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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 wor

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.
- Frondo 7y ago
  People aren't and will never be rational economic actors -- homo economicus -- and while we can chide them for making mistakes a rational person wouldn't, I feel like there must be a way to structure the world that doesn't set up this expectation no one will ever live up to. (edit to fix a typo)
- dclowd9901 7y ago
  Right, so how did the fucking guy running the ship win the lottery on the backs of everyone who didn't?
  - solveit 7y ago
    The reason he made bank is because Softbank decided it would be a good idea to let Neumann burn money, gave Neumann a shit ton of money without actually buying control of Wework from Neumann, found that nobody else thought burning money was a good idea and so WeWork couldn't IPO, decided that burning money wasn't a great idea after all, found that Neumann liked burning money and would continue to run WeWork into the ground burning money every step of the way, found that they couldn't do shit because WeWork still belonged to Neumann, couldn't walk away because they were billions in the hole, and so decided to give Neumann even more money so they could actually control the company this time. The employees pretty much got the typical outcome of working at a startup (startup runs along for a couple years, then fails). The fact that Adam Neumann made bank is rankling, but Rich People Burning Money and Also Accidentally Giving Some Away to Undeserving People Because They Did Incredibly Stupid Things isn't exactly something we can or should stop. You can't make it illegal to be stupid.
compiler-guy 7y ago
Options are a risk you take, and every analysis out there says that one should discount them almost to zero, especially for startups. It does suck for those employees that their risk didn't work out, but for most of them it was a conscious decision to take on the risk, presumably for a high potential upside. And if you accept the risk, then its unfortunate that it didn't work out, but that is what risk is.

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.
Frondo 7y ago
People aren't and will never be rational economic actors -- homo economicus -- and while we can chide them for making mistakes a rational person wouldn't, I feel like there must be a way to structure the world that doesn't set up this expectation no one will ever live up to. (edit to fix a typo)
dclowd9901 7y ago
Right, so how did the fucking guy running the ship win the lottery on the backs of everyone who didn't?
- solveit 7y ago
  The reason he made bank is because Softbank decided it would be a good idea to let Neumann burn money, gave Neumann a shit ton of money without actually buying control of Wework from Neumann, found that nobody else thought burning money was a good idea and so WeWork couldn't IPO, decided that burning money wasn't a great idea after all, found that Neumann liked burning money and would continue to run WeWork into the ground burning money every step of the way, found that they couldn't do shit because WeWork still belonged to Neumann, couldn't walk away because they were billions in the hole, and so decided to give Neumann even more money so they could actually control the company this time. The employees pretty much got the typical outcome of working at a startup (startup runs along for a couple years, then fails). The fact that Adam Neumann made bank is rankling, but Rich People Burning Money and Also Accidentally Giving Some Away to Undeserving People Because They Did Incredibly Stupid Things isn't exactly something we can or should stop. You can't make it illegal to be stupid.

compiler-guy 7y ago

Options are a risk you take, and every analysis out there says that one should discount them almost to zero, especially for startups. It does suck for those employees that their risk didn't work out, but for most of them it was a conscious decision to take on the risk, presumably for a high potential upside. And if you accept the risk, then its unfortunate that it didn't work out, but that is what risk is.