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I like Matt Levine's take on this: (re: Adam Neumann) If you want, you can imagine him as a diabolical genius who explicitly set out to short the unicorn bubbl

by mbesto 7y ago

I like Matt Levine's take on this: (re: Adam Neumann) If you want, you can imagine him as a diabolical genius who explicitly set out to short the unicorn bubble and then walked away barefoot with a jaunty whistle and $700 million of SoftBank’s money, but that does not strike me as necessary or accurate. My model doesn’t require you to think that your startup is dumb! You don’t need to worry about Neumann’s personal beliefs and motivations at all, really. You can just think of him as a product of the invisible hand of the market. A lot of money was pouring into startups, there was a lot of demand, and the demand called forth supply, and the people who supplied the supply got rich; it is elemental and straightforward and has very little to do with questions like “is this a good business model?”[0] “Capitalism occasionally makes huge mistakes,” is part of the story, but the other part is that there are rich rewards for those who spot the mistakes and bet against them. This is a lesson specifically of financial capitalism: In most businesses you can notice a competitor doing a dumb thing and create value by doing a better thing, but the financial markets are special because you can notice a competitor doing a dumb thing and get rich by taking the other side, without creating value or doing a better thing. If you notice that people are buying dumb unicorn shares for too much money, you don’t have to invent a better way of doing business or of funding companies. You can just sell them as many as possible of the dumbest possible unicorn shares; when the bubble bursts, you collect your winnings. This sort of thing—getting rich by being smarter than your counterparties, making markets more efficient by being on the right side of bets—is a classic path to wealth creation in the financial business. Tech, traditionally, has a different ethos, one of getting rich by changing the world. But sometimes there are crossovers, and anyway maybe WeWork was never really a tech company.[1] [0] - https://www.bloomberg.com/opinion/articles/2019-10-02/the-trades-will-be-free-now https://www.bloomberg.com/opinion/articles/2019-10-02/the-tr... [1] - https://www.bloomberg.com/opinion/articles/2019-10-23/how-do-you-like-we-now https://www.bloomberg.com/opinion/articles/2019-10-23/how-do...

asdfman123 7y ago
I mean, maybe he was a genius fraudster, but maybe he convinced himself to believe in what he was selling -- which made him all the better of a salesman.
- gruglife 7y ago
  As George Costanza famously said “it’s not a lie if you believe it”
- JohnFen 7y ago
  Almost all successful con artists (as well as salesmen and marketers) believe their own stories to some degree, particularly when those stories are ridiculous. They have to tell them with "authenticity", after all.
- bryanmgreen 7y ago
  “Reality distortion” mindsets are kind of important for launching a startup or doing something great. It’s sort of like Vicodin for managing the pain/stress. Good, maybe necessary, in the short term, but easy to abuse and get addicted to the delusion and go full Don Quixote. Unfortunately, you can see large consequences when it’s not given it up.
jariel 7y ago
When a company is public there are short positions to be played and this is definitely 'value creating' - in the exact same manner that all financial activity is 'value creating' on some level. It was not a 'bubble that burst' on WW, so much as it was a misunderstanding of the public's appetite for risk. There is a company there. WW is not being wiped out. Softbank may very well recover their 'losses' and then some. It's a misunderstanding of the nature of risk and the need for some companies to take in 'fuel' that makes grasping what happened with WW a little more difficult. Also - because we love to hate on people that make 'koolaid that's just a bit to strong' - while at the same time adore those who make 'just strong enough' koolaid ... there's an element of populism going on here. Amazon's retail business has never made a dime - though there are obviously some powerful fundamentals there, it can't really be ignored, and yet, we keep Bezos very, very rich in terms of valuation. My prediction is that in the long run, WW will be a succesfull company, it will make Softbank money, and that Newman's $1B take, in retrospect (if that's all he got) will seem on par with most startups that made it big. And I say this as someone who really doesn't like the guy, at least from what information there is publicly.

by mbesto 7y ago

asdfman123 7y ago

I mean, maybe he was a genius fraudster, but maybe he convinced himself to believe in what he was selling -- which made him all the better of a salesman.

gruglife 7y ago
As George Costanza famously said “it’s not a lie if you believe it”
JohnFen 7y ago
Almost all successful con artists (as well as salesmen and marketers) believe their own stories to some degree, particularly when those stories are ridiculous. They have to tell them with "authenticity", after all.
bryanmgreen 7y ago
“Reality distortion” mindsets are kind of important for launching a startup or doing something great. It’s sort of like Vicodin for managing the pain/stress. Good, maybe necessary, in the short term, but easy to abuse and get addicted to the delusion and go full Don Quixote. Unfortunately, you can see large consequences when it’s not given it up.

jariel 7y ago

When a company is public there are short positions to be played and this is definitely 'value creating' - in the exact same manner that all financial activity is 'value creating' on some level. It was not a 'bubble that burst' on WW, so much as it was a misunderstanding of the public's appetite for risk. There is a company there. WW is not being wiped out. Softbank may very well recover their 'losses' and then some. It's a misunderstanding of the nature of risk and the need for some companies to take in 'fuel' that makes grasping what happened with WW a little more difficult. Also - because we love to hate on people that make 'koolaid that's just a bit to strong' - while at the same time adore those who make 'just strong enough' koolaid ... there's an element of populism going on here. Amazon's retail business has never made a dime - though there are obviously some powerful fundamentals there, it can't really be ignored, and yet, we keep Bezos very, very rich in terms of valuation. My prediction is that in the long run, WW will be a succesfull company, it will make Softbank money, and that Newman's $1B take, in retrospect (if that's all he got) will seem on par with most startups that made it big. And I say this as someone who really doesn't like the guy, at least from what information there is publicly.