Adam Neumann is co-founder of We Company
WeWork's Adam Neumann has agreed to step down as chief executive of the modern office rental company, saying it is in the company's "best interest".
The decision is effective immediately, the company said. He will remain with the company as non-executive chairman.
The scrutiny of his leadership "has become a significant distraction," it said.
The move comes after WeWork's stock market listing plans have struggled, with investors raising concerns about losses and governance.
"Although our business has never been stronger in recent weeks, the scrutiny directed at me has become a significant distraction, and I have decided that it is in the company's best interest to step down as CEO," Neumann said in a statement.
WeWork's board of directors said it has appointed WeWork's former co-chairman and chief financial officer Artie Minson, and Sebastian Gunningham, the company's former vice-chairman, co-executives.
Neumann built WeWork in his own image, creating a billion-dollar company known for its workspaces, free-flowing alcohol, and a stated mission of "raising awareness of the world."
Since 2010, the company has expanded from a single office in New York City to over 500 locations in 29 countries. Japanese investment giant SoftBank valued the company at $ 47 billion in its latest round of investments.
But Neumann's impetuous charisma, which once attracted investors, emerged as a liability when WeWork decided to sell its shares in the public market. Reports suggest that the company's expected valuation fell between $ 10 billion and $ 12 billion.
Reports emerged detailing erratic decision making and the ways in which their party habits infused corporate culture.
Perhaps most alarming to potential investors was the way Neumann blurred the lines between his own personal finances and WeWork.
For example, over the years, the company was a tenant on some properties it owned; and Neumann, who had voting control of the company, also secured personal loans using company shares as collateral.
"I don't think many investors are comfortable with Neumann's relationship with the company," technology analyst Sam Reynolds told the BBC.
Neumann agreed to modify some of these deals as it was clear that he was losing the support of major funders such as SoftBank.
For example, he returned the $ 5.9 million in stock he received for selling WeWork under the "We" mark and agreed to give WeWork any profit from the properties it owns and which we rent.
His wife Rebekah, co-founder of WeWork, who had the power to identify a successor, also had his role reduced.
Neumann's wife Rebekah is co-founder and director of WeWork, but her role is controversial.
Neumann also agreed to significantly reduce its voting power. But even this change and its role change may not ease concerns about the company, which lost nearly $ 2 billion last year.
Market sentiment changed as shares of other high-profile, loss-making startups such as the Uber and Lyft apps plummeted after the fluctuation.
And critics have long complained that WeWork's financial data makes no sense, pointing to the company's losses and much lower ratings from similar companies, such as rival IWG, which used to be known as Regus.
WeWork "is a real estate company that tries to spread the tech company's fairy dust on itself," said Richard Kramer, founder of Arete Research. "This will not work with investors."
The company was relying on its stock market launch to unlock new loans, which means that its delay could mean problems.
Reynolds said he expects the company to remain privately held in the near future.
"I think the IPO will be postponed indefinitely," he said. "WeWork certainly has a future, but not as a public company."