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>the problem here isn’t really WeWork, it’s SoftBank No: WeWork is a huge part of the "problem", with crazy org structure, self-dealing, a "cult of CEO" struc

>the problem here isn’t really WeWork, it’s SoftBank No: WeWork is a huge part of the "problem", with crazy org structure, self-dealing, a "cult of CEO" structure, and a business model that may not be that defensible. Softbank is an enabler. Let's hope this his "peak hubris" and we're back to more sensible tech IPO attempts.

wayoutthere 7y ago
Softbank are the ones who drove the valuation that high. I agree with the cult of the CEO thing and all, but I’ve always felt the smart money in the valley knew to stay away from WeWork. It was a sucker’s gambit from the start.
- whatok 7y ago
  Wikipedia is saying that the 2016 round valued We at 16bn which was before Softbank invested. It was already overvalued before Softbank and the corporate governance issues were there before as well.
  - arcticbull 7y ago
    There is a difference between 20% overvalued on the expectation of future growth and 400% overvalued.
  - puranjay 7y ago
    WeWork should be valued around the same as Regus
roland00 7y ago
All of this is true, but it was the SoftBank capital flow that made this all possible until now. The reconinging and reform would have happened sooner with WeWork if SoftBank was not providing "free jet fuel." >Softbank is an enabler. Enabler is true, but a lever requires both the rod and the fulcrum the rod pivots on. Without the enabler the lever would not exist.
throwaway_law 7y ago
>No: WeWork is a huge part of the "problem", with crazy org structure, self-dealing, a "cult of CEO" structure, and a business model that may not be that defensible. Sounds just about par for the course of any SV startup, the only difference is, the critique seems consistent with outsiders criticizing SV startup IPOs, only the shoe is on the other foot and SV is criticizing outsiders for the very concepts it seems to promote within its own little bubble.
- deleted 7y ago
  [deleted]
- azylman 7y ago
  WeWork takes this much further than other SV companies. In their S-1 filing, they had to disclose something like 100+ related party transactions: https://www.forbes.com/sites/alapshah/2019/08/19/just-how-unusual-are-the-related-party-transactions-disclosed-in-the-we-companys-s-1-filing/#755f9080266a https://www.forbes.com/sites/alapshah/2019/08/19/just-how-un...
  - tru3_power 7y ago
    Wow, those filings make it seem like the founder was using WeWork as his personal piggy bank. Did I understand it right that he took out a loan from WeWork then used a bonus from the company to pay it back?
    - manigandham 7y ago
      He sold the company a trademark for the word "we" for $6M. It was eventually rolled back after media exposure.
thefj 7y ago
There are millions of poorly run shady businesses, it's a problem that takes care of itself if you don't have infinite money coming in. Not sure that it's a problem now though. Like Matt Levine suggested[0], WeWork did a lot of weird shit when they were private, but now they want public money, they need to behave more like a responsible company. It's kind of what's supposed to happen because of the disclosure, it's just that most of the time companies take care of governance issues before the S-1. [0] https://www.bloomberg.com/opinion/articles/2019-09-13/we-is-sorry-about-the-weirdness https://www.bloomberg.com/opinion/articles/2019-09-13/we-is-...
- ianferrel 7y ago
  I think an under-appreciated aspect is that you can't just have a CEO who's engaged in extremely questionable practices like WeWork's did just flip a switch and say "Ok, now we're public, so I'm going to cut all that out and be honest". It's a pretty big fucking signal that he's not trustworthy. Neumann's past behavior is still a problem.
  - thefj 7y ago
    Absolutely. Traditionally the move for a company in this situation might be to replace the CEO if they plan to raise public money and he has a history of bad behaviour. In WeWork's case it's probably impossible to remove him both legally and because the whole company is built around his personality cult.
    - munk-a 7y ago
      I mean... this should lower the valuation into the ground, companies built around personalities will collapse - possibly when the personality retires/dies but more likely just due to implosion over crazy antics. A company is something "we" build, it isn't something "one" builds, and this misunderstanding is causing a lot of social pains in the US right now.
      - dondawest 7y ago

wayoutthere 7y ago

Softbank are the ones who drove the valuation that high. I agree with the cult of the CEO thing and all, but I’ve always felt the smart money in the valley knew to stay away from WeWork. It was a sucker’s gambit from the start.

whatok 7y ago
Wikipedia is saying that the 2016 round valued We at 16bn which was before Softbank invested. It was already overvalued before Softbank and the corporate governance issues were there before as well.
- arcticbull 7y ago
  There is a difference between 20% overvalued on the expectation of future growth and 400% overvalued.
- puranjay 7y ago
  WeWork should be valued around the same as Regus

roland00 7y ago

All of this is true, but it was the SoftBank capital flow that made this all possible until now. The reconinging and reform would have happened sooner with WeWork if SoftBank was not providing "free jet fuel." >Softbank is an enabler. Enabler is true, but a lever requires both the rod and the fulcrum the rod pivots on. Without the enabler the lever would not exist.

throwaway_law 7y ago

>No: WeWork is a huge part of the "problem", with crazy org structure, self-dealing, a "cult of CEO" structure, and a business model that may not be that defensible. Sounds just about par for the course of any SV startup, the only difference is, the critique seems consistent with outsiders criticizing SV startup IPOs, only the shoe is on the other foot and SV is criticizing outsiders for the very concepts it seems to promote within its own little bubble.

deleted 7y ago
[deleted]
azylman 7y ago
WeWork takes this much further than other SV companies. In their S-1 filing, they had to disclose something like 100+ related party transactions: https://www.forbes.com/sites/alapshah/2019/08/19/just-how-unusual-are-the-related-party-transactions-disclosed-in-the-we-companys-s-1-filing/#755f9080266a https://www.forbes.com/sites/alapshah/2019/08/19/just-how-un...
- tru3_power 7y ago
  Wow, those filings make it seem like the founder was using WeWork as his personal piggy bank. Did I understand it right that he took out a loan from WeWork then used a bonus from the company to pay it back?
  - manigandham 7y ago
    He sold the company a trademark for the word "we" for $6M. It was eventually rolled back after media exposure.

thefj 7y ago

There are millions of poorly run shady businesses, it's a problem that takes care of itself if you don't have infinite money coming in. Not sure that it's a problem now though. Like Matt Levine suggested[0], WeWork did a lot of weird shit when they were private, but now they want public money, they need to behave more like a responsible company. It's kind of what's supposed to happen because of the disclosure, it's just that most of the time companies take care of governance issues before the S-1. [0] https://www.bloomberg.com/opinion/articles/2019-09-13/we-is-sorry-about-the-weirdness https://www.bloomberg.com/opinion/articles/2019-09-13/we-is-...

ianferrel 7y ago
I think an under-appreciated aspect is that you can't just have a CEO who's engaged in extremely questionable practices like WeWork's did just flip a switch and say "Ok, now we're public, so I'm going to cut all that out and be honest". It's a pretty big fucking signal that he's not trustworthy. Neumann's past behavior is still a problem.
- thefj 7y ago
  Absolutely. Traditionally the move for a company in this situation might be to replace the CEO if they plan to raise public money and he has a history of bad behaviour. In WeWork's case it's probably impossible to remove him both legally and because the whole company is built around his personality cult.
  - munk-a 7y ago
    I mean... this should lower the valuation into the ground, companies built around personalities will collapse - possibly when the personality retires/dies but more likely just due to implosion over crazy antics. A company is something "we" build, it isn't something "one" builds, and this misunderstanding is causing a lot of social pains in the US right now.
    - dondawest 7y ago