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How 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 departi
by semiotagonal 7y ago
How 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.
- justinator 7y agoSomething tells me this isn't a whole lot of money for said people...
- codyb 7y agoIsn’t Softbank about to invest 5bn? 4% of that just for a single individual who’s ostensibly a big part of the reason they tanked a 40bn dollar valuation to a mere 20% of that seems like a literal fuckton to me. Of course, he may be the reason they now control an 8bn dollar company too, still an incredible valuation I suppose.
- perl4ever 7y agoIt's slightly over one percent of the money Softbank has/will put in, from what I've read.
- 0xB31B1B 7y agoDisagree, there is a big difference between investing 200m where you can expect a return on investment and just giving someone 200m to go away. There is a return on the other money SoftBank has invested, but the 200m itself is a cost, and rather large. Most money transfers of this size are exchanges of capital for equity or debt, not gifts of cash.
- justinator 7y agoI guess that's why investors tell you to, "diversify your investments".
- ericand 7y agoThey are buying control, no? Neumann sold economic interest (non voting equity) to Soft Bank earlier. Now they want the voting power and they are offering him 200M for it. It has to be worth something. It sounds like it is unclear if that is enough (although if they are reporting it I assume it is) for him to agree.
- chewz 7y agoThis 200m is for JP Morgan and UBS who extended 500m credit line to Neumanm and he promptly drawn down $380 million. As JP Morgan is pushing for different vision of WeWork restructuring this is a pill to make sure they won't show loses on the credit line to Neumann. I doubt that Neuman would be left with more then a few $ in his pocket. https://www.nytimes.com/2019/09/25/business/wework-jpmorgan.html https://www.nytimes.com/2019/09/25/business/wework-jpmorgan....
- skybrian 7y agoThey agreed to terms giving the founder control, and they're apparently still unable to walk away.
- deleted 7y ago[deleted]
- lern_too_spel 7y agoHe owns enough the voting shares to control the company. The investors can either buy control or have everybody walk away with nothing.