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Adam Neumann will determine WeWork's fate
- irjustin 7y agoCorrupt? Thief? Say what you will, there is something to be said for having walked away with so much money - legally.
- _iyig 7y agoI think many would call for punishment of the WeWork CEO, along with the investors who failed their due diligence. Sometimes the law of the day does not deliver justice. Seems like another instance where everyone not taken in by the hype saw the crash coming.
- ISL 7y agoThe investors who made the wrong bet lost a spectacular amount of capital.
- _iyig 7y agoFor sure. But of the capital they managed, how much belonged to someone else? Did that someone else trust Softbank (for example) to do their due diligence before making a significant investment in WeWork?
- hashberry 7y agoThis is not much when considering Neuman took out a $500 million loan earlier this month.[0] [0] https://techcrunch.com/2019/10/04/report-wework-cofounder-adam-neumann-may-have-to-unload-property-to-pay-off-a-giant-loan/ https://techcrunch.com/2019/10/04/report-wework-cofounder-ad...
- fortran77 7y agoTo me, the real villains are Adam Neumann's enablers. The people that "created" Adam Neumann aren't much different from those that "created" Elizabeth Holmes. They keep looking for a quirky Steve Jobs-like charismatic leader who distorts reality. Of course, Holmes wishes she had Neumann's playbook so she could have walked away with hundreds of millions.
- semiotagonal 7y agoHow are the people putting the actual, real-world money into these businesses so unable to protect themselves against getting taken to the cleaners by a departing CEO?
- kasperni 7y agoBecause he literally controls everything, from http://nymag.com/intelligencer/2019/09/what-happened-at-we-why-wework-postponed-its-ipo.html http://nymag.com/intelligencer/2019/09/what-happened-at-we-w... "The S-1 detailed the extent to which Neumann controlled his company, and had benefited personally from his position: he had bought buildings in which WeWork then took out leases, and received $5.9 million in exchange for selling a set of We-related trademarks to his own company. One clause called for Rebekah to name a successor in the event of Adam’s death." Rebekah is his wife...
- semiotagonal 7y agoSure, but why didn't the Vision Fund deny him that level of control as a condition for providing the money, when the initial funding was taking place?
- untog 7y agoBecause who wants to miss out on the next Facebook!! Zuckerberg holds huge control over FB and he's a visionary. This rocket ship is going to the moon, are you strapped in?!? TL;DR: stupidity combined with the myth of the founder
- TheSoftwareGuy 7y agoThere was an NPR podcast about the guy who runs the fund recently. He’s sort of an adrenaline addict, addicted to risk
- ulfw 7y agoBecause Vision Fund isn't this magical VC that trumps all others. They just had a lot of (Saudi) money to throw around and frankly just aren't very good at it.
- meddlepal 7y agoIf Neumann declines the offer what happens here? He feels like the kind of guy who would rather watch it all burn down than sell out.
- aodin 7y agoWhat gives you that impression? Arguably, it was his early $700 million parachute that undermined the WeWork IPO.
- duxup 7y agoWeWork is where the bulk of his wealth has come from correct? I would think a lucrative exit would be better than a potential fight with SoftBank.
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- throwaway5752 7y agoThe chairman of the board of a company doesn't get to "burn it all down" because that would be a breach of fiduciary duty. I may be wrong but wouldn't he be exposed to personal liability at that point?
- bryanrasmussen 7y agoI think it would be a difficult argument to make that someone has a fiduciary duty to sell.
- SirensOfTitan 7y agoI’m clueless here, but WeWork is a private company: does Neumann have any de-jure fiduciary duty?
- quaquaqua1 7y agoI believe so, he has the duty to private "accredited" investors. IIRC, this is sort of what toppled Shkreli-- he mishandled investor money in a criminal manner, despite actually not losing any of their money.
- claudeganon 7y agoDoes it strike anyone as strange how much of the economy seems to be built around bizarre, failed, often seemingly blatant scams nowadays? It almost seems as if no matter how transparently irrational and corrupt these schemes are, what’s important is to maintain the semblance of it all, the specific articulation of power. The CEO, the visionary, the “disruption,” have become almost abstract fetishes, removed from any broader function.
- pg_is_a_butt 7y agoWhat is the meaning of your life?
- perl4ever 7y agoWell you raise the obvious question of "how much is built around this sort of thing?". My gut reaction is that not all that much of it is, and if it's increasing, it's simply due to global low interest rates.
- thomascgalvin 7y agoI think this is partially due to the fact that people are looking for the next Amazon; everyone wants to be a billionaire, and if that bald dude can become the richest man in the world by selling books, why can't I do it leasing office space? That drive causes people to try a lot of ... "plans" might be a more charitable word than "schemes" ... that might otherwise have never seen the light of day. And the media bears a lot of responsibility for this, too. WeWork is an office space rental company. It should have been trivial to figure out how much money they were taking in, and how profitable they could become - if they could become profitable at all. Valuing them at thirty bajillion dollars was just stupid, but stupid gets eyeballs, and that's what the media thrives on. "Office space leasing company rents desk space" isn't going to make the front page of Hacker News.
- wil421 7y agoHow much of the $20 trillion US economy so you think this is? If WeWork was a $40 billion dollar company it would be .2% of the economy. Apple, Google, and Amazon combined are about 4-5%.
- facethrowaway 7y agoThis seems strikingly similar to Travis Kalanick being paid to leave Uber. Is Benchmark involved?
- maldeh 7y agoBenchmark is a major investor, actually. But it sounds like they might be getting the short end of the stick on this deal, like almost everybody else. This case could be quite different from Uber per the thesis of this article by Stratechery: https://stratechery.com/2019/neither-and-new-lessons-from-uber-and-vision-fund/ https://stratechery.com/2019/neither-and-new-lessons-from-ub... While Benchmark was looking to preserve its assets from being squandered on possibly the startup-catch of a lifetime, Softbank on the other hand relishes being the Big Stack Bully, leaning hard on their portfolio companies to aim for home runs everytime, and their excessive leverage allows them concessions from companies most VCs can only dream of.
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- vuln 7y agoSeems like a very cheap and easy way for a Japanese company to buy up a lot of real-estate. Good luck protecting your IP when Japan monitors everything you do in their workspace... /tinfoilhat
- xxxtentachyon 7y agoWhat interest does Japan have in doing that?
- ISL 7y agoI wouldn't be worried about the IP, though the the position in low-latency real-estate might give SoftBank extra visibility into the financial health of up-and-coming startups. SoftBank doesn't appear to be in the business of theft, but rather in the huge-risk/huge-payoff gambling/investment business.
- vuln 7y ago> SoftBank doesn't appear to be in the business of theft, but rather in the huge-risk/huge-payoff gambling/investment business. It would appear that way. I look at through the lens of Facebook buying an Israeli VPN provider that it then used to buyout up and coming businesses[0]. [0] https://techcrunch.com/2019/02/21/facebook-removes-onavo/ https://techcrunch.com/2019/02/21/facebook-removes-onavo/
- brentm 7y agoWe Work leases the vast majority of their space so SoftBank isn't buying up a bunch of real estate.
- jessaustin 7y agoEveryone is just so amazed and consternated at how amazing and consternating TFA is. To me, that's a pretty good indication it's mostly bullshit. How likely are the "multiple sources" to be Neumann and his wife?
- rodgerd 7y agoI have to admire the purity of this breathtaking rinsing of VCs.
- thrower123 7y agoThis kind of stuff is really the best that Softbank could find to invest in? I am not sure I would want to be one of the people who pulled the trigger or advised for these deals, when the backers start asking where their money went.
- brentm 7y agoThey are so far in the whole on this company it wouldn't be wise to let it die. I doubt they want someone else in charge of what they funded. After they clean the company up it will be a good business. It's just not a tech company and never was a tech company but there is still good money in leasing office space for $1, making it look nice and then subleasing it for $4 or $5, they just need to knock off the bull shit.
- brentm 7y agoFor Neumann this whole thing must be such a nightmare. On one hand you did it. You built a huge company and become super rich at the end. But on the other hand the IPO blew up, the company is losing billions, employee options are fucked, "everyone" thinks you're an idiot, etc. If it was me this would ruin it all, especially since he has been living the rich guy lifestyle for many years now. I hope he didn't do anything more shady than we know though because the next saga to this story could easily be securities fraud, indictments, investor lawsuits, etc, etc. This amount of capital doesn't usually blow up quietly.
- otterley 7y agoMan, I hope to be “ruined” to the tune of $200 million someday. I would cry all the way to the bank.
- meddlepal 7y ago$900 if you include the $700 he gave himself.
- brentm 7y agoA majority of that 700M was a line of credit tied to his shares of the company. Good chance he will face a margin call on that (since the shares are now worth a lot less) and either have to come up with the cash (maybe why he wants this 200M to leave) or pledge more shares to make up the difference in value.
- fastball 7y agoHe has already cashed out hundreds of millions, so it's probably closer to being ruined to the tune of $1B.
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- rolltiide 7y agoHe cashed out close to $1 billion while he had absolute discretion to do so. He’s winning hard. Don’t get married to a position, and that means concentrated shareholdings of a company you started too. Its not a nightmare. There’s no embezzlement charge looming based on the things we know, no securities fraud based on the things we know. Softbank wants to turn it into a typical Japanese Zombie company with “totally fuckable sovereign wealth money” quoting the show Succession, and he’s out with no strings attached. Thats the dream. NEXT!
- reilly3000 7y agoI personally wouldn't choose to mess with the Saudi's money on that scale. That would seem imprudent.