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WeWork CEO gives back $5.9M from 'We' trademark after criticism
- ulfw 7y agoSo is this a thing now? That all new high-valuation tech companies of the last generation (Uber, "We") have to have some shady founder/CEO thing going on?
- toomuchtodo 7y agoBeing honest doesn’t garner press coverage. Ever hear of troubles at Twilio, PagerDuty, etc? I have not (disclaimer: no investment in either, happy customer of both).
- cglace 7y agoWhy would you need to disclaim that you are not an investor?
- nabdab 7y agoHe’s disclaiming that he’s a costumer, and noting that he’s not an investor.
- toomuchtodo 7y agoTransparency and disclosure of any bias is important.
- cglace 7y agoIs it, I think saving disclaimers for when they actually matter is more important. If everyone included disclaimers listing their inconsequential relations to companies they would quickly be ignored as noise(which they would be).
- deleted 7y ago[deleted]
- superfrank 7y agoI doubt the amount of shady CEOs is any worse than it was at times in the past (the 80s being known for the "Gordon Gekko" type CEOs immediately come to mind). I think it just feels like there's more corruption because of a combination of us consuming more media, quicker and recency bias.
- phjesusthatguy3 7y ago+1 Thank you. The whole Web 2.0 and beyond phenomenon is about getting some other sucker to over-pay for what you built before you run out of money.
- matwood 7y agoAnd investors are looking for anything to generate returns which leads to blinders.
- ticmasta 7y agoThe only real differences I can see are: 1. The numbers are a magnitude larger, instead of 100's of millions we're talking billions for the individual players. * Today's villains are far more disingenuous about their motives. In the 80's they unapologetically embraced greed for greed's sake, none of this false "making the world a better place" BS.
- Herrin 7y agoWe're in an investee's market right now. Investors are throwing large amounts of money at anything that might have a positive return. This gives the founders/CEOs/etc. a lot more power to get away with this kind of stuff. If their behavior scares off one investor, there will still be a line waiting to give them money. When things swing the other way, and not as much money is floating around waiting to be invested, investors will be able to hold the investees to higher standards.
- KaoruAoiShiho 7y agoI don't think it's that shady, I'd much prefer founders having power over investors having power. If you've been on HN for a while you've heard way more stories about investors exploiting founders and ruining companies and lives. Both sides should be protected but yeah there exists a bias I'd rather it be on the founder side than the investors.
- codewithcheese 7y agoAdam Neumann is a genius at finding ways to increase his net worth as founder of a VC backed company. [0] WeWork’s CEO Makes Millions as Landlord to WeWork - 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...
- october_sky 7y ago> ... is a genius at I'm reminded of the title of a book I read: https://en.wikipedia.org/wiki/The_Smartest_Guys_in_the_Room_(book) https://en.wikipedia.org/wiki/The_Smartest_Guys_in_the_Room_...
- degenerate 7y agoThe documentary with the same title is also excellent, if you're more inclined to watch something than read it.
- 4ntonius8lock 7y agoI'd strongly suggest the book. It goes into amazing detail and is super well written. I'm generally more into literature when not reading work related things. This was just fun to read.
- philwelch 7y agoA true genius would increase his net worth by building a successful business. If you're not clever enough to do that though, there's always self-dealing.
- draw_down 7y agoHe is building a successful business, it's just that that business isn't necessarily WeWork. I don't hold their stock, I'm not one of their VCs, what he and WeWork do is not my business, I have no quarrel with it.
- munk-a 7y agoErgh, the lead picture in the article is terrible and paints him in a significantly negative light. I'm not a huge fan of WeWork's business model especially with the tax law exploitation in the UK but I find it quite irresponsible for newspapers to cherry pick such terrible photos - just like - don't have an extreme face closeup, get a picture of him standing on a stage[1] and don't pick one that makes me wary this article is 100% slant... Because the We trademark was terrible and I really want to read an informative piece on it, but suddenly I have zero trust in this article. 1. The standard CEO pose - ala Steve Jobs
- umeshunni 7y agoThe article is from Business Insider, a well known clickbait content farm, not a newspaper.
- lazerpants 7y agoBusiness Buzzfeed
- ineedasername 7y agoEither way, it's still true that he used his position as CEO to outsource trademark creation to himself, and has now reversed that move. Also, other self-dealing.
- umeshunni 7y agoYes, I don't think anyone can deny that the CEO has done some very shady dealings, including selling stock right before the IPO, selling services to the company, leasing real estate back to the company and so on.
- Finnucane 7y agoSo, your complaint is that the article is presenting a viewpoint that you basically agree with, and making the CEO out to be a grifter, which he basically is, and therefore making him look like a grifter is uncomfortably biased? Hell, the article didn't even mention the insane narcissism of the IPO filing.
- exogeny 7y agoIt's less about the actual transaction and more about the structure that permitted it and the capricious willingness to do it. There are red flags all over the place with this company, and the optics of him doing that just adds more fuel to the raging inferno of terrible governance.
- csours 7y agoI'm just kidding guys. I was just testing to see if you really cared about corporate governance. You passed the test! Now look at the top line and my super special non-GAAP sauce! Now with 100% less GAAP!
- munk-a 7y agoI am actually a bit surprised this isn't illegal - it seems like the CEO purchasing the "We" trademark would likely violate an NDA or possibly be pursuable under corporate espionage laws - he essentially sniped the domain once the company restructuring was on the road map... Alternatively the shareholders might be able to go after him for some conflicts of interest - he manipulated the company restructuring to pick a particular name after personally securing the rights to it to force the company to buy it off of him... Both these scenarios seem like things that should be illegal.
- throwaway_law 7y agoVery rarely do you see the person behind Scam Scheme #1 return the ill gotten gains in preference for the potential gains behind the much bigger Scam Scheme #2. This guy is all class.
- frogpelt 7y agoHonestly, who cares? A lot of people care now because they just filed for an IPO, which is why he returned the money. But if this was a private company and a co-founder thought he deserved $6 million for his efforts and wanted to label it as a trademark transfer, I see no problem with it.
- jeromegv 7y agoWell that's the whole point. It is a public company so people should care, since investors should be aware of what they are getting into. If they invest in a company and money gets transferred to the owner in some funny ways, they should know. The fact that this wouldn't apply if they were private doesn't really matter here, they are on their way to be public.
- ineedasername 7y agoIs this a "who cares" as in it's none of our business, or as in he isn't doing anything wrong? Because generally when you work for a place, as an employee or CEO of anything in between, they own all of your work-related output. Better compensation in terms of salary, options, etc., is the way you're rewarded for strong performance. Self-dealing is generally regarded as a breach of fiduciary duty, and is punishable by repaying the loss along with punitive damages.
- munk-a 7y agoMost people are denied the opportunity to casually pick up $6 million for nothing and that money could have gone to increase salaries for people who are actually helping to keep WeWork running.
- code4tee 7y agoWhy does WeWork increasingly look like one of those deals on Shark Tank that starts off looking great then goes way south when the sharks start probing? I can see it now: “Wait, so we’d be investing in your business which is leasing buildings from another business that you own... but we’re not getting a piece of that action?” “Hold on, so we’d have to license the name of this company back from you and then you continue to get a royalty from that?” “So what’s your revenue and how much did you take home last year? Sorry say that again?!?”
- ChuckMcM 7y agoPretty much as far as I can tell. My rule is that after finding more than one path where a company is generating metrics through a scheme where it is on both ends, I figure they are all in on the misrepresentation/fraud aspect.
- x0x0 7y agoThe thing is, the $6m is so... pissant. Like WeWork made Adam a (multi!) billionaire. What is he doing scamming WeWork over $6m?
- braythwayt 7y agoThere's a certain type of personality that sharpens their pencil over everything and anything. They are often zero-sum thinkers, who reason that if they aren't taking the maximum on everything, somebody else is taking advantage of their "generosity."
- kirubakaran 7y ago"noun is gonna verb" comes to mind (where noun ≈ verb)
- human20190310 7y agoIt's 6 million real dollars.
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- GhettoMaestro 7y agoI will be very happy when WeWork collapses. Every time a jackass like this "graces" our industry, we are set back in the aftermath of the wake - it reinforces a false narrative that tech companies are bullshit.
- nabdab 7y agoWework is not a tech company... Stop buying into the narrative. Wework is a landlord nothing more nothing less.
- xeromal 7y agoWework is a tech company as long as people call it a tech company.
- ineedasername 7y agoI don't see how they ever even got the label of a tech company. It seems really just because they had lease terms that were very appealing to actual tech companies/startups etc., and then said "Hey, we should be a tech company too!" And people believed them.
- BinaryIdiot 7y ago> it reinforces a false narrative that tech companies are bullshit. They're not a tech company tho...
- peterwwillis 7y agoHow is it a false narrative?
- georgeecollins 7y agoJason Calacanis suggested that the CEO should do this exact thing on his podcast last week. He also suggested he should tie up his shares longer to compensate for all the money he has borrowed against stock to show he is still long the company. I would never invest in this company but it is good to see that at least people understand that this sale was shady.
- draw_down 7y agoA few million here, a few million there, pretty soon you're talking about real money.
- rmason 7y agoJason Calacanis predicted that he'd give the trademark back in this past Friday's episode of TWIST right at the 16:40 mark. But he didn't double his post IPO lockup which is the other thing Jason suggested that he do. https://thisweekinstartups.com/e969 https://thisweekinstartups.com/e969 I've got a friend who runs a very successful co-working center. She competes against WeWork and said the first half of this episode is the single best discussion of the WeWork IPO.
- hn_throwaway_99 7y agoThanks very much for posting that, was very informative. My favorite tidbit was when Molly Wood was saying that she heard from a financial analysis firm that specializes in obfuscation that this was the most unclear S1 they had ever seen in terms of hiding basic financial metrics, and the other guest said he couldn't even figure out what the GAAP margin was after reading the S1. That to me is more damning than any other shenanigans. Why wouldn't they clearly state the most basic financial metrics if this was anything else besides a steaming, raging dumpster fire?
- jonlucc 7y agoFor those curious, the other guest was Alex Wilhelm, a regular financial reporter of startups and their S1s. He's pretty well-equipped to dig into them.
- rmason 7y agoHe said in that video that the information contained in the S-1 was worthless. If in the know journalists are trashing it then who is going to be buying this stock?
- mattcdrake 7y agoPension fund managers.
- rajacombinator 7y ago
- ergothus 7y agoAt lot of comments here are saying "this is not evil, buisness people can and should do what they can get away with" (paraphrase) Some other comments point out why investors should object, even if it isn't evil. I, for one, am grateful for this demonstration that transparency can work. I feel like the last several years have involved a lot of "here's someone/some company doing something really bad" and the world collectively shrugs. (I mean, lots of outrage too, but the shrugs win) Here's a case where govt regulation (requiring the disclosure), people reporting, and individual reactions all did what they were supposed to do. (And I dont mean that the money was returned - I mean that there is sufficient pressure that he/the company actually feels a need to react). It's a nice feeling, even if too rare.
- bradhe 7y agoThe thing that's truly amazing about WeWork is that they're able to get away with all this.
- onetimemanytime 7y agoThe collapse gonna be spectacular though. Usually it is with these type of companies
- strikelaserclaw 7y agoWhere is this guy getting all this money to pocket it himself?
- maehwasu 7y agoVCs who think they can then flip the whole mess onto the public markets.
- stingraycharles 7y agoWhat are the types of investors that will invest in WeWork after IPO? I can see that even on regular investment forums they think it’s a joke... Will it be daytraders? Index funds? Or just “suckers” that have a fear of missing out? I’m not trolling, I really try to understand what reasoning those people have.
- dvtrn 7y agoSeems to me if someone is shorting We because they really expect a drop following this and just want in on the action to scalp what they can, are they really a sucker? Scalpers gonna scalp.
- chocolatebunny 7y agoI didn't think you could short immediately after IPO.
- homologate 7y agoUnderwriters are not allowed to lend out shares for short sale until 30 days after the IPO. Other investors could lend out shares but there are not going to be that many shares on the market right after the IPO. https://www.investopedia.com/ask/answers/05/062905.asp https://www.investopedia.com/ask/answers/05/062905.asp
- jdmichal 7y agoIf you want to short a stock, you get far better leverage with options than actual short positions. And AFAIK there's no limitations there.
- dbuder 7y agoYou can make a OTC/private deal and you can buy puts and sell calls. I'll be spectating the book on day one, the underwriters might have to defend, really defend, not just touch the number like FB.
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- ineedasername 7y agoI guess I can't blame him for trying (okay, I can and do), but it is a very brazen example of self-dealing. I'd really like to collect my normal compensation at the same time that I use company resources to outsource my work to... myself... and pocket that as well.
- ryandrake 7y agoIf I wrote a program that solves a problem for my employer, then turned around and tried to sell it to them or get royalties from them, it would be a huge conflict of interest, I’d likely get fired, and they’d take it from me anyway due to standard tech company IP reassignment clauses. But if I’m the CEO i guess it’s totally fine.
- braythwayt 7y agoSurprise! It turns out that although we employees are fêted as "Masters of the Tech Universe," Adam is a member of the Owner Class, and we are members of the Worker Class, and the two classes play by different rules. The first of such rules is that Owners make the rules, and consequently those rules benefit Owners over Workers. I'm ok with that, obviously, but being ok with something is not the same thing as being blind to it.
- blueline 7y ago>I'm ok with that, obviously why?
- braythwayt 7y agoWhy am I ok with that? Or why is it obvious?
- aresant 7y agoIf you want to expand this greed-driven view to how absolutely whacky and double dealing this IPO is going to be add in the following: 1) If WeWork does NOT raise at least $3billion in this IPO they will be in default of a contingency with lenders that will WITHHOLD a committed $6billion credit line. (a) 2) This at first glance sounds sage, keeps the bankers honest in pushing the IPO right? When in fact the lending bankers ALONE will split a 3% up front loan fee - $180,000,000 - if their buddies down the hall can sell $3b of stock to bag holders in the IPO. 3) If you're lending $6b to a property landlord you'd want some strong guarantees right and again ensure the banks customers are being prioritized? Of course not - these WeWork loans will be "secured against cash and leases" NOT real property. So the bankers, many of whom are involved in both the IPO and the unsecuritized loan, will FEAST on short term fees but of course believe in the long term viability of the business right? This should all end well. (a) https://www.bloomberg.com/news/articles/2019-08-01/wework-sets-up-6-billion-financing-contingent-on-ipo-s-success https://www.bloomberg.com/news/articles/2019-08-01/wework-se...
- willart4food 7y agoThe price of money. Some's going to have to pay for those expensive buildings, bonuses, suits and perks.
- solotronics 7y agoNot sure why your being downvoted, if you think about it this is an interesting application for smart contracts where you need less or no intermediary between investors and owners.
- appleshore 7y agoLuckily, we have the Consumer Financial Protection Bureau to protect taxpayers from such shenanigans.
- olefoo 7y agoEven if it were still functional organization this would be outside of it's purview. This is all SEC territory.
- perseusprime11 7y agoBuffet's investment thesis strongly suggests staying away from companies with bad management teams. CEO seems like a self-dealer. I am going to stay away from this Stock.
- n-exploit 7y agoThe supposed valuation of WeWork gives us some incredible insight into the nature of "brand value" - it looks like their trying to capture the brand of the commons. I think the government is slightly complacent, given they let them trademark "We."
- pcurve 7y agoIt's like he knows the company will collapse and is trying to milk everything until he can't.
- roymurdock 7y agoGet yours while the getting is good. What would you do differently in Neumann's position? This company/its IPO is a shining example of what emerged from the way "we" decided to structure the US economy post 2008 recession.
- dantheman 7y agoI'd say this is more the result of the early 2000 reforms. IPOs happen much later.
- nwsm 7y agoThis has to be the most outrageously transparent and simple $6M scam to ever work
- travisporter 7y agoIf even 10% of all McDonald's offered high speed wifi, accessible power outlets, and maybe some nice desks, I feel they would destroy this company.
- ghaff 7y agoMcDonald's isn't in the business of providing seats for people nursing a coffee for a couple of hours. Not that there's any shortage of people who spend at least some time working out of cafes and coffeeshops. However, in general, those don't really substitute for an office. Even an open floor plan office like WeWork mostly is. Yes, at the margins, if someone doesn't really need an office, WeWork or its competitors are sort of a luxury that can be done without. But if someone wants to/has to work outside of their home, possibly with co-workers, have meetings in conference rooms from time to time, etc., the local Starbucks is probably not going to cut it.
- rightbyte 7y agoAccording to Wikipedia One WTC cost 3,9 billion USD to build. It's 325,279 m2 floor area, or 12 000 USD/m2. WeWork claims 3,7 million m2 office space and a 47 billion USD "valuation", or 12 700 USD/m2. So the valuation of WeWork per square metre they rent, is about the same as the cost of One WTC per square metre ... https://www.sec.gov/Archives/edgar/data/1533523/000119312519220499/d781982ds1.htm#toc781982_10 https://www.sec.gov/Archives/edgar/data/1533523/000119312519...
- gruez 7y ago>According to Wikipedia One WTC cost 3,9 billion USD to build. It's 325,279 m2 floor area, or 12 000 USD/m2. That doesn't include land value, does it? A significant chunk of the lease is to pay for the land value.
- hn_throwaway_99 7y agoThere is nothing in your statement above that seems remotely surprising to me. Now, I'm extremely bearish about WeWork, and their financials (not to mention their governance) look horrible at least from my layman's eye, but you seem to be arguing above that WeWork is overvalued based on the comparison to a real, physical asset. If there is anything the Internet has shown, it is (unfortunately, IMO) that all the money is to be made in marketing, not in actually building or selling things. I mean, Google absolutely rakes it in with AdWords, while all the businesses actually buying AdWords to sell real products often lose money (Mary Meeker's latest report showed how customer acquisition costs are starting to exceed the lifetime value of customers!!) Thus, in and of itself, I don't find it odd that a marketing and management company like WeWork is worth more than the products they rent.
- baby 7y agoThat’s why being a service company is always a win: 1. Find a market that has no way of shrinking and where small and big money is being made. 2. Launch an app that you can market as a product, but that makes money from providing a service to small and big money business. 3. Profit.
- paxys 7y agoHere's something I don't understand - the overwhelming consensus among analysts, newspapers/websites, blogs, internet commenters etc. seems to be that this company is overvalued and not worth even close to what they want to IPO at. It is not close to profitability and may never be. Not to mention all the borderline scams and shady dealings the company and CEO is involved in. Yet, we know that on IPO day both retail and institutional investors are going to ignore all these red flags and still buy, and the company is still going to be valued at $40-$50 billion. Why is that? Why doesn't everyone just stay away?
- aresant 7y agoIt's one of two things: 1) That the consensus is wrong and this is an amazing, misunderstood business. Stratechery has the most balanced view IMO of this possibility - https://stratechery.com/company/wework/ https://stratechery.com/company/wework/ - in this case you will likely be able to value buy the stock and hold for long term gain. 2) That the bankers selling to retail & institutional investors have a giant, incumbent incentive tied to IPO fees, debt origination fees, and of course actual debt repayment. As a result they are going to sell the WeWork stock and because what's good for the goose is good for the gander. If this is the accurate case WeWork will likely achieve their IPO guidance and be a good long term short.
- my_usernam3 7y ago> we know that on IPO day both retail and institutional investors are going to ignore all these red flags Do we know that? I'm just over here eating popcorn. While I do agree with what you believe is the "overwhelming consensus", there are legitimate reasons to think WeWork is bullish too. Here's an article I think does a good job representing both beliefs: https://fortune.com/2019/09/01/wework-ipo-stock-should-i-buy/ https://fortune.com/2019/09/01/wework-ipo-stock-should-i-buy...
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- whatok 7y agoI think the general consensus is that WE is probably going to go public at a discount to the latest round. UBER was talked at like 100bn+ before they actually IPOed.
- stretchwithme 7y agoI suppose once you realize that keeping a sum of money will cost you more than giving it back, you give it back.
- more-entropy 7y agoWhy?! Why at this topic I get so much ads? Is it a part of their IPO? Or what? What the hell? It's a "little bit" annoying. You wanna share your experience -- go ahead, we're ready to listen.
- adjkant 7y agoSo how many years until he ends up in jail? I feel like he's walking around a room with a giant bag of cash setting mousetraps for himself and he's gotta run out of room eventually. 2-3 years?
- timoth3y 7y agoThe more I read about WeWork, the more I am convinced that it's the Webvan of the current bubble. A huge amount of hype and money involved. They have the biggest and "best" investors behind them. Those who point out seemingly huge problems with their long-term business model are dismissed as "just not getting it". Sometimes business models really are new, and I admit that I often don't grasp the importance or viability of a new model at first glance, but when a business seems this wrong it usually is.