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I still can't believe this guy gets to walk away with 1.7 billion dollars just for building up fluff while all the people who helped him grow have dire conseque

• rapsey 7y ago
  What dire consequences?
• hef19898 7y ago
  WeWork is under investigation, so.
  • astrodust 7y ago
    Oh, snap: https://www.reuters.com/article/us-wework-newyork-investigation-exclusiv/exclusive-new-york-state-attorney-general-investigating-wework-sources-idUSKBN1XT01J https://www.reuters.com/article/us-wework-newyork-investigat...
• chosenbreed37 7y ago
  I'd argue that they would have been reasonably happy with their salaries (and any other perks) while they were employed (otherwise they would have gone elsewhere). And whilst I've not read the article chances are there will be some severance payout. And whilst it's inconvenient there's a good chance many of them will find employment elsewhere. Lastly, the writing's been on the wall for some time now. I'd like to think that they would have braced themselves for this eventuality.
  • gameswithgo 7y ago
    Look even if you want to be obtuse and pretend its not bad that people got lured into jobs that couldn't possibly last, and may have uprooted families only to get laid off now, and have to uproot them again, even pretending that is no big deal, which it is, but let's pretend. MAYBE you can feel some emotion for the investors whose money was essentially stolen, by a scam artist?
    • earthtolazlo 7y ago
      I feel badly for the employees. SoftBank, not so much.
    • adambyrtek 7y ago
      I feel no emotion for the investors since these are professional VC funds which should be fully aware of the risks involved. However, the situation would have been very different if they pulled out the IPO, cashed out to (among others) individual investors and then folded.
    • fat-chunk 7y ago
      I don't agree with the person you are replying to either, however I don't feel much emotion for VCs who throw their money around and don't do their proper due diligence. A property leasing company that sub-leases property owned personally by the CEO is a massive conflict of interest and a huge red flag, how these "professional investors" came to the conclusion that it would be a good idea to invest is beyond me.
    • chosenbreed37 7y ago
      > MAYBE you can feel some emotion for the investors whose money was essentially stolen, by a scam artist? I've got plenty of sympathy for people being laid off I was just putting forward the case that it was good while it lasted. Less so for investors. From the perspective of the latter you win some, you lose some. And any concerns should be raised with people that funded the company to the tune of billions with what appears to be little governance or due diligence.
    • nopriorarrests 7y ago
      >MAYBE you can feel some emotion for the investors whose money was essentially stolen, by a scam artist? Honestly, I think investors were quite aware of what kind of business WeWork is. They were hoping to dump the whole hot mess to public markets and walk away, and they failed.
    • lotsofpulp 7y ago
      >MAYBE you can feel some emotion for the investors whose money was essentially stolen, by a scam artist? Please explain what the scam was, and how money was forcefully or fraudulent taken from the investors. Was the scam the public knowledge of a CEO using private jets to smoke weed and vacation with company money and speaking in cultish phrases? Was it the lack of cash flow? Was it the obvious lack of any moat?
• jbob2000 7y ago
  You could look at this as a shifting of talent. Instead of those 2,400 people wasting their time managing short term office rentals for yuppies, perhaps they'll move on to more meaningful work! Some will start companies, some will join companies that provide more value to society, some will spend time with their families.
  • brosinante 7y ago
    shifting of talent I hate this new reality.
    • jbob2000 7y ago
      Which new reality? The one where most of the population can read and write and where most hold degrees and diplomas? This isn’t the 1900s industrialization era, where employees were picked out of the farm fields to work in factories, having never gone to school. People are smart these days, layoffs aren’t as destructive as they used to be.
      • slumdev 7y ago
        > layoffs aren’t as destructive as they used to be. Student loan debt cannot be discharged. Unsecured personal debt is at all-time highs. Nearly half of Americans have less than $1000 in savings. You are wrong.
        • marcusverus 7y ago
          Federal student loans are eligible for deferment during periods of financial hardships, including unemployment, for up to three years. https://studentaid.ed.gov/sa/repay-loans/deferment-forbearance#deferment-eligibility https://studentaid.ed.gov/sa/repay-loans/deferment-forbearan...
        • p1esk 7y ago
          Yeah, no. I’ll take being laid off in 2019 over being laid off in 1919 any day!
• buboard 7y ago
  for the people who got laid off, obviously it's very bad, they should sue and they may get something back as settlement. For the existing employees who saw their stock options value deflated overnight, well tough luck. it's hard to become a millionaire For the investors who just throw money to whoever in sight just to see what sticks, no tears at all
  • JackFr 7y ago
    > for the people who got laid off, obviously it's very bad, they should sue and they may get something back as settlement. On what possible grounds? They were fairly compensated and got severance. There is no indication that they were hired under false pretenses. They're angry cause they didn't get to rip off Softbank too.
    • buboard 7y ago
      i have no idea really, but considering that lawyers exist and a lot of money is at stake ... they ll connect some dots
      • pc86 7y ago
        This is a disgusting attitude and is exactly why these types of problems exist.
        • buboard 7y ago
          https://fortune.com/2019/11/19/wework-softbank-takeover-lawsuits/ https://fortune.com/2019/11/19/wework-softbank-takeover-laws...
• macspoofing 7y ago
  To be clear, Neumann's $1.7 billion payout is from SoftBank shareholders. There's nothing obviously criminal about SoftBank's bailout. But I agree SoftBank didn't have to do it. WeWork was ostensibly bankrupt and SoftBank could have dictated pretty much any terms they wanted.
  • toomuchtodo 7y ago
    SoftBank is trying to obtain a $2.8B loan for turning around WeWork [1]. Sunk cost fallacy at scale. SoftBank should've burned WeWork and Neumann's comp to the ground, while still paying out severance to the rank and file ("shoot the hostage"). Instead, SoftBank looks incompetent, Son looks incompetent, Neumann walks away a billionaire for delivering nothing of value, and layoffs are still happening. They're doubling down on financially destructive decisions. This is what happens when you have more money and vanity than courage. [1] https://asia.nikkei.com/Business/SoftBank2/SoftBank-in-talks-with-Mizuho-and-Japan-banks-for-2.8bn-loan https://asia.nikkei.com/Business/SoftBank2/SoftBank-in-talks... (SoftBank in talks with Mizuho and Japan banks for $2.8bn loan)
    • rchaud 7y ago
      They're doubling down to save face. They're betting that WeWork can survive as a much smaller company and that in 5 years people will forget what a disaster this was.
      • deleted 7y ago
        [deleted]
  • workthrowaway 7y ago
    i thought part of it were also consultancy fees for him to be a consultant for the company many years to come?
    • uptown 7y ago
      Yes, in the same way that high level employees leave those roles to spend more time with their families.
• chewz 7y ago
  Well if you define a market simply as a mechanism of wealth transmission from dumb people to smarter people then I think that Adam Neumann deserves every single cent of 1.7 billion dollars.
  • prewett 7y ago
    > if you define a market simply as a mechanism of wealth transmission from dumb people to smarter Who defines a market with that kind of cynical, silly definition? I don't think most of us want that kind of "market". And if that's the only way to make Neumann look good, then maybe the reverse is true.
    • chewz 7y ago
      There is a definition of stock market as a mechanism of wealth transfer from active investors to patient/intelligent investors. Most of the people are jumping one over the other to lose money as quickly as possible on some fantastical promise of profits. Human nature is like that. Intelligent people made money out of this sentiment since money had been invented.
      • JanSt 7y ago
        > There is a definition of stock market as a mechanism of wealth transfer from active investors to patient/intelligent investors. That's certainly not a definition. Investing is not zero-sum.
  • ceejayoz 7y ago
    > Well if you define a market simply as a mechanism of wealth transmission from dumb people to smarter people... Does anyone?
    • AlexandrB 7y ago
      Advertisers.
  • jotm 7y ago
• JackFr 7y ago
  The employees deserve more cause they didn't get their share of the grift? By all accounts they were well compensated for working in a wealth destroying venture.
• Strom 7y ago
  I presume that by all the people who helped him you mean the WeWork employees and not investors like SoftBank. Well, these employees aren't walking away empty handed either. They've been getting paid all these years and most of them will probably continue getting paid for some time. That's also a fruit of Neumann's scheming. These people didn't have to fight for jobs in a real business, they are benefiting from the WeWork illusion of grandeur and bringing in paychecks month after month.
  • dickeytk 7y ago
    They’re not destitute, no. But their employees were heavily compensated with options that are now worthless. Of course options are a risk, but they didn’t work there if they didn’t think those options would be at least worth something in the future.
    • Strom 7y ago
      Options in a startup are always a lottery ticket. I would argue that no rational person assigns any significant value to them, because even career investors aren't able to pick winners and instead earn money by betting on a lot of different startups.
      • dickeytk 7y ago
        Big difference between a startup and a massive valuation that everyone assumes is about to IPO. WeWork deflated more than any company in HISTORY. You’re technically correct but people are irrational and I’m sure they were being lied to their face in all hands about how great the future would be. At that stage as an employee you’re counting on those to be able to put down a down payment or do a much needed renovation, or hopefully not payback debt.
        • nopriorarrests 7y ago
          >WeWork deflated more than any company in HISTORY. Cisco went from 77$ per share in 2000 to $10 per share in 2002, while being public (so the value was much more real than WeWork, you could hit the 'sell' button to make it real money in 5 minutes, unlike WeWork equity). IIRC it was valued around 500 billions in 2000, so it was much larger destruction in value. It still hasn't recovered, with $45 per share right now, never reaching its 2000 peak during these 19 years.
• julienchastang 7y ago
  Investors did not do due diligence (unless there was fraud, but I have not heard of that). It is therefore not surprising AN got away with it. There are several companies with the same business model as WeWork that do not have nearly the same valuation (before all the recent hullaballoo, that is). There have been a number good articles about this topic in the WSJ lately. There is no reason to compare Adam Neumann to Elizabeth Holmes at this point.
  • lotsofpulp 7y ago
    >Investors did not do due diligence One (likely in my opinion) possibility is they did, and they were betting they could find a bigger fool.
    • rchaud 7y ago
      Agreed, all the public statements from them were highly bullish, right up until the point where they realized the public markets weren't going to be suckered after the Uber IPO bombed.
    • jotm 7y ago
      Hey, it's the bank's fault they approved a 20K credit limit without even checking my ID. They should've done their due diligence beyond seeing the credit score /s
      • lotsofpulp 7y ago
        Your statement doesn't make sense to me. If you're claiming that this WeWork situation is similar to someone fraudulently obtaining $20,000 by claiming they are someone else, I have to disagree because there has been no misrepresentations in the WeWork saga that I am aware of.
        • jotm 7y ago
          Oh no, there was no identity theft. Just a jobless man cashing in on his credit score.
• berberous 7y ago
  I don’t really see why it’s his fault investors over valued his company — he believed in his own spin and was phenomenally successful at building a large, real business. This was not like Theranos where he was straight up lying about a product working — anyone could analyze the business based on the fundamentals, and investors seemed ever willing to invest at high valuations. The self dealing was reprehensible and evidence of low morals in my view, but none of those events actually materially impact the value of the business. Instead, overnight, investors just came to their senses about what kind of value this type of business is worth. Definitely a strategic misstep on his part, but it’s not like he stole billions of value away from the company. The drop in value is more like what happened to Uber or Blue Apron post IPO, except, unfortunately for the employees, it happened before they could exit.
  • bogomipz 7y ago
    >"he believed in his own spin and was phenomenally successful at building a large, real business.' How was he "phenomenally successful" if the company needed an emergency bailout because they were about to run out of cash?
    • sidr 7y ago
      > How was he "phenomenally successful" He walked away with $1.7 billion.
  • dclowd9901 7y ago
    Agreed. This is the direct and intended result of a society which values those with money (investors) over those without money (people who invest their time, talent and effort). He did nothing wrong in this society, so maybe we ought to fucking change society.
    • perl4ever 7y ago
      That seems like an odd statement, considering that to participate in WeWork, employees got paid, customers got subsidized, and investors (Saudis, I guess) got charged vast amounts to no benefit for them. Nothing about it suggests valuing investors, but the opposite.
• Abishek_Muthian 7y ago
  “WeWork isn’t really a real estate company. It’s a state of consciousness, a generation of interconnected emotionally intelligent entrepreneurs.” -Adam Neumann.[1] Even after hearing that media raved about him/WeWork, analysts were bullish and investors pumped Billions. Startup media are generally happy with their funding related news as it is glamorous. And due to the funding noise, Startup ecosystem has forgotten that a Startup is a Business and a Business should make money, else it's just a hobby. [1]:https://www.nytimes.com/2018/02/17/business/the-wework-manifesto-first-office-space-next-the-world.html https://www.nytimes.com/2018/02/17/business/the-wework-manif...
  • asdfman123 7y ago
    I don't even know who their target audience was. Many people who work from home do so because they enjoy the privacy of working from home. People who want more social interaction go to coffee shops, and plenty of people do both. I don't see who would want to pay a few hundred bucks a month to work on a conference table surrounded by strangers.
    • whaaaaaat 7y ago
      Please don't give your opinion on something you don't know anything about. You've clearly never even seen the inside of a WeWork because the majority of them were office spaces. The audience was small companies who preferred short time leasing, which in large cities, there were plenty of. Every wework I've been to in Manhattan has been completely full. There are 1-5 person offices, and sometimes single larger spaces, and you rented the "offices", which were just rooms. It's not like it's just a table where people sit together, that's crazy. It's office space. The benefit was you could get a place for a few months and then move somewhere else if your company isn't stable yet and you don't want to sign a year lease.
      • jfengel 7y ago
        As I understand it, the goal was also to network with other small businesses using the same space. The spaces were set up to encourage people to find opportunities to work together -- cross-marketing, sharing resources, new ideas. Kind of an incubator, without the financial support or design. Not inherently a bad idea, though it's full of Silicon Valley optimism where one serendipity produces tons of money while a lot of other things just fail to gel -- but some people get paid regardless.
• ioror93jf 7y ago
  I am shocked people still get shocked about the elite being treated differently Sports, TV, designer stuff... all heavily dependent on emotional attention. The attention economy is older than we realize. Brand building is at the core of this, and we’ve seen this with of elite brand builders over and over. Those who can do. Those who can’t are CEOs
• landryraccoon 7y ago
  I’m pretty neutral. Why does he deserve it less than the billionaire VCs who didn’t do due diligence before handing it over? I don’t see moral superiority on either side of the table from where I’m standing. Besides by that principle his employees didn’t deserve to get paid either, since by your reasoning his employees were only paid by the fruits of fraud. That doesn’t make sense to me.
• Tiktaalik 7y ago
  Even well beyond the usual norms of Silicon Valley, this dude has lost so many people so much money um, I gotta wonder what sort of security detail he has for himself to prevent some pissed off people from making themselves feel a little bit better.
• kevin_thibedeau 7y ago
  On the bright side. He has to watch his back for MBS henchmen.
  • rchaud 7y ago
    He really doesn't. For that kind of investor, the portfolio is more about having strategic connections to big players rather than purely making money. I'd imagine the next time Son comes around to ask for money, MBS will have more leverage than he previously did.
• tejtm 7y ago
  well, he will never work in this town again :/
  • jletienne 7y ago
    sadly he was given 1.7 billion as an exit package. he's capable of starting multiple business ventures tomorrow if he desires
  • rchaud 7y ago
    He'll Epstein his way back into the good graces of the upper classes. Fully expect to see the "Adam and Rebekah Neumann centre for cancer research" or something like that at a major university sooner rather than later.
• pacetherace 7y ago
  If he was not able to manage that kind of money the first time, he will not go very far the second time. Most likely he will come up with a similar Ponzi scheme and burn all his cash.
• kp98 7y ago
  I think you could consider WeWork worse than Thernanos in many ways. Far more people understood what was going on at the highest level, and when all was said and done Elizabeth Holmes walked away with nothing but criminal prosecution. Both screwed their investors, arguably Thernanos did worse, but investors prepare for potentially big losses. The employees on the other hand are all screwed: at Thernanos Holmes was the most screwed given the potential jail time, but at WeWork Neumann is walking away with over a billion, which is sort of like spitting on your employees. WeWork (Neumann) preached about the 'We Generation' and 'elevating the world to a new consciousness,' but really his actions were traitorous against the people who made him. Thernanos never claimed the moral high ground, nor did the leader get off like a bandit.
  • mosdl 7y ago
    Didn't people pay for Theranos tests that lied about their abilities? That is way worse.
• freddy418_sc 7y ago
  He's not getting that for building fluff. Adam is walking away with 1.7 billion dollars because he fooled whoever is in charge at Softbank into getting into bed with him for WeWork and Softbank decided that that was an appropriate amount to pay in order to get rid of him.
• vanusa 7y ago
  What's not to believe, or be (more than momentarily) surprised by? His behavior is not only perfectly consistent with, but emblematic of the governing ideology of his, and our time: https://en.wikipedia.org/wiki/Neoliberalism https://en.wikipedia.org/wiki/Neoliberalism The overarching goal of which might well summed up succinctly as: "Socialization of risk; privatization of gain."
• jensv 7y ago
  I wouldn't say workers suffered from "dire personal and financial consequences". The employees had good jobs that could help build their career with relatively little risk.
• stopadvertising 7y ago
  This is a much more massive scam than Theranos. They almost IPO'd with all this fraud.
• smileysteve 7y ago
  > while all the people who helped him grow have dire consequences both financial and personal. That's definitely a glass half empty way to look at this; On the other hand, with 20/20 hindsight, knowing it was selling space it rented for a $.80 for $1 of cost, knowing that this hype meant and in a low unemployment time means that these were effectively a jobs program, with above average market salaries, funded by Softbank (and the Saudis). Also a jobs program for any companies that would have paid $1/$1 of office space but saved the discount. And, from a being laid off perspective; while it's not fun to have a job end at someone else's discretion, if you worked at WeWork and the August headlines weren't a hint to get the resume ready, I'm not sure what else might; Effectively, 4+ months of notice combined with now actual severance. The downstream effects of this are probably worse from a capitalism / worker piece; As WeWork reduces leasing office space, buildings or service companies will likely pocket the contract termination fees while reducing jobs/hours of contract staff -- who, unlike wework employees, were closer to minimum wage, may not even have benefits, and definitely won't get severance.
• 77pt77 7y ago
  Not quite at the same level. For it to be like theranos the offices wouldn't exist.