5 ms·

As the fallout of WeWork being bailed out played out in the public eye it was obvious that there were tremendous problems at the company. But this article reall

by raiyu 7y ago

As the fallout of WeWork being bailed out played out in the public eye it was obvious that there were tremendous problems at the company. But this article really goes into detail to show the true dysfunction that existed. I mean a CEO that skipped board meetings entirely? An entire board that basically sat quietly as valuations grew ever further out of touch with reality and that the first time they brought it up as an issue was already after the failed IPO had been halted, really is something straight out of an episode of Silicon Valley on HBO.

bsder 7y ago
> An entire board that basically sat quietly as valuations grew ever further out of touch with reality and that the first time they brought it up as an issue was already after the failed IPO had been halted Um, like, duh. The whole point of that IPO was to leave the public holding the bag. If Adam Neumann had only been slightly less of a douchebag, it might have happened.
- chii 7y ago
  Banking on the public being stupid is not a good idea. Wisdom of the crowds is real. As long as there are regulations about financial reporting, these false valuations will come out eventually. They needed to go all in, and commit fraud like Enron, if they really wanted to leave the public holding the bag.
  - onetimemanytime 7y ago
    >>Banking on the public being stupid is not a good idea. By the time public wakes up, the thinking goes, we've already cashed our chips. How many investment firms buy solid businesses, only to chop them up, milk them dry, load with debt and then IPO?
    - dba7dba 7y ago
      This comment is downvoted but I have to agree with this. Rarely, very rarely do these people ever get caught or have to pay back the ill gotten money.
    - kortilla 7y ago
      To the point where the business is no longer viable? Very rarely because without fraud it’s hard to hide that in the IPO docs.
      - onetimemanytime 7y ago
        No longer viable or barely viable is a fine line. Here are a few cases: https://www.washingtonpost.com/business/the-debt-laden-lbo-that-wants-to-be-a-hot-tech-ipo/2019/09/13/eec65d76-d619-11e9-8924-1db7dac797fb_story.html https://www.washingtonpost.com/business/the-debt-laden-lbo-t... https://www.bloomberg.com/news/articles/2006-08-06/buy-it-strip-it-then-flip-it https://www.bloomberg.com/news/articles/2006-08-06/buy-it-st... Edit: It's not fraud, they disclose it all but a lot of people are fooled by the low IPO price, even though the business is loaded with debt and has a gazillion shares issued.
    - aguyfromnb 7y ago
      This is why Silicon Valley stalwarts like a16z are pushing for an "alternative" stock market. They need a less transparent place to dump this stuff on the bagholders.
  - unityByFreedom 7y ago
    The public is left holding the bag every time a public company fails to achieve profit. No fraud necessary.
  - leggomylibro 7y ago
    The aphorism that I'm familiar with is, "the wisdom of a crowd is proportional to the square root of its members."
    - andy_ppp 7y ago
      Does that actually mean anything?
      - iudqnolq 7y ago
        It's apparently a Terry Pratchett quote: "The intelligence of that creature known as a crowd is the square root of the number of people in it." A sixteen-year-old newsgroup poster explains it as follows: > Sorry to disagree, but I thought the quote worked extremely well the first time and on further reflection, still do. I think it's very apt and I would hesitate to say that perhaps you didn't see the intended purpose on first reading. > Terry talks about the crowd as a creature, therefore implying one single IQ. So, to use your own methods, let's say a crowd of 100 people would have an IQ of 10 - not each, but altogether. Each person would have an IQ of 0.1 if you wanted to break it down, although to do so would be completely counter-productive, because we are talking about a crowd and not a single person. Once you start talking about single people, they are no longer part of the crowd and their IQ would revert to normal status. The crowd is a whole, and the description provides a picture of it being a single organism with one purpose (to imply the fervour that people get swept up in, in crowds, e.g. race riots, Paedophile lynchings, vigilantes that one person would not do) > I think the purpose behind the description was to provide the metaphor of a crowd being a big, dumb, violent animal composed of intelligent, reasoning people - a sort of paraphrase on "the sum is greater than the parts". https://alt.books.pratchett.narkive.com/nVL49SnZ/quote-from-jingo#post3 https://alt.books.pratchett.narkive.com/nVL49SnZ/quote-from-... As an aside, I find it amazing that I was able to go from a paraphrased description of a quote to an in depth discussion of the accuracy of the quote with suggestions for alternative functions. Despite all its flaws, the hacks upon hacks upon hacks we call the internet is incredible when you step back and consider it all.
        cobbzilla 7y ago
  - bsder 7y ago
    > Banking on the public being stupid is not a good idea. Wisdom of the crowds is real. Hardly. It wasn't the fact that WeWork had horrific fundamentals that killed the IPO--look at Uber and Lyft. What killed the IPO was all the reporting on how Neumann was looting the company in just incredibly douchey ways. If Neumann had been a touch more sophisticated or slightly less brazen in looting the company, the IPO probably would have succeeded.
- Gibbon1 7y ago
  I've been wondering lately about the similarities between startups and the movie industry. Most movies don't make a profit. But everyone involved makes money. One wonders what's in it for the investors using their own money. Along with the suspicion that making a profit isn't 1st on the list.
  - onetimemanytime 7y ago
    >>Most movies don't make a profit. But everyone involved makes money. They do this to screw the small fish that might have a % agreement and/or for tax purposes. So ABC Movie makes no money for Disney but (say) Disney Productions made $XX million to produce it, Disney Promotions $XX to promote it and so on. In the end it all went to Disney' pockets, but the movie lost money.
newguy1234 7y ago
The only reason that happened was because Masayoshi Son pioneered the idea that you could make any idea a success if you gave the company enough funding. Obviously, that turns out to a total disaster of an idea. The reality is that you still need to make customer satisfaction and value the number one priority. You need to make a product or service that people want, need and are willing to pay for (or allow you monetize it profitably). Of course, that turns out be very very hard to do in practice so it is understandable why Son was looking for a shortcut.

by raiyu 7y ago

bsder 7y ago

> An entire board that basically sat quietly as valuations grew ever further out of touch with reality and that the first time they brought it up as an issue was already after the failed IPO had been halted Um, like, duh. The whole point of that IPO was to leave the public holding the bag. If Adam Neumann had only been slightly less of a douchebag, it might have happened.

chii 7y ago
Banking on the public being stupid is not a good idea. Wisdom of the crowds is real. As long as there are regulations about financial reporting, these false valuations will come out eventually. They needed to go all in, and commit fraud like Enron, if they really wanted to leave the public holding the bag.
- onetimemanytime 7y ago
  >>Banking on the public being stupid is not a good idea. By the time public wakes up, the thinking goes, we've already cashed our chips. How many investment firms buy solid businesses, only to chop them up, milk them dry, load with debt and then IPO?
  - dba7dba 7y ago
    This comment is downvoted but I have to agree with this. Rarely, very rarely do these people ever get caught or have to pay back the ill gotten money.
  - kortilla 7y ago
    To the point where the business is no longer viable? Very rarely because without fraud it’s hard to hide that in the IPO docs.
    - onetimemanytime 7y ago
      No longer viable or barely viable is a fine line. Here are a few cases: https://www.washingtonpost.com/business/the-debt-laden-lbo-that-wants-to-be-a-hot-tech-ipo/2019/09/13/eec65d76-d619-11e9-8924-1db7dac797fb_story.html https://www.washingtonpost.com/business/the-debt-laden-lbo-t... https://www.bloomberg.com/news/articles/2006-08-06/buy-it-strip-it-then-flip-it https://www.bloomberg.com/news/articles/2006-08-06/buy-it-st... Edit: It's not fraud, they disclose it all but a lot of people are fooled by the low IPO price, even though the business is loaded with debt and has a gazillion shares issued.
  - aguyfromnb 7y ago
    This is why Silicon Valley stalwarts like a16z are pushing for an "alternative" stock market. They need a less transparent place to dump this stuff on the bagholders.
- unityByFreedom 7y ago
  The public is left holding the bag every time a public company fails to achieve profit. No fraud necessary.
- leggomylibro 7y ago
  The aphorism that I'm familiar with is, "the wisdom of a crowd is proportional to the square root of its members."
  - andy_ppp 7y ago
    Does that actually mean anything?
    - iudqnolq 7y ago
      It's apparently a Terry Pratchett quote: "The intelligence of that creature known as a crowd is the square root of the number of people in it." A sixteen-year-old newsgroup poster explains it as follows: > Sorry to disagree, but I thought the quote worked extremely well the first time and on further reflection, still do. I think it's very apt and I would hesitate to say that perhaps you didn't see the intended purpose on first reading. > Terry talks about the crowd as a creature, therefore implying one single IQ. So, to use your own methods, let's say a crowd of 100 people would have an IQ of 10 - not each, but altogether. Each person would have an IQ of 0.1 if you wanted to break it down, although to do so would be completely counter-productive, because we are talking about a crowd and not a single person. Once you start talking about single people, they are no longer part of the crowd and their IQ would revert to normal status. The crowd is a whole, and the description provides a picture of it being a single organism with one purpose (to imply the fervour that people get swept up in, in crowds, e.g. race riots, Paedophile lynchings, vigilantes that one person would not do) > I think the purpose behind the description was to provide the metaphor of a crowd being a big, dumb, violent animal composed of intelligent, reasoning people - a sort of paraphrase on "the sum is greater than the parts". https://alt.books.pratchett.narkive.com/nVL49SnZ/quote-from-jingo#post3 https://alt.books.pratchett.narkive.com/nVL49SnZ/quote-from-... As an aside, I find it amazing that I was able to go from a paraphrased description of a quote to an in depth discussion of the accuracy of the quote with suggestions for alternative functions. Despite all its flaws, the hacks upon hacks upon hacks we call the internet is incredible when you step back and consider it all.
      - cobbzilla 7y ago
- bsder 7y ago
  > Banking on the public being stupid is not a good idea. Wisdom of the crowds is real. Hardly. It wasn't the fact that WeWork had horrific fundamentals that killed the IPO--look at Uber and Lyft. What killed the IPO was all the reporting on how Neumann was looting the company in just incredibly douchey ways. If Neumann had been a touch more sophisticated or slightly less brazen in looting the company, the IPO probably would have succeeded.
Gibbon1 7y ago
I've been wondering lately about the similarities between startups and the movie industry. Most movies don't make a profit. But everyone involved makes money. One wonders what's in it for the investors using their own money. Along with the suspicion that making a profit isn't 1st on the list.
- onetimemanytime 7y ago
  >>Most movies don't make a profit. But everyone involved makes money. They do this to screw the small fish that might have a % agreement and/or for tax purposes. So ABC Movie makes no money for Disney but (say) Disney Productions made $XX million to produce it, Disney Promotions $XX to promote it and so on. In the end it all went to Disney' pockets, but the movie lost money.

newguy1234 7y ago

The only reason that happened was because Masayoshi Son pioneered the idea that you could make any idea a success if you gave the company enough funding. Obviously, that turns out to a total disaster of an idea. The reality is that you still need to make customer satisfaction and value the number one priority. You need to make a product or service that people want, need and are willing to pay for (or allow you monetize it profitably). Of course, that turns out be very very hard to do in practice so it is understandable why Son was looking for a shortcut.