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SoftBank and their investors deserve this. SoftBank wanted to take wework and jam it on the stock market, then pull their money out. They knew this company was

SoftBank and their investors deserve this. SoftBank wanted to take wework and jam it on the stock market, then pull their money out. They knew this company was trash, they are no better than Adam Neumann. Congrats to Adam for exposing and exploiting softbanks attempts to exploit the USA stock market. In the end this will stop future cases of investors trying to jam garbage companies into the public markets, essentially stealing money from retail investors who don’t know better

konschubert 7y ago
For, like, 3 years.
rollerboi 7y ago
>In the end this will stop future cases of investors trying to jam garbage companies into the public markets, essentially stealing money from retail investors who don’t know better History doesn't repeat itself, but it rhymes. I wish I could have hope that this wouldn't happen again in the future (banks selling an overvalued business to the public markets via IPO) But really, this has happened before and it will happen again. Human irrationality knows no bounds.
- Nasrudith 7y ago
  Really I would expect it to reoccur just from neural network forgetting over time alone - let alone human irrationalities. I suspect the only way that would maybe go away would be both greater transparency requirements and the ability for the market to parse all of the data in an informed way. So in other words technically possible but probably not going to happen.
  - rollerboi 7y ago
    You're right about "technically possible but probably not gonna happen." The part you're missing is - although the market might have access (and be able to) parse data in an "informed" way, that doesn't mean all market participants will react to that data in the same, rational manner.
deleted 7y ago
[deleted]
davidw 7y ago
> In the end this will stop future cases of investors trying to jam garbage companies into the public markets, essentially stealing money from retail investors who don’t know better Until the next bubble, at least.
wowFuckYoouu 7y ago
Congrats to Adam Gee, yeah. Great job with plotting an elaborate scheme to create an illusory company made of garbage and then pass the buck, in order to reveal the REAL enemy. He totally pulled a heroic move, worthy of congratulations. Yeah. Wow.
arcticbull 7y ago
There are no good guys here. Neumann, by taking money from SoftBank, was completely complicit. He knew his financials, he knew the company was a flaming dumpster, he knew he had no plan to fix it, other than buying a wave pool company and assigning his family to high-level positions. You really think if the company had gone public, Neumann would have what, stepped up and said "see, this is why we need to add more investor protections"?
- stevespang 7y ago
  Can't wait to see the lawsuits rolling in . . .
- rolltiide 7y ago
  He didn't need plans to fix it, Softbank got all the information they needed for their due diligence and invested. There are plenty of private companies with outside capital that are not structured for a stock market debut. WeWork was one of them and the investors tried to list it on the stock markets anyway. Neumann played the best cards available to him and cemented his consolidated ownership, with a different share class becoming a mere conduit for payment, and voter control allowing for unilateral signing off on contracts to himself and his other entities.
- dredmorbius 7y ago
  The easiest person to con is a con.
- lern_too_spel 7y ago
  There are no good guys among the main players, but the people who are not the main players mostly benefited. Workers got higher wages due to the infusion of cash into the demand side of the labor market from Softbank and KSA. The knowledge worker industry benefited from increased competition in the office space market. A few property owners benefited from selling their properties to a conman with virtually unlimited buying power. Now lawyers are benefiting and probably the personal security industry as well. Sure, the people who chose to work for WeWork now have worthless equity, but that's always a risk when working for a startup, and they knew that going in.
tootie 7y ago
WeWork still has a ton of customers and rapid growth. I think their eyes were bigger than their mouths when it came to expanding offerings into unrelated nonsense and they were being extremely undisciplined in their spending, but the business is still extremely viable. The new leadership are taking a giant ax to all the excess to get it over with and then can rebuild from what is still a very strong base. It will take at least a year to recover, but I think they'll still hit profitability in the long run.
- arcticbull 7y ago
  They have customers who cost them money on an incremental basis. More customers, less money. They don't deserve to be valued any differently than like Regus, approximately 8X their annual profits or 1X their annual revenue. In this space, net margins are approximately 15%. That values WeWork somewhere between -15.2B and 1.8B based on their 2018 performance data. Measured against their competitors, they're still about 5X over-valued.
  - ummonk 7y ago
    They have significantly higher brand value than Regus, which does merit a premium though probably not 5x.
    - arcticbull 7y ago
      Brand value, maybe (even after this?) but they definitely haven't proven that they can turn that brand equity into higher margins. I believe if two offices were priced the same, someone might pick WeWork, but would people pay WeWork more than Regus for a comparable office? I'd imagine not much.
      - rollerboi 7y ago
        If I could chime in here - WeWork was way overvalued because they sold themselves to the public as a "tech company" that dabbled in real estate, not a real estate company that dabbled in tech. I mean, they had a lot of the same characteristics (such as crazy revenue growth while operating at a loss), but let's be clear: WeWork isn't a tech company, they're a real estate company in "tech clothes." To circle this back to the parent comment - I still don't think they'll be profitable after drastically cutting spending. They might be able to keep the company afloat for a little bit. But their spending cuts target parts of the business that aren't under their "core competency" which is leasing office space on a short-term basis. So for example, they ax'd plans for WeLive or WeSchool (or whatever their kindergarten plans were called) as part of their turnaround plan. WeWork has something like $17B in long-term lease liabilities across major cities in the US (and UK, I believe). They signed these long-term (10+ years I believe) leases with hopes of turning around and leasing them back to freelancers/businesses on a short-term (3-6mo) basis. If the economy slows down and demand for this variable-term space dries up, WeWork will still be on the hook for those $17B leases.
vanusa 7y ago
SoftBank and their investors deserve this. And yet - as bad as their "losses" were - precisely none of those people are actually suffer (in actual personal, physical terms) anywhere near as badly as the laid off / outsourced service workers referred to in the article.

konschubert 7y ago

For, like, 3 years.

rollerboi 7y ago

>In the end this will stop future cases of investors trying to jam garbage companies into the public markets, essentially stealing money from retail investors who don’t know better History doesn't repeat itself, but it rhymes. I wish I could have hope that this wouldn't happen again in the future (banks selling an overvalued business to the public markets via IPO) But really, this has happened before and it will happen again. Human irrationality knows no bounds.

Nasrudith 7y ago
Really I would expect it to reoccur just from neural network forgetting over time alone - let alone human irrationalities. I suspect the only way that would maybe go away would be both greater transparency requirements and the ability for the market to parse all of the data in an informed way. So in other words technically possible but probably not going to happen.
- rollerboi 7y ago
  You're right about "technically possible but probably not gonna happen." The part you're missing is - although the market might have access (and be able to) parse data in an "informed" way, that doesn't mean all market participants will react to that data in the same, rational manner.

deleted 7y ago

[deleted]

davidw 7y ago

wowFuckYoouu 7y ago

Congrats to Adam Gee, yeah. Great job with plotting an elaborate scheme to create an illusory company made of garbage and then pass the buck, in order to reveal the REAL enemy. He totally pulled a heroic move, worthy of congratulations. Yeah. Wow.

arcticbull 7y ago

There are no good guys here. Neumann, by taking money from SoftBank, was completely complicit. He knew his financials, he knew the company was a flaming dumpster, he knew he had no plan to fix it, other than buying a wave pool company and assigning his family to high-level positions. You really think if the company had gone public, Neumann would have what, stepped up and said "see, this is why we need to add more investor protections"?

stevespang 7y ago
Can't wait to see the lawsuits rolling in . . .
rolltiide 7y ago
He didn't need plans to fix it, Softbank got all the information they needed for their due diligence and invested. There are plenty of private companies with outside capital that are not structured for a stock market debut. WeWork was one of them and the investors tried to list it on the stock markets anyway. Neumann played the best cards available to him and cemented his consolidated ownership, with a different share class becoming a mere conduit for payment, and voter control allowing for unilateral signing off on contracts to himself and his other entities.
dredmorbius 7y ago
The easiest person to con is a con.
lern_too_spel 7y ago
There are no good guys among the main players, but the people who are not the main players mostly benefited. Workers got higher wages due to the infusion of cash into the demand side of the labor market from Softbank and KSA. The knowledge worker industry benefited from increased competition in the office space market. A few property owners benefited from selling their properties to a conman with virtually unlimited buying power. Now lawyers are benefiting and probably the personal security industry as well. Sure, the people who chose to work for WeWork now have worthless equity, but that's always a risk when working for a startup, and they knew that going in.

tootie 7y ago

WeWork still has a ton of customers and rapid growth. I think their eyes were bigger than their mouths when it came to expanding offerings into unrelated nonsense and they were being extremely undisciplined in their spending, but the business is still extremely viable. The new leadership are taking a giant ax to all the excess to get it over with and then can rebuild from what is still a very strong base. It will take at least a year to recover, but I think they'll still hit profitability in the long run.

arcticbull 7y ago
They have customers who cost them money on an incremental basis. More customers, less money. They don't deserve to be valued any differently than like Regus, approximately 8X their annual profits or 1X their annual revenue. In this space, net margins are approximately 15%. That values WeWork somewhere between -15.2B and 1.8B based on their 2018 performance data. Measured against their competitors, they're still about 5X over-valued.
- ummonk 7y ago
  They have significantly higher brand value than Regus, which does merit a premium though probably not 5x.
  - arcticbull 7y ago
    Brand value, maybe (even after this?) but they definitely haven't proven that they can turn that brand equity into higher margins. I believe if two offices were priced the same, someone might pick WeWork, but would people pay WeWork more than Regus for a comparable office? I'd imagine not much.
    - rollerboi 7y ago
      If I could chime in here - WeWork was way overvalued because they sold themselves to the public as a "tech company" that dabbled in real estate, not a real estate company that dabbled in tech. I mean, they had a lot of the same characteristics (such as crazy revenue growth while operating at a loss), but let's be clear: WeWork isn't a tech company, they're a real estate company in "tech clothes." To circle this back to the parent comment - I still don't think they'll be profitable after drastically cutting spending. They might be able to keep the company afloat for a little bit. But their spending cuts target parts of the business that aren't under their "core competency" which is leasing office space on a short-term basis. So for example, they ax'd plans for WeLive or WeSchool (or whatever their kindergarten plans were called) as part of their turnaround plan. WeWork has something like $17B in long-term lease liabilities across major cities in the US (and UK, I believe). They signed these long-term (10+ years I believe) leases with hopes of turning around and leasing them back to freelancers/businesses on a short-term (3-6mo) basis. If the economy slows down and demand for this variable-term space dries up, WeWork will still be on the hook for those $17B leases.

vanusa 7y ago

SoftBank and their investors deserve this. And yet - as bad as their "losses" were - precisely none of those people are actually suffer (in actual personal, physical terms) anywhere near as badly as the laid off / outsourced service workers referred to in the article.