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WeWork's business model makes more sense when you realize it's probably just a scheme for transferring VC money directly into Adam Neumann's pocket. He owns a n

WeWork's business model makes more sense when you realize it's probably just a scheme for transferring VC money directly into Adam Neumann's pocket. He owns a number of the buildings that WeWork is leasing: https://www.bizjournals.com/sanjose/news/2019/01/16/wework-ceo-neumann-property-owned-ipo.html https://www.bizjournals.com/sanjose/news/2019/01/16/wework-c...

tomhoward 7y ago
No longer true; he transferred them to a fund owned by the company: https://www.businessinsider.com.au/wework-ark-fund-to-buy-commerical-properties-2019-5?r=US&IR=T https://www.businessinsider.com.au/wework-ark-fund-to-buy-co...
- throwawaytoday5 7y ago
  I don't mean to be facetious but how does that make it better? Doesn't he still control the company that owns the fund? Is it suppose to be better because it "looks" better because with my minimal understanding there isn't a difference.
  - fastball 7y ago
    I mean, it is different / better. Now, if WeWork goes belly up, Neumann doesn't get to keep the buildings.
    - elmomle 7y ago
      But he gets to keep the money that they paid him for the buildings.
  - tomhoward 7y ago
    His personal ownership was a problem as it created a conflict of interest between his personal property assets the the company, so you have scenarios where he is engaging in related party transactions [1], i.e., potentially entering into lease agreements at above-market rates, to benefit himself personally, and (as the sibling commenter pointed out), having highly valuable property assets, funded by company loans, that remain in his personal ownership even if WeWork goes out of businesses. When the company owns the properties, that ceases to be the case, as there is no conflict of interest between property owner and occupier as they are one and the same. He is (and was) still always legally obliged to act bona-fide in the interest of the company (i.e., act as much for the benefit of minority shareholders as his own). It was just harder to scrutinise when he was both the majority shareholder of the company, and landlord for some of its properties. That is no longer the case. [1] https://en.wikipedia.org/wiki/Related_party_transaction https://en.wikipedia.org/wiki/Related_party_transaction
- sachdevap 7y ago
  That link says he transferred them at cost, which means he still made a profit off of them beside the company. The fact that he even did that in the first place is very questionable.
judge2020 7y ago
Also worth noting the trademark "We": https://twitter.com/seldo/status/1161822659610497025?s=20 https://twitter.com/seldo/status/1161822659610497025?s=20

tomhoward 7y ago

No longer true; he transferred them to a fund owned by the company: https://www.businessinsider.com.au/wework-ark-fund-to-buy-commerical-properties-2019-5?r=US&IR=T https://www.businessinsider.com.au/wework-ark-fund-to-buy-co...

throwawaytoday5 7y ago
I don't mean to be facetious but how does that make it better? Doesn't he still control the company that owns the fund? Is it suppose to be better because it "looks" better because with my minimal understanding there isn't a difference.
- fastball 7y ago
  I mean, it is different / better. Now, if WeWork goes belly up, Neumann doesn't get to keep the buildings.
  - elmomle 7y ago
    But he gets to keep the money that they paid him for the buildings.
- tomhoward 7y ago
  His personal ownership was a problem as it created a conflict of interest between his personal property assets the the company, so you have scenarios where he is engaging in related party transactions [1], i.e., potentially entering into lease agreements at above-market rates, to benefit himself personally, and (as the sibling commenter pointed out), having highly valuable property assets, funded by company loans, that remain in his personal ownership even if WeWork goes out of businesses. When the company owns the properties, that ceases to be the case, as there is no conflict of interest between property owner and occupier as they are one and the same. He is (and was) still always legally obliged to act bona-fide in the interest of the company (i.e., act as much for the benefit of minority shareholders as his own). It was just harder to scrutinise when he was both the majority shareholder of the company, and landlord for some of its properties. That is no longer the case. [1] https://en.wikipedia.org/wiki/Related_party_transaction https://en.wikipedia.org/wiki/Related_party_transaction
sachdevap 7y ago
That link says he transferred them at cost, which means he still made a profit off of them beside the company. The fact that he even did that in the first place is very questionable.

judge2020 7y ago

Also worth noting the trademark "We": https://twitter.com/seldo/status/1161822659610497025?s=20 https://twitter.com/seldo/status/1161822659610497025?s=20