WeWork co-CEOs Address Employees in First Memo After Adam Neumann Resiged

WeWork had been scaling up rapidly in the private markets. Now under the scrutiny of public market investors, it might have to pare back.

“As we look toward a future IPO, we will closely review all aspects of our company with the intention of strengthening our core business and improving our management and operations,” the company’s new co-CEOs Artie Minson and Sebastian Gunningham wrote in a letter to employees Tuesday, as seen by Fortune. “While we anticipate difficult decisions ahead, each decision will be made with rigorous analysis, always bearing in mind the company’s long-term interest and health.”

To employees, the letter and ensuing all-hands meeting suggested layoffs or cost-cutting efforts may be in the works. That comes amid reports that WeWork was expected to raise significantly less in its postponed IPO than it anticipated when the company revealed its prospectus. (WeWork did not immediately respond to a request for comment.)

The company doubled its revenue in 2018 to $1.8 billion, the kind of dramatic growth that venture capitalists covet—but that was matched by equally eye-popping losses of $1.9 billion that year.

And the delayed IPO was just the latest funding setback for the company. Banks reportedly pitched the company’s valuation between $43 billion to $104 billion when trying to win WeWork’s business, per the Financial Times. In pre-roadshow conversations however, a shortage of investor demand resulted in talks to shrink the valuation to $10 billion to $12 billion.

Employees and analysts alike however wonder if the IPO debacle could have been avoided in its entirety had the company raised the initial $16 billion it had sought in private markets from investors including SoftBank. That deal was however reportedly cut down due to market turbulence and due to opposition from the investors including the Saudi Arabian and Abu Dhabi sovereign wealth funds, which were said be worried about an over-allocation to real estate. A recent report from Vanity Fair also suggests that Neumann may not have made the best personal impression on the head of Abu Dhabi’s sovereign wealth fund, Khaldoon Khalifa Al Mubarak, coming into a meeting late and perhaps even hungover just before the $16 billion deal was significantly pared back.

Taken together, WeWork’s stumbles are certainly a sign that public markets are more risk averse than private market investors—but also that private boards need to be tougher on their founders in a way that better aligns with the public sphere as they seek an exit ramp. The switch up in the C-suite certainly echoes Uber’s saga. Silicon Valley had long been seen as a founder friendly nest—a narrative that broke down when major investor Benchmark sued Uber, paving the way for current CEO Dara Khosrowshahi to take over.

Who are Sebastian Gunningham and Artie Minson?

In similar fashion, the SoftBank-led campaign to oust Neumann resulted in the elevation of two even-keeled successors, both of whom hail from established public market companies rather than private ones. Gunningham, who joined a year and a half earlier, has come to be known as the jack-of-all-trades within the company, working on projects in multiple segments of the company. While Neumann was known to be mercurial according to sources with knowledge of the matter, Gunningham, who hails from Amazon, has a reputation as being process and goal-oriented, knowledgable about technology and able to translate complex topics into layman’s terms in ways Neumann was not. Gunningham previously ran Amazon’s marketplace as a senior vice president, overseeing over 30,000 people.

Minson meanwhile was known to be the numbers guy. While Neumann’s breadth of knowledge fell short in presentations with charts and financials, according to former and current employees, Minson, the same sources say, was in his element when going through complex financials. It was Minson and his deputy Mike Fitzpatrick, who presided over the recent quarterly earnings calls—a task typically reserved for the CEO.

“It is an incredible honor to lead WeWork during this important moment in the company’s history,” Gunningham and Minson said in a statement. “Our core business is strong and we will be taking clear actions to balance WeWork’s high growth, profitability and unique member experience while also evaluating the optimal timing for an IPO.”

Per the letter, the two have split their responsibilities into two broad swaths. Minson is expected to oversee finance, legal, people, real estate, public affairs, corporate communications, corporate development and global partnerships, and ventures.

Gunningham meanwhile is expected to oversee product, design, development, sales, marketing, technology, regional teams, and community, per the letter.

Neumann left in a more peaceful fashion than Uber’s Kalanick—there was no lawsuit, no public fight between investor and founder. But unlike Kalanick who remained a director on the board, Neumann will still loom large, remaining chairman of the board, but relinquishing majority control over the firm.

And the company he helped build, which has grown so rapidly, now employs 15,000 workers. Many of whom, after yesterday’s memo, may be wondering if they have a short-term tenancy, or a long-term future with the company.