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> owns buildings personally he leases to WeWork This part bugs me. This is standard procedure for small businesses, having a real-estate business leasing prope

by larrik 7y ago

> owns buildings personally he leases to WeWork This part bugs me. This is standard procedure for small businesses, having a real-estate business leasing property to your main business. If you want to succeed, you own the building. Otherwise, you are on borrowed time. Edit: alright, great points, thanks!

paulsutter 7y ago
But not owned by the CEO in conflict with every other shareholder
ceejayoz 7y ago
Small businesses aren't doing it to soak up investor money.
socalnate1 7y ago
Yes it is for small privately owned business with one primary stakeholder. Not giant Softbank funded behemoths.
ocdtrekkie 7y ago
The thing is, a small business' owner for both of those entities is the same, with aligned interests. And the owner benefits from both being successful. In the case where he personally owns property leased out to a company that's going to be public: The public investors are cut out of all that rental income. And in the case of WeWork, their regular business isn't actually profitable. Which means this dual business structure would be designed to siphon public investment into Neumann's personal property, as WeWork is forced to continue paying it's leases to Neumann while it continues to just lose money.
lm28469 7y ago
Yeah sure, when you're a 2 persons business making home made shoes in a garage. Not when you're a multi millionaire basically paying your _personal_ real estate loans through investors money. That's an obvious conflict of interests, I don't even know how these kind of companies are allowed to be honest.
ineedasername 7y ago
It's not as common as you may think. I know of a company where the CEO was doing this to line his own pockets. He went to jail for a different fraud (vendor kickbacks) and that's when the company board found out about his self-dealing and sued him for breach of fiduciary.

by larrik 7y ago

paulsutter 7y ago

But not owned by the CEO in conflict with every other shareholder

ceejayoz 7y ago

Small businesses aren't doing it to soak up investor money.

socalnate1 7y ago

Yes it is for small privately owned business with one primary stakeholder. Not giant Softbank funded behemoths.

ocdtrekkie 7y ago

The thing is, a small business' owner for both of those entities is the same, with aligned interests. And the owner benefits from both being successful. In the case where he personally owns property leased out to a company that's going to be public: The public investors are cut out of all that rental income. And in the case of WeWork, their regular business isn't actually profitable. Which means this dual business structure would be designed to siphon public investment into Neumann's personal property, as WeWork is forced to continue paying it's leases to Neumann while it continues to just lose money.

lm28469 7y ago

Yeah sure, when you're a 2 persons business making home made shoes in a garage. Not when you're a multi millionaire basically paying your _personal_ real estate loans through investors money. That's an obvious conflict of interests, I don't even know how these kind of companies are allowed to be honest.

ineedasername 7y ago

It's not as common as you may think. I know of a company where the CEO was doing this to line his own pockets. He went to jail for a different fraud (vendor kickbacks) and that's when the company board found out about his self-dealing and sued him for breach of fiduciary.