According to anew WSJ report
[https://www.wsj.com/articles/some-wework-board-members-seek-to-remove-adam-neumann-as-ceo-11569171188?emailToken=3945679d7e7af0e57b781e146309594eKPImIdKP7snpEhAiKh9PgAhrM28weSqNKxsY2dqSES582CVNfdFW1/iW9JZmhBouIzDujw30d7usudnP3NqBQRUPCLlBqMAVFvB3ZnKkgDwSykpsNAn2A+o28kZqFO++&reflink=article_copyURL_share] , certain members of WeWork?s seven-person board, which includes cofounder and
CEO Adam Neumann, are planning to pressure Neumann to step down and instead
become We?s non-executive chairman. The move, says the outlet, ?would allow him
to stay stay at the company he built into one of the country?s most valuable
startups, but inject fresh leadership to pursue an IPO that would bring We the
cash it needs to keep up its torrid growth.?

The WSJ and Bloomberg are reporting that it isSoftBank
[https://crunchbase.com/organization/softbank]specifically that wants Neumann to
step down. Neither WeWork nor SoftBank is commenting publicly.

It?s a fascinating development, the kind we saw when Uber?s board successfully
forced cofounder and longtime CEOTravis Kalanick
[https://crunchbase.com/person/travis-kalanick]to abandon his role as CEO.
Still, we?d caution against drawing too close a comparison. While the venture
firm Benchmark, which spearheaded Kalanick?s ouster, stood to lose billions of
dollars if Kalanick dragged down Uber and continued to push off an IPO,Benchmark
[https://crunchbase.com/organization/benchmark]was not in a do-or-die situation
because of its Uber investment.

SoftBank appears to be in more dire straights, making this standoff a
particularly meaningful one.

Let?s back up a minute first, though, and consider who is involved and which way
this could potentially go. A few days ago,? Business Insider put together a
usefulcheat sheet
[https://www.businessinsider.com/meet-weworks-board-of-directors-thatll-advise-ceo-adam-neumann-2019-9#bruce-dunlevie-is-the-founding-partner-of-venture-capital-firm-benchmark-3] about WeWork?s board members that may hint at their allegiance.

1.) Ronald Fisher ? who is vice chairman at SoftBank Group after founding
SoftBank Capital, a U.S. venture arm of SoftBank ? joined SoftBank?s board last
year.? He oversees 114 class A shares, each of which carries one vote.
Obviously, he?s going to side with SoftBank.

2.) Lewis Frankfort ? the chairman of a fitness studio chain called Flywheel
Sports ? has been a board member of WeWork for roughly five years, and BI says
WeWork once loaned him $6.3 million, which he repaid with interest earlier this
year. We have to think he?d stick with Neumann out of loyalty. At the same time,
he doesn?t wield much power unless he has the right toblock significant actions
at the company
[https://www.startuplawblog.com/2009/03/21/what-rights-come-with-preferred-stock/] (some shareholders get these blocking rights; some don?t.)? What he know: he
controls 2 million shares, and 750,000 of them are Class B shares that carry 10
votes each.

3.) Benchmark, which first backed WeWork in 2012, is represented on the board by
Bruce Dunlevie, the founding partner of the venture firm. Benchmark owns 32.6
million Class A shares, and could go either way, seemingly. On the one hand,
Benchmark doesn?t want to establish areputation for pushing out founders
[https://techcrunch.com/2017/08/11/what-was-benchmark-thinking/]after the
Kalanick debacle, and if it supports SoftBank over Neumann, it risks this exact
thing happening. On the other hand, Benchmark might not want to battle with
SoftBank if it thinks it has staying power or it?s concerned (suddenly) that it
allowed Neumann to amass too much control.

4.) Steven Langman, the cofounder of private equity firm Rh?ne Group, has ties
that go back a ways with Neumann, and he has benefited richly from the
association. According to anApril story
[https://www.wsj.com/articles/investors-ties-to-wework-raise-conflict-of-interest-concerns-11566903601] in the WSJ, Langman met Neumann through a shared rabbi in its earlier days and
joined the board in 2012. He also invested in the company (he owns 2.28 million
shares, according to a bond filing). Langman is on both the company?s
compensation committee and its succession committee. He also runs a real-estate
investment vehicle in partnership with We that buys and develops buildings to
then lease back to the co-working company, despite that it raises
conflict-of-interest questions. We?d guess he?s on Team Neumann.

5.) Mark Schwartz is a former Goldman Sachs exec who stepped off the board of
SoftBank earlier this year but who remains on WeWork?s board. Why he left
SoftBank?s board may or may not hold clues here. According to The Information,
he remains aconfidante
[https://www.theinformation.com/articles/wework-board-to-meet-monday-on-neumanns-removal] of SoftBank CEO Masayoshi Son.

6.) John Zhao is the chairman and CEO of Hony Capital, which partnered with
SoftBank and WeWork to create astandalone entity
[https://venturebeat.com/2017/07/27/wework-grabs-500-million-investment-to-expand-its-shared-work-spaces-across-china/] called WeWork China back in 2017, and Hony has subsequentlypoured more capital
[https://therealdeal.com/2018/07/26/wework-raises-500m-for-chinese-subsidiary/] into that subsidiary. We?re not sure how close Zhao is to SoftBank, but if
SoftBank brought Hony into WeWork, we?re guessing he will back the Japanese
conglomerate on this one. Hony doesn?t own 5 percent or more of WeWork?s parent
company so its share holdings aren?t listed publicly.

Harvard Business School professor Frances Frei also brought inroughly a minute
ago
[https://www.businessinsider.com/wework-adds-former-uber-executive-frances-frei-to-board-2019-9] to add a much-need sprinkling of gender diversity to WeWork?s all-male board.
Frei?s name first came to be more broadly recognized when she was hired to help
address Uber?s battered culture, so presumably she has ties to Benchmark. We?d
guess she?ll side with Dunlevie, meaning that we have no idea whose side she
will take.

Neumann, it?s very worth noting, is himself is far more powerful than any of
these six individuals. Even after the company recently revised Neumann?s
supervoting rights, which gave him 20 times the voting power of ordinary
shareholders and now give him 10, he could fire the entire board if he so
chooses, notes the WSJ.

Naturally, that wouldn?t be a good look for Neumann, who is already battling
growing public perception that, among other negatives for a public company CEO,
he smokes a whole lot of pot and that he may be delusional. (AWSJ piece
[https://www.wsj.com/articles/this-is-not-the-way-everybody-behaves-how-adam-neumanns-over-the-top-style-built-wework-11568823827] last week reported that Neumann likes to smoke marijuana with friends and while
airborne. It also said that Neumann has confided to different people his
interest in becoming Israel?s prime minister and president of the world.)

All that said, SoftBank is also fast-losing credibility. While its CEO, Son, has
been long revered as a visionary, a growing number of sources we?ve spoken to
question the viability of his entire Vision Fund operation. They see WeWork?s
ever-soaring valuation on the private market, from$20 billion
[https://www.wsj.com/articles/this-is-not-the-way-everybody-behaves-how-adam-neumanns-over-the-top-style-built-wework-11568823827] to, more recently,$47 billion
[https://www.businessinsider.com/definitive-history-wework-company-valuation-2019-9#january-2019-5-billion-direct-investment-from-softbank-47-billion-valuation-12] ? which was almost single-handedly SoftBank?s doing ? as just one in a costly
string of poor calls.

Indeed, despite the roughly $10 billion that SoftBank has sunk into WeWork, the
financial loss it would take if WeWork falls apart would pale in comparison to
the reputational hit Son would suffer, and you can bet there will be ripple
effects.

Our suspicion: given the Vision Fund?s impact on the startup industry over the
last few years, there?s a lot more riding on what happens with WeWork than meets
the eye. Stay tuned.

Correction: An earlier version of this story did not include WeWork board member
Mark Schwartz.