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Adam Neumann planned for his children and grandchildren to control WeWork
- ridruejo 7y agoI kept wondering what would be the pets.com of this second bubble. I wonder no more
- onetimemanytime 7y agoYou should have posted as a throwaway account....his great-great-great grandchildren might go after yours for this comment ;)
- golergka 7y agoThey would need to go after most of HN then.
- Hamuko 7y agoI wouldn't be surprised if Neumann's vision included We armed forces, so maybe that'd help.
- high_derivative 7y agoNeumann's basilisk?
- firasd 7y agoI think all the 'Uber-for-X'/food delivery apps that popped up circa 2015 and went under a couple years later were actually the pets.com equivalents. That bubble popped and people didn't think much about it, because Facebook, Google et al were doing well. WeWork is an outlier case since Softbank caused the problem by giving them all this money but will probably keep them afloat as well.
- simias 7y agoI don't think those food delivery apps are a good comparison because a few of them actually survived and the market consolidated around them. The service they offer is clearly valuable for many people. I don't think it qualifies as a proper bubble.
- firasd 7y agoWell 'bubble' is not defined by whether the industry's products are valuable (or we would never have a 'housing bubble')—I would base it on whether investors were putting too much money into a type of business. There were so many Uber-for-X startups going under that former YC President Sam Altman wrote this post on unit economics: https://blog.samaltman.com/unit-economics https://blog.samaltman.com/unit-economics
- codewithcheese 7y agoInteresting how pets.com is so ridiculed but something like a books.com (amazon) became the one of most valuable companies in the world.
- adventured 7y ago> became the one of most valuable companies in the world I don't follow the premise. Amazon became so valuable because of AWS, not because of their retail operations. Its hyper low margin retail division might be worth $120-$150 billion in a sane market. It's considerably smaller and less profitable than Walmart for example. It's not trivial of course, however they'd still be a lot smaller than the other titans of market cap. More like Costco, less like Microsoft. And at this point their retail segment is slow growth, so the stock would probably be under compression duress about now, the bloom would be off the valuation rose. Amazon's recent market value ramp begins when they start showing off the growth and profit potential of AWS. In the first part of 2015 they showed off the figures, the stock promptly skyrocketed four fold in three years afterward (it was previously on a slow, quite gradual climb and had not gone net higher in about 1 1/2 years).
- christopoulos 7y agoDon’t know the pets.com story, care to tell more or link resource?
- brokensegue 7y agohttps://en.wikipedia.org/wiki/Pets.com https://en.wikipedia.org/wiki/Pets.com
- christopoulos 7y agoThank you, what a story!
- rasz 7y agoyou will probably enjoy Beenz one https://www.youtube.com/watch?v=5o9HEjuXsc0 https://www.youtube.com/watch?v=5o9HEjuXsc0
- deleted 7y ago[deleted]
- zelly 7y agoDon't insult Pets.com by comparing them to WeWork. At least they actually produced technology even if it was just an ecommerce website.
- heymijo 7y agoI was alive for the .com bust but kind of forgot the scale. I looked up Pets.com. When they IPO'd they were valued at $290 million (about $294 million in inflation adjusted numbers). They raised $110.5 million in private capital and $82.5 million at IPO [0]. WeWork has raised $14.2 billion in capital to date[1]. In other words, pets.com only raised a mere 1% of the current total that WeWork has raised. If pets.com was the poster child for the dot com debacles then this new era of irrational startup exuberance exemplified by WeWork is another beast entirely. [0] https://www.marketwatch.com/story/sock-puppet-kills-petscom https://www.marketwatch.com/story/sock-puppet-kills-petscom [1] https://craft.co/wework/funding-rounds https://craft.co/wework/funding-rounds
- perl4ever 7y ago"When they IPO'd they were valued at $290 million (about $294 million in inflation adjusted numbers" That doesn't sound like the right amount of inflation. Maybe you mean $190M then or ~$435M now?
- heymijo 7y agoI could be wrong. I popped it into the first inflation calculator I Googled. 1998-Present and got the above.
- perl4ever 7y agoSure, but...common sense. 2% compounded for 20 years is about 50%. In fact, that seems to be very close to the correct amount.
- heymijo 7y agoThank you for pointing out my lack of common sense. Should I take this opportunity to point out that pet.com's $435 million is still a paltry sum compared to WeWork's $14.2 billion in capital, or has that larger point been rendered moot by my lack of common sense?
- stjohnswarts 7y agoThere is no second bubble, just a waxing stage approach. Some of those internet companies were leveraged 1000 to 1 . Not even WeWork or Uber is close to that. There are revenues in even the worst cases unlike back then. So please don't exaggerate.
- luckylion 7y agoThis quote sums it up very well: Warned Jackson, “Those companies are asking shareholders to trust management’s business judgment — not just for five years, or 10 years, or even 50 years. Forever.” Such perpetual dual-class ownership “asks them to trust that founder’s kids. And their kids’ kids. And their grandkid’s kids . . . It raises the prospect that control over our public companies, and ultimately of Main Street’s retirement savings, will be forever held by a small, elite group of corporate insiders — who will pass that power down to their heirs.”
- macspoofing 7y agoI don't see it as a problem because of this line: "Those companies are ASKING shareholders..." Don't invest in companies that are making dumb decisions, or divest from companies that are making changes you feel are dumb.
- dccoolgai 7y agoAs someone who is at least somewhat well-informed, I literally never heard this. How would you expect investors to know that? Wouldn't it be better to just live under a system of laws that prevents insanity like this? And then you could spend your time learning and being productive instead of poring over the details of how you're being duped in any given situation?
- unreal37 7y agoSoftbank should have known. They had billions of dollars invested. They don't get to act surprised that Neumann was borrowing money from banks and then having the company cover those loans.
- palunon 7y ago> How would you expect investors to know that? Something called due diligence. Plus, this insanity is removing power from investors. If they are not even going to look at the company share structure, what kind of decision were they going to make?
- 7y ago
- macspoofing 7y agoThis is actually a point in favour of Neumann since it shows he actually believed the bullcrap he was selling around what WeWork was. Like many have noted, it was a landlord with a particular focus on the startup and tech markets. That's it.
- whyenot 7y agoIt could also be that this was just something he was using to look more sincere.
- kgantchev 7y agoThis just shows that people with a bad mission and values eventually get exposed only to crash and burn.
- nottorp 7y agoKinda off topic: is there a way to opt out of tracking on sites like techcrunch that seem to use a seriously obfuscated opt out screen? I've never dared to click past the second dialog for fear that I'll opt in to something by mistake.
- Angostura 7y agoGood question. I haven't found a way around, so I've stopped visiting. Presumably one day they'll get a kicking from a GDPR regulator - but they have bigger fish to fry at the moment.
- personlurking 7y agoIf you copy the URL fast enough after clicking, you can check Archive (.is) to see if it's been archived. In this case, it was. http://archive.is/NLqpE http://archive.is/NLqpE There's also Outline. Not sure if one service is better than the other.
- icebraining 7y agoInstead of copying, you can just click Stop on the browser before the dialog opens.
- nottorp 7y agoYeah, that's what I normally do, but sometimes i click a HN link without checking where it goes... like today.
- SahAssar 7y agoDisable all js, and you don't get the popup. I use umatrix to disable js on these sites (medium is another one that is a lot better without js).
- nebulous1 7y agoI'm giving this a go but it might be a situation where it just breaks too many things. I realize it gives you the power to fix things up relatively easily, but over half the sites I've visited so far have required changes.
- Hendrikto 7y ago> “It’s important that one day, maybe in 100 years, maybe in 300 years, a great-great-granddaughter of mine will walk into that room and say, ‘Hey, you don’t know me; I actually control the place. The way you’re acting is not how we built it,'” he said. > These may sound like more outlandish proclamations from Neumann, who has a flair for the dramatic.
- solidsnack9000 7y agoIt's interesting that he takes solace in the possibility of arbitrary exercise of authority by absentee owners.
- shmooty 7y agoI don't think beings will even be "walking" into "rooms" to "say" stuff in 300 years.
- gameswithgo 7y agodo you think we will have ascended to pure energy or all be dead? asking for a friend.
- deogeo 7y agoTo be fair, competition and investors tend to pressure corporations to place profit above any other values - the only way to maintain those values is to be forced by an external, 'arbitrary' force, like the law, or eccentric owner unconcerned with pure profit.
- kuon 7y agoAfter seeing a lot of headlines on HN I finally understood that WeWork is a company and not some sort of US institution or some communist worker union (no pun intended, we have those in Europe).
- Hamuko 7y agoIf Neumann is to be believed, WeWork is no mere company.
- TheOtherHobbes 7y agoIf the trend in current valuations is to be believed, it's not even a company.
- Jerry2 7y agoThis is also an interesting one: >WSJ: WeWork Founder Mixed Spiritual Group With Business https://www.wsj.com/articles/wework-founder-mixed-spiritual-group-with-business-11571232391?mod=breakingnews https://www.wsj.com/articles/wework-founder-mixed-spiritual-...
- baybal2 7y agoVery much like a Jobs, Musk, or Holmes styled persona. They have a very peciliar way to cultivate their image among very trusting people. Just have a conversation with a kid working for a client about all those guys. In conversation about Mr. Musk: "If somebody gives you $1.8B credit in cash, and you still manage to screw up, you must have been doing something wrong" How do you call them in America? "New ageians?"
- microtherion 7y agoExcept that Jobs, to my knowledge, never tried to have his kids run Apple. They’re still rather young, of course. For all we know, in 5 years Reed Jobs will ride up to Apple Park on a white stallion, wielding a sword he pulled from the SF Bay…
- shubhamjain 7y agoI know founders can sometimes be eccentric, but for Adam it's just delusion and that's well evident from his first venture [1]. > Working out of his Tribeca apartment, he started Krawlers, which sought to make baby clothes with knee pads to make crawling more comfortable. The slogan, he has said: “Just because they don’t tell you, doesn’t mean they don’t hurt.” Are founders like Adam really incapable of seeing obvious holes in their ideas? Or they just conveniently ignore them? [1]: https://www.wsj.com/articles/this-is-not-the-way-everybody-behaves-how-adam-neumanns-over-the-top-style-built-wework-11568823827 https://www.wsj.com/articles/this-is-not-the-way-everybody-b...
- rabbitonrails 7y agoSteve Jobs is turning in his grave at this and other comments on this post.
- TrackerFF 7y agoThe answer is narcissism. If you've ever worked or lived with someone that suffers from NPD, you'll know that their self-image is infallible. No mater how half-baked their ideas are, they truly, truly believe that it's the greatest thing ever. This only gets amplified when they succeed at something. Even more so when being surrounded by yes men and sycophants.
- dmitryminkovsky 7y agoI don’t get what you’re saying. This seems like a good idea and a good tagline for our times.
- lordnacho 7y agoThe dual share class thing needs to be phased out, at least as it pertains to separating voting rights from economic rights. (Seems fine for other purposes like cross border listings.) It's a bubble symptom that investors are happy to go with reduced influence, both wrt equity share classes as well as looser covenants on debt. As for planning for your kids to own the company, that's pretty common.
- robbiep 7y agoThere’s nothing wrong with setting up company structures that have radically different rights wrt. Shares; what is important is that the market prices them correctly. And the market clearly has no idea how to price the control. Look at Facebook or many of the other major tech exits that have allowed ords to be priced from a ‘control’ perspective. The market believes in a BDFL model at the moment and is being taught a bit of a lesson
- tim333 7y agoI guess if you are going to have a benevolent dictator, check they really are benevolent.
- zaphar 7y agoThe hard of a benevolent dictator isn't finding a benevolent person. Its ensuring they stay benevolent. That type of power has a track record of corrupting the holder.
- deleted 7y ago[deleted]
- tim333 7y agoThe organisation of shares is really a matter for the shareholders and many of the well known dual share class companies seem to have done well for investors. BRK, Ford, Google, Facebook. Even Uber is still valued at $54bn which is not bad for a taxi app.
- cannabis_sam 7y agoNoob! He needs to institute primogeniture to make sure the power stays consolidated
- Agathos 7y agoAh, my favorite Crusader Kings II minigame: stitching my kingdom back together after a gavelkind succession.
- seapunk 7y agoI thought that it was a headline of the Onion.
- danso 7y ago> The outlet reports that in a speech Neumann gave to employees in January of this year, footage of which it says it has viewed, Neumann is seen saying that WeWork isn’t “just controlled — we’re generationally controlled.” Maybe Business Insider (who first reported this, but for their premium paywall offering) has some info, but I’m really curious to hear how WeWork employees, including mid level managers and executives, took this proclamation? I’m assuming some of WeWork’s workforce has some regard for the concept of meritocracy. Hearing your CEO declare that he foresees WeWork to be controlled by his bloodline for the next 300 years would seem to be off putting.
- luckylion 7y ago> Hearing your CEO declare that he foresees WeWork to be controlled by his bloodline for the next 300 years would seem to be off putting. Unless you're that deep into the cult that you actually believe in him being the prophet and you're calmed by the thought that his eternal consciousness will stand watch and defend the company from outside influence.
- xwdv 7y agoSo imagine Niander Wallace from Bladerunner 2049, CEO of Wallace Corp, whose headquarters is a massive pyramid building about 2 miles tall and has plans of expanding business to other worlds. Now imagine instead of doing something important such as solving the world’s food shortage or building replicants, Wallace Corp simply rented out office space to fledgling startups, and now you will have some idea of the future Adam Neumann envisioned for himself.
- JohnJamesRambo 7y agoMore human than human indeed.
- gigatexal 7y agoThe more we learn about this guy the more I can’t wait for him to ride the wave into obscurity and irrelevance except for in the immortal pages of case studies of what not to do.
- mister_hn 7y agoImmortal page of "how to ride an unicorn to death"
- et2o 7y agoWell, he still made it out as a billionaire.
- jgalt212 7y agodid he? He's very levered against his stock.
- sudhirj 7y agoEven worth the buildings owned and the cash payments for the word ‘we’?
- CrazyStat 7y agoHe gave back the trademark payment iirc. He got a few hundred million for stock he sold, and borrowed a few hundred million more against stock he still owned. We don't know the exact numbers though. He also gave away $100m+.
- thedufer 7y agoHe was paid for 'we' in stock, not cash, and he ended up paying it back after their first IPO filing caused an uproar.
- sudhirj 7y agoAt least it was private money that hopefully learnt their lesson. Think of it as karmic wealth redistribution. Unless the private money turned out to be pension funds in which case oh shit.
- timwaagh 7y agoThere is not really anything wrong with having a family business. Many of the German automobile makers are run that way. In this day and age where pump-and-dump short term trading often prevails, the security benefits of limiting the power of public shares often seem worth considering. Indeed the market has spoken on Wework, as it always does, but it had little to do with this. It had to do with him flying around in things the company could not afford.
- deelly 7y agoSame goes for politic, yes? Because "in this day and age where pump-and-dump short term trading often prevails, the security benefits of limiting the power of public shares often seem worth considering."
- zelly 7y agoMonarchy is really underrated.
- humanrebar 7y agoOnce you get past the fact that murder is the primary way to change monarchical leadership, it's quite smart.
- anoncake 7y agoI certainly would prefer to live under a heritable monarch than a bunch of anonymous external shareholders. Of course any kind of autocracy is a gross violation of the rights of everyone living under it. But this is capitalism so democracy isn't even an option.
- meshr 7y agoYes. Ford provided good automobiles for Nazis. Family business works if money is your only value. Human values are not inherited by genes.
- throwaway744678 7y ago
- velox_io 7y agoI don't believe this for a second. This is a hybrid fine-art / Ponzi scheme. Investors pay over the odds to inflate the valuation, hoping that more will follow after them, raising the value further, repeating the cycle.
- cryptica 7y agoIf someone as dumb as Neumann can go so far, how smart are all the people leading all other tech unicorns and corporations?
- thosakwe 7y agoIs there a specific reason that WeWork comes up so much on HN? I've never heard of it otherwise, but I see at least one story on it hit the front page a week.
- unreal37 7y agoPeople see it as a "schadenfreude" story. How the hottest of the hot unicorn startups got it's due. A great story to repeat over and over and over.
- bronz 7y agofor the same reason theranos used to come up all the time. because investment and hype didnt appear to align with the true value of what the company in question was offering.
- stjohnswarts 7y agoThere really isn't much to compare to theranos, as it was based completely on a lie. The only thing in common here is just a crappy CEO. WeWork has a solid premise, it's just highly over-leveraged and over-valued.
- alex_young 7y agoWhy is this news? This guy has been pretty solidly shamed, removed from power, and his former company practically destroyed. At this point it seems pretty shallow celebrating more stories of missteps here.
- brosinante 7y agoBecause this kind of behaviour is rife in the industry and hiding it under the carpet only because he was (eventually) removed from his position does not mean the true story does not deserve to be heard.
- dredmorbius 7y agoIt's another detail in the picture. It's bearing witness, if nothing else. Showing a pattern (or showing a behaviour which may prove not to be a pattern) of fraud / control / incompetence.
- grepthisab 7y agoThis one's a bit beyond the pale. No one is upvoting mundane tabloid gossip, this is bigger because it's not something ordinary.
- amiga_500 7y agoI could dance on the grave of WeWork, softbank and the general "startup" culture for a little longer. Strike up the band!
- dang 7y agoPlease don't do this here. Critique is welcome, but curiosity withers under repetition and internet rage is uninteresting.
- ycombonator 7y agoWeOwn
- unreal37 7y agoIsn't Walmart controlled by the children of Sam Walton? [1] "Sam Walton's heirs own over 50 percent of Walmart through their holding company Walton Enterprises and through their individual holdings. " Where does this writer think shares go when someone dies? [1] https://en.wikipedia.org/wiki/Walmart https://en.wikipedia.org/wiki/Walmart
- luckylion 7y agoThe difference is that they actually own those shares. This is about different kinds of shares being issued, i.e. the founder gets some that have 10 times the voting power of normal shares. He now only needs more than 5% of the company to provide the majority in votes.
- bagacrap 7y ago510 < 951
- luckylion 7y agoRight, don't ever do math on stream. Thanks for pointing that out, I was mistaken; I wasn't paying attention to the numbers.
- unreal37 7y agoBut the story is talking about "generational ownership" of companies, that pass control to heirs when the founder dies. Whether through dual class shares, or retaining a large % stake, it's the same. The Ford heirs control Ford. The Walton heirs control Walmart. There are many, many companies in this world controlled by the children and grandchildren of the founder. That's never been a huge problem. I just think this Techcrunch story is poorly written. It's acting "shocked" that a child or grandchild of a founder could still control a company. Nothing to be shocked about there.
- luckylion 7y agoI don't totally disagree regarding "be sure you know what you get into", but I believe the dislike is mostly that one share, one vote is considered to be "fair" as in general elections one citizen, one vote. Anything that skews that is eyed suspiciously. They have more say than skin in the game.
- codegladiator 7y agoI don't think public shamig works anymore, .... Wait, did it ever work ? Would love know know cases where it did.
- BLanen 7y ago> The moral compass of the company Neumann seems like a black hole of arrogance.
- awaisraad 7y ago"Research Reveals That Publicly Announcing Your Goals Makes You Less Likely to Achieve Them" https://www.inc.com/melissa-chu/announcing-your-goals-makes-you-less-likely-to-ach.html https://www.inc.com/melissa-chu/announcing-your-goals-makes-...
- minxomat 7y agoOne instance where the (otherwise insultingly bad) Mitchen translation of Tao Te Ching makes sense: > The slow overcomes the fast. > Let your workings remain a mystery. > Just show people the results. 36 (https://terebess.hu/english/tao/mitchell.html#Kap36 https://terebess.hu/english/tao/mitchell.html#Kap36)
- neonate 7y agohttps://web.archive.org/web/20191019022454/https://www.businessinsider.com/wework-adam-neumann-said-family-control-company-300-years-january-2019-10 https://web.archive.org/web/20191019022454/https://www.busin...
- dblohm7 7y agoNot uncommon in Canadian companies. coughBombardiercough
- rpmcmurdo 7y agoI am curious what their hiring strategy was. I met someone who worked there a few weeks ago at a networking event. This was after most of the bad news had broken. Wow, was he drinking the Kool Aid. I felt like I was getting an Amway or Scientology pitch (the main thought going through my mind was "you should really be using this opportunity to look for a job"). It made me wonder if they systematically hired people who were easy marks, like the type of people cults would look for, and did they have a hiring protocol for screening them.
- stjohnswarts 7y agoI like the idea of WeWork but my god it's not worth anywhere near what they were trying to IPO for, also their CEO is an idiot. Good riddance.