The future of WeWork
Idealism combined with Wall Street-rescue ambition has now forced Neumann to step down as the CEO of the office-sharing startup WeWork. The company itself is facing IPO embarrassment with waning investor and market confidence in its business idea and viability.
Who will replace Neumann at WeWork is yet to be seen. But there’s no doubt that it is Son and Softbank who now hold the reigns at WeWork. Unfortunately, WeWork’s Adam Neumann did not get the cue and ended up with a farewell postcard, meanwhile, being one more addition to the list of Founder-Investor Feud.