Power couples: the Neumann factor
Investors want bosses to work together, not live together
Business power couples have received a bad rap lately. WeWork chief executive Adam Neumann and his wife, co-founder and “strategic thought partner” Rebekah, appeared to encourage one another’s eccentricities. Mrs Neumann reportedly demanded employees with “bad energy” should be sacked. Both are now stepping down from executive roles.
Investors want bosses to work together, not live together. Elizabeth O’Connell recently switched jobs at UK-listed litigation funder Burford following criticism from a US short-seller. Muddy Waters saw Ms O’Connell’s combined role — finance director and wife to chief executive Christopher Bogart — as a governance failing. Vernon Hill, co-founder of struggling Metro Bank, took flak for contracting wife Shirley’s business to design its wildly overspecified branches (lots of marble, free dog biscuits).
In theory, a successful private relationships should translate to the workplace. Trust and familiarity should raise productivity. Coupled-up founders should share goals and eschew rivalry. Family duties should be covered more flexibly.
Kevin and Julia Hartz credit their partnership with helping them start Eventbrite in 2006. The married couple now occupy the chair and chief executive roles respectively in the $1.5bn company. That has not stopped shares shedding more than half since last year’s initial public offering.
A study of Danish entrepreneurial couples in the decade to 2010 suggests fruitful partnerships are no rarity. Businesses started by couples achieved the same profits as businesses started by two people who were not in a relationship, despite lower sales. The incomes of entrepreneurial couples rise faster than those of couples where only one person started the business.
Metro Bank and Burford are listed in the UK and WeWork planned to float in the US. In public companies, executives are expected to serve shareholders’ interests above all. Marriage to another boss could make that harder. A chief executive might avoid firing her chief financial officer/husband, for example. The frosty silence during the car ride home would beat any froideur following a fractious dinner party.
The good news is that couples who start businesses together are no more likely to divorce or feel miserable than those who do not. Mr and Mrs Neumann no longer work together. He is switching to chairman. She is reportedly leaving. They can still enjoy a relationship brimming with the positive energy both espouse.