Where do I even begin?
I was on a flight yesterday, and I chose not to get the
Wi-Fi. I vicariously listened to an audio book and drifted in and out of sleep
with zero cares in the world. And then I landed.
The first thing I saw on Twitter was the news about WeWork
CEO Adam Neumann stepping down, and I
naively thought I had missed so much while in the air. My colleague
Daniel Bentley responded with
an ominous: “Wait til you scroll up.”
Here are the words I dropped into the Term Sheet word doc as
I scrolled up last night: “Neumann out, Comscore fraud, Trump impeachment
But wait, there’s more! This morning, Juul’s co-founder and CEO stepped down too amid a proposed U.S. ban on vaping flavors that make up more than 80% of its sales.
I’m going to attempt to address some of the big stories of
the day. Let’s begin:
WEQUIT: Oh boy. In the off chance you haven’t read 18
hot takes on WeWork already, let’s talk about it. A Term Sheet reader emailed
me and asked, “Is this actually a WeWork blog?” At the risk of upsetting them,
I need to talk about WeWork just one more time.
Not long ago, WeWork vowed to “elevate the world’s consciousness” at a $47 billion valuation. People raised eyebrows at the company’s business model and governance practices. So WeWork decided to compromise. It made governance changes and postponed its IPO amid spiralling investor demand. By that point, the company’s sky-high valuation was to be reduced to as little as $15 billion on the public market. Most recently, CEO Adam Neumann’s reported partying and drug use came to light following a revealing WSJ report.
All of this came to a head on Tuesday afternoon. Neumann
announced he would be stepping down as CEO and would continue as a
non-executive chairman of the board. In a statement, Neumann said: “While our
business has never been stronger, in recent weeks, the scrutiny directed toward
me has become a significant distraction, and I have decided that it is in the
best interest of the company to step down as chief executive.” WeWork’s Artie
Minson, formerly co-president and chief financial officer, and Sebastian
Gunningham, formerly vice chairman, have been named co-CEOs of the company.
CEO Daily, Fortune’s Alan Murray asks: So that raises the
question: now that Neumann is no longer at the helm, what’s left?
That’s hard to say because we all remember that Neumann was
presented as the company’s crown jewel in its IPO prospectus. The S-1 listed
Neumann as a risk factor, noting that the company’s future success depends in
large part on him continuing to serve as CEO, “which cannot be ensured or
Neumann reportedly relinquished control after facing pressure from SoftBank’s Masayoshi Son—the man whose private equity backing fueled WeWork’s remarkable rise. Bloomberg’s Matt Levine wrote yesterday that sometimes journalists inadvertently become a character in the story. (He uses the example of how the opponents of Uber’s Travis Kalanick used the threat of leaking to the New York Times (i.e. Mike Isaac) as leverage to force him out.) Levine writes: “So if you’re a SoftBank executive who wants Neumann gone, persuading Son to fire him is good, but telling reporters that you’ve persuaded Son to fire him is even better.”
It’s all so much to absorb, and frankly, I’m confused by
some of the motivations here. If anyone can tell me what SoftBank/Son’s angle
in all of this is, please feel free to write in.
For more, read my colleague Rey Mashayekhi’s piece here: The
Remarkable Rise—and Epic Fall—of WeWork’s Charismatic, Controversial Founder
VAPE NO MORE: Juul Labs’s Kevin Burns will step down,
as the highly valued private e-cigarette company faces a growing public backlash.
The company said in a statement that K.C. Crosthwaite will be joining the
company as CEO effective immediately. Crosthwaite previously served as chief
growth officer at Marlboro maker Altria Group, which took a $13 billion stake
in Juul last year.
Juul also said it has a new marketing strategy: It will
suspend all TV, print and digital ads and it will stop some of its lobbying
efforts. The company said it is committing to fully support and comply with any
new federal policy related to vaping products. The FDA is currently weighing
regulations to ban all flavored e-cigarettes. Read
POWER MOVE: President Donald Trump is in the midst of
a battle that will define his presidency and the 2020 election. Speaker of the
House Nancy Pelosi announced that Democrats would begin a formal impeachment
inquiry into whether President Donald Trump “sought help from a foreign
government for his reelection.”
Trump says he will publish an un-redacted and declassified
transcript today of a phone call with Ukraine’s leader at the center of what
Democrats allege is his abuse of presidential power. The White House is also
planning to release to Congress a whistleblower’s complaint that triggered the
week-long crisis that has rocked the Trump presidency.
Regardless of what might be released by the White House, the
Democratic caucus seemed squarely behind an impeachment inquiry. With
Pelosi’s backing, that ultimately could lead to the full House voting on
articles of impeachment at a to-be-determined point.
COMSCORE FRAUD: The SEC charged Comscore and its
former CEO Serge Matta with “engaging in a fraudulent scheme to overstate
revenue by approximately $50 million and making false and misleading statements
about key performance metrics.” As is common with such charges, Comscore
neither admitted nor denied the charges, while still paying a fine. The company
paid $5 million in penalties to settle fraud charges. Matta will also pay
$700,000 in penalties and repay his former company $2.1 million for stock and
other compensation he received. He will be barred for 10 years from serving as
an officer or director of a public company. Read
Woof, ok, I’m tired. See you tomorrow.