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WeWork's Adam Neumann offered package worth up to $1.7B to step down from board
- freejulian85 7y agoThank you fed for all the free money. You guys really improved the economy and reduced inequality. Keep inflating away my wages and savings please. We need companies like WeWork to stay afloat.
- notfromhere 7y agoThat bailout comes as a gift from the House of Saud
- deleted 7y ago[deleted]
- sudoaza 7y agoIPO are the new ICO
- nathanaldensr 7y agoHeadline: "WeWork's Adam Neumann will reportedly get a $1.7 billion deal to step down from board." First paragraph: "Former WeWork CEO Adam Neumann will get about $1.7 million in stock, cash and credit to walk away from the company and give up his voting rights." Which is it: billion or million?
- sorenn111 7y agoI noticed that too, kept reading, pretty sure its billion
- kevinmchugh 7y agoThe "key point" seems to be in error. The body of the article makes billion the only reasonable option
- btt2h 7y ago$1.7 Billion [0]. $1 Billion in cash for his shares, $185 Million consulting "fee", $500 Million line of credit (which is what Mr. Neumann had from JPMorgan). [0] https://www.wsj.com/articles/softbank-to-take-control-of-wework-11571746483 https://www.wsj.com/articles/softbank-to-take-control-of-wew...
- mfer 7y ago> SoftBank will pay Neumann $1 billion for his shares, a $185 million consulting fee and will offer him $500 million in credit to help repay his loans to JPMorgan, according to the report. This is from the article and provides the breakdown. It does look like there are discrepancies in the article, though. Guess this is what happens when you rush to publish or don't have good editing.
- KoftaBob 7y agoA Japanese VC fund that funneled billions of Saudi Sovereign Fund money into American real estate owners pockets. The circle of life.
- eternalban 7y agoAnd somewhere in the center of that circle is the actual untold story.
- ddalex 7y agoseeing rich saudis queue in a glorified Paris mall to buy way way overpriced faux leather bags, a truth occured to me: the west truly scammed the oil out of their land, not by force, but by smart appeal to greed.
- fasicle 7y ago"$185 million consulting fee" Now that's a steep consulting rate, wonder what he bills per hour
- louisswiss 7y agoPresumably about $370 million.
- tqkxzugoaupvwqr 7y agoWhat an amazing twist if true. In my opinion, Neumann is a conman. That he got away with taking out $700 million pre-IPO, that We is close to bankcruptcy just weeks later, that he now gets an additional $1.7 billion … it’s just jawdropping. I don’t understand why he is not afraid for his safety.
- tomp 7y agoYeah, he's a loser and a fraud, but there's an even bigger loser and a fraud that's even more desperate to save face...
- luma 7y agoFraud, certainly. Loser? If this is what losing looks like why am I trying to win...
- wayoutthere 7y agoThis is what losing looks like for billionaires. Not you.
- arcturus17 7y agoThis is what losing looks for someone who wanted to build a sustainable business and stay in control of it... For anyone else, pocketing over two billion dollars isn’t losing.
- criley2 7y ago>who wanted to build a sustainable business and stay in control of it. Serious question: what evidence is there that WeWork was built to be "sustainable"? Doesn't the evidence quite clearly demonstrate the EXACT OPPOSITE, that WeWork was built to be a VC-guzzling gamble that would implode the second investors stopped funding the losses? The only "sustainable" part was destroying the competition to build some semblance of a moat
- paulsutter 7y agoGiven that WeWork has already raised $13B, and the new premoney is $8B, why isn’t Adam wiped out by the preferences on the old investment? Was Softbank buying common shares in some prior rounds?
- marcinzm 7y agoAs I understand it, Adam's shares have much higher voting rights. They may or may not be worth anything but they control the company.
- hkmurakami 7y agoThey have 10-1 voting rights. There were talks of this being reduced to 3-1 during the IPO talks, but those broke down when the IPO was pulled.
- throwawaysea 7y agoDo you mean he would voluntarily agree to reduce his voting rights? Or was there some means to force him into that?
- paulsutter 7y agoIt’s an interesting standoff because his only negotiating stance would be to refuse to accept the investment and key the company go bankrupt. I guess avoiding that is worth $1.7B. Softbank would control the company after bankruptcy anyway, but the process would be messy
- hkmurakami 7y agoPresumably they may have opted for a very ominous debt package, which would have been senior to Softbank's equity, which is another thing SB would have liked to avoid.
- deleted 7y ago[deleted]
- holstvoogd 7y agoAnd meanwhile they are not firing ppl because they can't afford their severance packages. How is this not criminal?
- ProAm 7y agoSeverance isnt required by law?
- dumbfounder 7y agoIf the majority of that is in loans against the stock he will be in trouble if (when) the stock doesn't realize the liquidity and price he needs to pay off those loans, right?
- nextstep 7y agoThis is an outrage when the employees are likely to get nothing for their options of common stock: https://www.businessinsider.com/wework-employee-equity-ipo-bankruptcy-lesson-for-tech-startups-2019-10 https://www.businessinsider.com/wework-employee-equity-ipo-b...
- Lazare 7y agoMmm, it's interesting. There's really two options here: Option A: Son is right, and the market is wrong. WeWork is a ~$50b company, and after a bit of hardball SoftBank will own 70% of it for a very affordable $15b (or whatever it is). And once the market catches on, WeWork's valuation will quintuple overnight, netting the Vision Fund a nice profit and Son the right to be very, very smug. Option B: The market is right, and Son is wrong. WeWork is a ~$10b company, which through a fit of almost comic mismanagement Son has managed to pay ~$15b for (and still owns only a bare majority). With a lot of work (and thanks to getting rid of Neumann), it might one day be worth enough SoftBank/the Vision fund is (barely) not below water, but even that's iffy. I'm no expert, and while on paper option B does look pretty compelling, let's say maybe option A is right after all. In which case... ...given that Son is just a uniquely talented visionary, and saw potential that nobody else (and especially not other potential investors) saw, uh...why in the hell did he keep investing at higher and higher valuations? Like, if the market is just dumb and can't see that WeWork is worth $50b, not $10b, then....why invest at a $50b valuation? Unless it was just a glorified pump-and-dump all along (ie, Son never thought it was worth $50b, but he thought other people could be fooled into thinking it), in which case, why invest now? Does he think he's going to get a second bite at the apple? It's really hard to imagine us all being here in 18-36 months going "wow, WeWork sure has turned things around, I think their IPO will price at $60b!" Right? Isn't the WeWork hype irrevocably gone? This whole thing is so odd. Is it really as simple as "we're just piling billions of dollars up and setting them on fire because we love expensive bonfires"? Is that it?
- arbuge 7y agoThere is an Option C: bankruptcy or fire sale. It's quite possible that the company will remain a loss-making convoluted mess of SPEs that will never turn a profit in time to avoid that outcome.
- empath75 7y agoYeah there's a real possibility that wework is worth nothing.
- DebtDeflation 7y ago
- arbuge 7y agoThis is not going to work.
- deleted 7y ago[deleted]
- perseusprime11 7y agoIt pays to be a liability...
- deleted 7y ago[deleted]
- matthewsills 7y agoAnyone from inside WeWork able to give a sense of the impact on morale? Are people more worried about the coming layoffs, relieved that they won't extend to the entire company, or just pissed enough at Neumann to hope the whole thing implodes?
- DebtDeflation 7y agoIt's getting harder and harder to see how there's ever going to be a liquidity event here. The steps being taken to become profitable, while necessary, are going to come at the expense of future growth. Without the hypergrowth fake tech unicorn story, they get valued like Regus. Neither SoftBank nor Neumann are incented to do an IPO with a Regus-like valuation. I doubt there are buyers for a private sale. How does this end?
- buboard 7y agoOne of the best wealth redistribution agents in the world. He ll probably be very sought after , if he ever wants to work again.
- xoz275 7y agoStories like this make me feel stupid for caring about honesty in business/life. :(
- hn_throwaway_99 7y agoYet one more example that leads the average person to feel "The system is rigged, and grossly at that." I don't even think your average person minds that much when there are insanely wealthy people who built huge, successful companies, but here is another case of someone who has destroyed billions in wealth, and is paid yet more billions for the honor. It's this "heads I win, tails you lose" system that eventually brings people to want to tear the whole thing down.
- campfireveteran 7y agoThe vulture-cannibalistic corporate capture of nearly everything leads to many vicious feedback loops including extinctions of species, destruction of the planet, grotesque income&property ownership inequality and deepening political capture (corruption). If the average person from the masses of people had any self-respect, they'd band together and form worker-owned co-ops to ensure livable wages AND fair remuneration from their work. They'll never get anything more than crumbs with this current, extremely unfair wealth transfer (e.g., slavery) arrangement.
- goldenkey 7y agoBut thats the crux - pressure and incentives. Capital is supposed to reward ingenuity and efficiency. Instead it is mainly used like you say, in a recursive way, so to protect itself even when there is no invention, no ingenuity, just pure oppression through disruption of communication, things like unions, independent candidates, etc Crumbs from an abundance are pleasing to those who have comparisons to look at: nature's parasites or pangs of age or pangs of poverty or 1800s medicine. The real issue was never equality. It has always been adequacy and comparative "neo-nostalgism." Until the hinge breaks of fully, there are usually never any real revolutions. Maybe the internet can change that.
- rchaud 7y agoI get your first point; most people would look at Newman's 'success story' and feel like wealth doesn't happen by working hard and saving and investing, it happens by meeting the right suckers at the right time. But I wouldn't say Neumann has destroyed anybody's wealth. He's simply taken Softbank + Saudi Arabian money and made himself and landlords much richer. Unlike Uber and Airbnb whose operations have a public policy impact (lack of labour protections, reduced housing supply), WeWork basically just rents out boutique office space to big corps and freelancers, and does so at a major loss. They aren't even putting Regus and IWG out of business.
- campfireveteran 7y agoVery golden parachute for such sloppy execution.
- nytesky 7y agoIts too bad he truly wasn't as principled as the image he tried to cultivate. He could bestow each employee of his company $80k, as a bonus for all the pain his mismanagement has caused.
- setgree 7y agoA friend once commented about Skull and Bones [0]: "I don't know what's worse, the fact that it exists, or that I'm not a part of it." (Neither of us went to Yale :)) I wish there were a single word to capture this mix, because it's perfect for this story. This is absolutely repulsive, and also, why can't it happen to me?! [0] https://en.wikipedia.org/wiki/Skull_and_Bones https://en.wikipedia.org/wiki/Skull_and_Bones
- 40acres 7y agoI won't be surprised if WeWork comes out of this mess relatively strong. A crisis is a terrible thing to waste and I still believe that the idea of WeWork can be valuable. A lot of ink has been spilled about how cooky Adam and his wife are but I really liked the WeGrow idea of providing schooling / daycare. Ask any parent of young kids how much they and spend on childcare and you'll be shocked. Combining the work space with childcare (providing everything is on the up and up) is an incredible bundling of convenience. Even some of WeWorks well criticised acquisitions seemed like great ideas to me. Leveraging Meetup.com with WeWork locations just seems natural. It all hinges on Softbanks ability to eat shit for a few years while rebuilding the company but I do think that there is a still a very strong brand here that had some great ideas but got a bit too hooked on the Kool aid.
- navigatesol 7y ago>A lot of ink has been spilled about how cooky Adam and his wife are but I really liked the WeGrow idea of providing schooling / daycare. Yeah, and everyone likes the idea of self-driving, solar-powered Tesla robo-taxis, too. Finding things that people want is easy; providing that product or service at a profit is much harder. At the end of the day, WeWork is a real-estate company. 25% of the world's wealth is tied up in this industry. It's old, and efficient. Borrowing long, lending short is a surefire way to get crushed in a recession. This is known.