You'll recall that WeWork announced its plans to go public last month (with one of the most bizarre and oddly entertaining SEC filings I'd ever read).
But it now apparently plans to delay, after reports saying it would have a hard time going public at even one-third of what it had hoped. Against that, maybe it's unsurprising to hear about palace intrigue.
It's not clear whether a coup can succeed. In theory, Neumann could simply fire any rebelling board members.
Still, it's a stunning potential turn for Neumann, whom the Journal basically laid bare last week. Its profile is behind a paywall, but here are a few of the most colorful anecdotes and allegations:
- Neumann allegedly flying with friends last summer on a private jet to Israel while smoking marijuana, and the crew supposedly finding "a sizable chunk of the drug stuffed in a cereal box for the return flight." (The jet's owner took the plane back without him.)
- Poetic waxings about "becoming leader of the world, living forever, [and] amassing more than $1 trillion in wealth." ("Many former employees said they didn't always know how seriously to take some of Mr. Neumann's pronouncements," the Journal's Eliot Brown writes.)
- How Neumann reportedly addressed his entire company after laying off 7 percent of its staff by speaking "somberly," before bringing in staff with tequila shots for everyone, plus a surprise appearance by Darryl McDaniels of Run-DMC, who "played a set for the staff." (Brown: Some employees said they were "stunned and confused.")
It's weird stuff, sure. But honestly, we Americans kind of like our big-name CEOs weird. And who knows how weird any of it really seemed in context at the time?
The problem is when the weird stories get play after investors were already balking at details in the prospectus. (The Journal says the marijuana story especially "added to concerns over Mr. Neumann's management style and transactions.")
Cited examples include things like how Neumann personally owns properties that he leases back to WeWork, and the degree to which he borrows against his own stock.
"Even some of We's private investors said they were angered to learn that an entity Mr. Neumann controls sold the rights to the word 'We' to the company for almost $6 million--before public pressure led him to unwind the deal," the Journal reports.
I asked WeWork for comment about all this Sunday night. However, the company declined, citing the quiet period before an IPO.
So, let's go back to how WeWork was talking about Neumann just six weeks ago, when it filed its prospectus:
"Our future success depends in large part on the continued service of Adam Neumann....
"Adam...is critical to our operations. Adam has been key to setting our vision, strategic direction, and execution priorities....
"If Adam does not continue to serve as our chief executive officer, it could have a material adverse effect on our business."
Perhaps you don't have any particular interest in WeWork. But in a world where so much attention and entrepreneurial credit goes to these kinds of larger-than-life characters, maybe there's a place after all for smart founders who build big businesses with sound numbers and business models that just make sense.
We'll close with an outside assessment from Len Sherman, a Columbia Business School adjunct professor who told Bloomberg:
"I've never seen a company of this size and scale generate such a consensus of negative opinion in my long, long life of following IPOs. There is no box that they haven't ticked when you think of all the reasons that you might be very concerned--like blaring red lights. Like, oh my gosh, caution, danger, danger."
If he's right, who knows what happens next. We might well find out soon.