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> Adam also owned the rights to the "We" trademark, which the firm decided they must own and paid the founder/CEO $5.9 million for the rights. The rights to a n
by dlgeek 7y ago
> Adam also owned the rights to the "We" trademark, which the firm decided they must own and paid the founder/CEO $5.9 million for the rights. The rights to a name nearly identical to the name of the firm where he’s the founder/CEO and largest shareholder.
Really? How is this sort of shenanigan allowed?
- n-exploit 7y agoThe Tragedy of the Commons 2.0™
- Apocryphon 7y agoThe Tragedy of the Creative Commons
- marcinzm 7y agoAdam controls the majority of voting right to the company and the board (made up of VCs) doesn't want a messy legal fight since they stand to lose money if We tanks. So a moderate amount of graft is tolerated since the alternative is less desirable.
- dooglius 7y agoBreach of fiduciary duty can be a criminal matter in addition to a civil one.
- amluto 7y agoI am not a securities lawyer (or any other type of lawyer), but: if this all blows up, I believe that self-dealing by the executives is an excellent way for creditors to pierce the corporate veil.
- devcpp 7y ago>Adam controls the majority of voting right to the company This alone should be a massive turn-off for investors, nevermind this kind of personal eccentricity that makes this absolutely insane.
- erikpukinskis 7y agoI don’t think majority ownership is necessarily a turn on or a turn off. There are cases when a bunch of minority shareholders would be chaotic and prevent the company from making long term bets. There are also cases where minority ownership would allow for stability while cycling through executive turnover and experimentation. Which situation you are in, and whether shareholders would be turned off by majority ownership, is context specific. For example, I think SpaceX would be a less attractive stock if there were only minority stockholders, and having Elon as the majority holder makes it more likely to succeed at going interplanetary, rather than just milking a traditional orbital business model. If your investment thesis depends on a bold bet like that, a single majority shareholder you trust would be a comfort.
- codeisawesome 7y agoSpaceX isn’t a public stock though?
- erikpukinskis 7y agoIt still has investors, and shares.
- Breza 7y agoFor the SpaceX example, I actually think they'd be better off focusing on the orbital launch market. The dream of affordable and reliable access to space dates back to the 50's and still hasn't been fully realized. In my opinion, that's a bigger deal than trying to get SpaceX to put a payload beyond orbit. I agree with your larger point though.
- JumpCrisscross 7y ago> How is this sort of shenanigan allowed? Investors gave Adam virtually unchecked power over their capital.
- navigatesol 7y agoThis guy has become a multi-hundred-millionaire by renting out office space under a business model that appears to make no financial sense. Because "tech company". It's utterly bonkers.
- marcinzm 7y agoIt's basically a modern ponzi scheme as I see it. The VCs make money at the expense of people who buy post-IPO.
- projektfu 7y agoIf it goes where I think it should, then it’ll be the IPO subscribers holding the bag.
- wpietri 7y agoYeah, I think WeWork is at best the next Groupon: something that was made to seem just plausible enough at the time that the financiers made a bundle, but that rapidly turns into a minor-league business as the shiny wears off post-IPO. And that's at best. But I think a collapse is more likely. Uber may also be losing a ton of money, but they have enormous pricing power over their major raw materials, namely individual drivers and their cars. But WeWork is renting space from hard-bitten landlords run by professionals, and those companies have plenty of alternative tenants if they don't like WeWork's terms. At some point I think there's going to be a mismatch between their short-term income structure and their long-term obligations to the space owners, and then it's going to be a big old mess.
- fragmede 7y agoIf there's a recession that hits WeWork, those alternative tenants will also dry up, for the same reason. Companies won't want to justify a large capex investment into new office space, and cancel pending contracts for space that hasn't been built out yet. Comparatively, the money WeWork's customers spend on WeWorks would be considered opex, for those whos budgets are big enough for the distinction to be material. Is WeWorks hacking corporate America's budgeting practices, doing what AWS did for rack space?
- ggg3 7y agolol. let alone trademark "we". guess I should trademark "you" and call google about youtube.
- juliusmusseau 7y agoThis is a classic due-diligence item during early funding rounds - up there with "does the company actually own its domain name or do one of the founders own it"? I suspect either due-diligence caught it and decided to live with it after some negotiation, or they missed it - oops!
- konschubert 7y agoNo, they just decided later to re-name the company from WeWork to We - and then they needed the new brand name
- juliusmusseau 7y agoThe founder already personally owned the trademark to "We" well before they made that decision? That's lucky. In that case wouldn't he simply have to divulge that fact early on in the decision-making process? "Guys, maybe I should recuse myself on this decision since I'm in a bit of a conflict..."
- 6nf 7y agoHe has majority voting rights, he's the one making these decisions.
- DannyBee 7y agoIt usually is not. But delaware