We have suffered through Richard Scrushy (HealthSouth), Dov Charney (American Apparel), Elon Musk (Tesla), Travis Kalanick (Uber), Martin Shkreli (Turing Pharmaceuticals), Elizabeth Holmes (Theranos), Jeff Dachis (Razorfish), and the list is long and becoming boring. Now comes Adam Neumann (WeWork, now just We). These entrepreneurial CEOs with great ideas are dynamic, energetic, forward-thinking, and stubborn. They can take an idea and see it through to great financial success. Then something happens. Perhaps their downfall comes from too much recognition and too much money too early in life. Perhaps the downfall comes because they have no one to rein them in. Yet somehow they manage to get their companies into trouble, cause questions to be raised about their companies, and/or just keep pushing the envelope on personal behavior.
Mr. Neumann was profiled in the Wall Street Journal. One example was a private jet flight for Mr. Neumann and his friends to Israel. The gang smoked marijuana on the flight over the Atlantic, and the crew found a stash of the drug placed in a cereal box — planning ahead for the trip back. The owner of the private jet recalled the plane. That company wanted no part of the young CEO’s adventures. Mr. Neumann wants managers to fire 20% of their employees because he believes they have hired too many mediocre folks. The conflicts of interest revealed in preparation for an IPO were stunning — family, friends, and Mr. Neumann all benefited privately from We’s work. Mr. Neumann borrowing money from the company with his options as collateral — conduct that public companies can no longer do thanks to Bernie Ebbers and his WorldCom disaster.
Yet, in the article, there are still analysts proclaiming that this kind of conduct is what resulted in the company meeting its “outlandish” targets. Yes, indeed, they will meet the targets when you are firing at a rate of 20%. However, that does not mean that the numbers are real. That info will be percolating. The We board seeks to remove Mr. Neumann — good luck with that one. See the stories of the CEOs listed.
History repeats because another thing these young buckeroos have in common is that they never learn the lessons of those who have taken similar paths with their companies. Neither do the analysts. The boards have tried, but the obstacle is that the buckeroos have majority control.