There's more than one reason that WeWork's board just pushed out its founder and CEO, Adam Neumann. In fact, my colleague Bill Murphy Jr. wrote about several of them earlier this week, and it's not a short list. There's also the fact that the company's valuation dropped from $47 billion earlier this year to $15 billion this month, leading to a delay in its IPO. I mean, it's not complicated to see that losing your CEO is bad when you're trying to take a company public.
While it took pressure on WeWork's planned public offering from investors for the board to finally make this move, there's a far bigger reason that Neumann had to go. Before we get to that, it's only fair to mention that Neumann has agreed, according to The Wall Street Journal, to resign, which is more than a technicality considering he has a virtual lock on the controlling shares of the company. The board couldn't fire him without his willingness to resign.
People far smarter than me will write about what it means for the company's future IPO plans, but I want to focus on something more pressing for everyone who's ever started a business, or plans to start one someday: Your business is not only yours.
There comes a point in an entrepreneur's experience in building a business that things change. You become responsible for more than the idea in your head, but for the people who have joined you to make it real. Some of those people are employees. Some are customers. And when you take outside money, some of those people are investors.
But when each of them agrees to your invitation to come along on your adventure--also known as growing your business--you have a responsibility to honor them with the way you steward the business. That means building a company that treats employees with respect and dignity, while providing them the resources they need to grow and do their job.
In some cases, parts of the business are literally no longer yours--which is an especially difficult thing for some founders to come to terms with. Bringing in investors, or even more so, selling shares to the public, means your primary measurement of success is no longer whether you can get this cool idea off the ground, but whether it will generate a return for those who have put their money behind your efforts.
It means putting the interests of your investors (or shareholders), your people, and your customers before yourself. If you aren't willing to do that, then like Neumann, you should be prepared to step aside.
Many of the questions around Neumann's leadership of WeWork stem from what appears to be a failure to recognize that the company didn't exist solely for his own gain. Investing in properties with money borrowed from the company, in order to lease those same properties back to the company, as Neumann reportedly did, isn't about anyone else's interests but his own.
The problems at WeWork aren't just financial--which would be significant enough for a company getting ready to sell shares to the public. Like other recent examples (hello, Uber), the problems are cultural and reflect a belief that growing the company is simply an excuse to spend other people's money. Eventually, people stop giving you money to spend if you can't show that you're able to do it responsibly.
Not only that, but if you treat the people around you like they're only there to be props in your "disruptive," "world-changing" party, eventually they'll stop giving you something just as valuable as their money--their respect (not to mention their trust). Once you lose that, it's time to go.