We(Don’t)Work Here Anymore
Adam Neumann resigned yesterday as CEO of WeWork’s parent company, We Co., amid growing concern that he might have been a total dingus all along.
This time last year, the party-on-top party-on-the-sides CEO was preparing to take his company public as the “most-valuable” IPO of all time.
But eyebrows were raised (and faces were palmed) when the company released its financials as part of its S-1 filings earlier this year.
The filings told a sordid tale of ballooning losses, hundreds of millions of dollars of real-estate deals and personal loans, and just a bunch of weird stuff that Adam was doing.
It transpired that Neumann was buying properties with his personal money and leasing them back to his company.
He was borrowing heavily against his stock to buy private jets. And he even sold the rights to the word “We” for $6 million to his own company.
(This guy makes the best deals with himself.)
“This is not the way everybody behaves,” former Twitter CEO Dick Costolo told the Wall Street Journal. “The degree of self-dealing in the S-1 is so egregious, and it comes at a time when you’ve got regulators and politicians and folks across the country looking out at Silicon Valley and wondering if there’s the appropriate level of self-awareness.”
In the wake of its disastrous S-1 filing, We Co. slashed its market valuation from $47 billion to as low as $15 billion. Earlier this month, the company which rents real estate from its own CEO canceled its IPO roadshow and postponed its IPO until it could sort this mess out.
(And by “sort this mess out”, I mean “get rid of Adam without a lawsuit.”)
Trade-in Your Neumann for a New Man
Like a child who doesn’t understand money or the world or even basic concepts, Adam would often tell people that his goal in life was to become the world’s first trillionaire. (Which is hard to do when you have a penchant for buying $60 million jets.)
Adam may have to push his goal back a few years for now, as the overlords at the Softbank Group, who own a third of We Co., have decided to remove Adam as CEO of the Adam Does Whatever He Wants Funtime Company.
Neumann will remain at We Co. as a non-executive chairman (which means he’s technically your boss, but you should never do what he tells you). And he’ll be succeeded as CEO by two of his deputies (which means they have to share a big two-person suit that makes them look like a conjoined twin).
Artie Minson, finance chief of We Co., will take control of finance, legal, and human resources. Amazon veteran Sebastian Gunningham (who may or may not be an entire British football team) will take the wheel on marketing and technology.
Neumann will voluntarily give up (is being forced to) cede majority control of the company, reducing his supervoting shares from 10-to-1 to 3-to-1.
The rollicking comedy duo of Minson & Gunningham is expected to start hacking away at staff and try to stem the explosive hemorrhage of money spilling out of the company.
Given the current state of affairs, it’s unlikely that We Co.’s IPO will go ahead this year.
However, the company’s lawyers are currently negotiating for a $3 billion loan with JPMorgan and Goldman Sachs. And their old pal Softbank is expected to fork over a chunk of its own money to keep the company afloat long enough for Minson & Gunningham to sort this big old mess out.
And speaking of ousted CEOs…
Juul’s CEO Burns Out
In déjà vu news, Kevin Burns will be stepping down as CEO of Juul Labs amid a seemingly never-ending avalanche of negative press.
Burns will be replaced by an executive from the Altria Group, which owns a 35% stake in the company. (Who, disappointingly, will not be Kevin Burns in a mustache calling himself Kevin Vapes.)
K.C. Crosthwaite (who sounds like the hero in your bad detective novel) was handpicked by Altria for his experience working closely with regulators as Altria’s chief strategy officer. (And that was for cigarettes, which are typically a harder sell than e-cigarettes.)
After a spate of mysterious illnesses linked to “ripping fat cotton”, the administration is expected to crack down on vaping later this year and potentially ban most of Juul’s totally rad products that are definitely not for kids.
“The progress we’ve made in reducing youth tobacco use is jeopardised by the onslaught of e-cigarette use,” tweeted Ned Sharpless, the FDA’s acting commissioner. “Nobody wants to see children becoming addicted to nicotine & we will continue to use our regulatory authority thoughtfully & thoroughly to tackle this public health crisis.”
Juul says it has no plans to lobby against the ban of flavoured e-cigarettes (because the press would not be great). And the company will suspend all broadcast, print, and digital advertising for the foreseeable future.
Altria CEO Howard Willard told the Wall Street Journal that the proposed ban would have an impact on Juul’s business, but it’s unclear exactly what restrictions the FDA is preparing.
“I continue to believe Juul will continue to be successful and a good investment for Altria in the long run,” Mr. Willard said, adding that Juul’s new CEO would “work in a responsible way” with the FDA and other regulators to address youth vaping (aka yaping).
Shares of Altria rose about 4% in premarket trading on Wednesday after it was announced that the company would be going ahead with its potential merger with Philip Morris International.
In Other News
One Last Thing
Democrats Launch Official Impeachment Proceedings
After months of indecision, infighting, and another in-word I can’t think of right now, House Speaker Nancy Pelosi said that Congress will move ahead with an official impeachment inquiry.
The decision to start official impeachment proceedings follows a report that President Trump withheld aid from Ukraine in exchange for dirt on political rival Joe Biden.
(Not sure why you’d need to go all the way to Ukraine to find dirt on Biden when we have all these creepy pictures of him groping people right here on American soil.)
Pelosi, who is notoriously allergic to even talking about impeachment, said yesterday that “the actions taken to date by the president have seriously violated the Constitution.”
Democratic strategists say Pelosi has chosen to act now because a five-page transcript of a phone call is easier to read than a 448-page report.
“This tracks more closely to Watergate because there is a direct cause-and-effect harming a political foe,” strategist Joel Payne told The Hill.
President Trump — who was meeting with world leaders at the U.N. General Assembly — tweeted “PRESIDENTIAL HARASSMENT!” as Pelosi made the announcement and he vowed to fight the “breaking news Witch Hunt garbage.”
Yesterday, the Senate voted unanimously to release the transcript of the phone call between President Trump and Ukrainian President/former comedian who starred as a man who was accidentally voted the president of Ukraine (not a joke) Volodymyr Zelensky.
In the transcript, which was released as I was finishing up this story, President Trump urges Zelensky to “do us a favour” and contact Attorney General William P. Barr about opening a potential corruption investigation connected to former Vice President Joseph R. Biden Jr.
“There is a lot of talk about Biden’s son, that Biden stopped the prosecution, and a lot of people want to find out about that,” said the President, according to the transcript. “So whatever you can do with the attorney general [Barr] would be great.”