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The highly leveraged conglomerate has been forced into selling major assets to raise funds, but could receive a big boost from the Bank of Japan’s plan to expan

The highly leveraged conglomerate has been forced into selling major assets to raise funds, but could receive a big boost from the Bank of Japan’s plan to expand corporate bond buying, which would support its predilection for borrowing. The Japanese taxpayer (Yen-holder) having to support the losses of Adam Neumann's personal money tree seems pretty crazy to me.

PedroBatista 6y ago
This happens all the time all over the World, the more you learn about it the more you lose "faith" in whatever you're doing. But it's all psychology 101 really, once you are viewed as "too big to fail", everyone contributes to your gigantic scam like a nervous peasant and they'd rather do it forever than take the hit now and let it burn.
- arethuza 6y ago
  Appropriately enough I saw this about RBS today: https://www.bbc.co.uk/news/uk-scotland-scotland-business-52478639 https://www.bbc.co.uk/news/uk-scotland-scotland-business-524... They got £46 billion from the UK government.
- ssharp 6y ago
  I might be missing the nuance here but how is WeWork "too big to fail"? While many were against the 2008-09 bailouts, you could at least see the logic of why the cost of the wake left behind from a company like General Motors radically reorganizing or dissolving would be worse than the cost of bailing them out. What happens if WeWork dissolves? Softbank and its investors lose a couple billion. They'll survive. WeWork owns some real estate and would leave behind office space that's already built out for short-term leasing. They'd be leaving behind something that can be mostly done turn-key by the next owner, hopefully on a smaller scale, with less ambitious growth expectations. They wouldn't be leaving behind an entire supply chain that extends well beyond themselves.
  - xuki 6y ago
    GP is talking about SoftBank. With that kind of debt it's likely that SoftBank will need to get bailed out by the Japan government, i.e. Japanese tax payers.
    - lotsofpulp 6y ago
      That is ssharp’s point. Why do Japanese taxpayers need to bail out a Saudi gambling operation? Answer is they don’t “need” to.
      - xuki 6y ago
        Bailing out SoftBank is different from bailing out Vision fund, I'm sure Vision fund will burn on its own.
  - godzillabrennus 6y ago
    WeWork has more liabilities with its long term leases than the real estate it owns. Adam set that company up for failure and Son funded that stupid vision. Appropriately it was with the SoftBank Vision Fund.
  - _curious_ 6y ago
    "While many were against the 2008-09 bailouts, you could at least see the logic of why the cost of the wake left behind from a company like General Motors radically reorganizing or dissolving would be worse than the cost of bailing them out." It isn't logic grounded in some empirical truth. Bailouts - who gets them, as well as what would happen if not, are so subjective that there's no fair way to even go about it. What's worse is to perpetuate a culture, model, industry that doesn't deserve to continue to operate. And by deserve, it's not my opinion, rather logic of the market dictating things. As if that wasn't even, bailouts reward poor business practices - someone please prove otherwise!
  - vikramkr 6y ago
    Softbank is the one that is too big to fail, and they are facing a lot more than just writing down wework right now
Traster 6y ago
Softbank walked away from the planned bailout of Neumann, so that $1Bn golden parachute for Neumann is long gone. Now he has to sue softbank to try and get it back but there's just no way it's ever going to happen.
- onetimemanytime 6y ago
  >>Now he has to sue softbank to try and get it back but there's just no way it's ever going to happen. You think Softbank will win the lawsuit? Any idea why?
  - CydeWeys 6y ago
    Adam Neumann is delusional and/or a con artist. I don't see him being pitied in court.
    - lotsofpulp 6y ago
      In my experience, courts don’t take pity into account anyway, they work using the contracts that exist two parties, subject to the law of the jurisdiction.
    - AndrewUnmuted 6y ago
      However, he is a very good con artist. I could see him getting away with some more swindling at the courts, because really that's a game all about persuasion, not truth.
      - onlyrealcuzzo 6y ago
        Matt Levine has wrote at length about this. Neumann does not have a case. That being said, anything can happen in court.
        AndrewUnmuted 6y ago
        Thanks for the insight on Matt Levine's work. Here's [0] an article I found that I found pretty compelling, in case others are seeking a starting point. [0] 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...
dforrestwilson 6y ago
Masa has been active on Twitter for the first time in years. Buying masks for public usage in Japan etc. He's not doing it for altruistic reasons. It's sophisticated rent-seeking via image glossing.
rchaud 6y ago
Wouldn't blame Neumann for this. He certainly made Western media outlets swoon with his haute couture brand of PT Barnum bullshit, but Softbank held the purse strings and knew what the financials looked like. I wonder what Japanese public opinion is regarding the central bank potentially bailing out a rich megacorp. Are they also resigned to the 'too big to let fail' philosophy that we in the west consider part and parcel of our brand of capitalism?
- rangibaby 6y ago
  AFAIK neither Son nor SoftBank are liked much by the Japanese public
LordOfWolves 6y ago
This sounds a bit similar to - and just as ludicrous as - American taxpayers financially assisting or “bailing out” massive companies which were/are so bad at cash flow management that their runway was/is only 1-3 months, despite hundreds of millions - if not billions - in annual revenue and a varying chunk of that being profit.
- golergka 6y ago
  American taxpayers invest their 401k money into american stock market, and they vote with their money for such companies. I'm against bailouts on libertarian principles, but if you're going to do bailouts at all, I don't see any reason why you wouldn't bailout these companies. (And, every time bailouts are mentioned, I have to notice that it's not free money, it's loans, with interests, and 2008 bailout have actually made money for american taxpayers in the end. May be not as much money as other investments would, but it also had a nice side effect of saving american (and probably world) economy from even worse disaster). Edit: OK, I was wroung about free money, by bad. But when the 2008 bailour is mentioned, I feel that most people discussing it still think of it as some sort of handout.
  - jlmorton 6y ago
    That's not exactly true this time. The airlines, for instance, are getting about $35 billion in outright grants, and $15 billion in loans and warrants equal to 10% of the total. The large part of it is free money, and many major US airlines have been the worst offenders at financial engineering, spending the large part of their free cash flow on stock buybacks, and running the business on razor margins.
  - onlyrealcuzzo 6y ago
    The loans are forgiveable if used for salaries and rent and interest on existing debt, as long as you hire back or keep 90% of your staff at 90% of wages. So any company can say that they used 100% of the money to pay for the approved things for 8 weeks, and that amount of money is forgiven. Most of the loan is like free money to most companies.
  - 6y ago
raiyu 6y ago
Technically it wouldn't be for Adam Neumann personally. Softbank has pulled back it's tender offer for an additional $3B share re-purchase which would have mostly come from existing shareholders. https://www.cnbc.com/2020/04/02/softbank-pulls-deal-costing-weworks-adam-neumann-nearly-1-billion.html https://www.cnbc.com/2020/04/02/softbank-pulls-deal-costing-... This was the deal that would have been the golden parachute for Adam Neumann as well as providing a sizable return for Benchmark. This is now going to go to litigation, but highly unlikely that it will close as there were certain conditions to the deal closing which haven't been met.

PedroBatista 6y ago

This happens all the time all over the World, the more you learn about it the more you lose "faith" in whatever you're doing. But it's all psychology 101 really, once you are viewed as "too big to fail", everyone contributes to your gigantic scam like a nervous peasant and they'd rather do it forever than take the hit now and let it burn.

arethuza 6y ago
Appropriately enough I saw this about RBS today: https://www.bbc.co.uk/news/uk-scotland-scotland-business-52478639 https://www.bbc.co.uk/news/uk-scotland-scotland-business-524... They got £46 billion from the UK government.
ssharp 6y ago
I might be missing the nuance here but how is WeWork "too big to fail"? While many were against the 2008-09 bailouts, you could at least see the logic of why the cost of the wake left behind from a company like General Motors radically reorganizing or dissolving would be worse than the cost of bailing them out. What happens if WeWork dissolves? Softbank and its investors lose a couple billion. They'll survive. WeWork owns some real estate and would leave behind office space that's already built out for short-term leasing. They'd be leaving behind something that can be mostly done turn-key by the next owner, hopefully on a smaller scale, with less ambitious growth expectations. They wouldn't be leaving behind an entire supply chain that extends well beyond themselves.
- xuki 6y ago
  GP is talking about SoftBank. With that kind of debt it's likely that SoftBank will need to get bailed out by the Japan government, i.e. Japanese tax payers.
  - lotsofpulp 6y ago
    That is ssharp’s point. Why do Japanese taxpayers need to bail out a Saudi gambling operation? Answer is they don’t “need” to.
    - xuki 6y ago
      Bailing out SoftBank is different from bailing out Vision fund, I'm sure Vision fund will burn on its own.
- godzillabrennus 6y ago
  WeWork has more liabilities with its long term leases than the real estate it owns. Adam set that company up for failure and Son funded that stupid vision. Appropriately it was with the SoftBank Vision Fund.
- _curious_ 6y ago
  "While many were against the 2008-09 bailouts, you could at least see the logic of why the cost of the wake left behind from a company like General Motors radically reorganizing or dissolving would be worse than the cost of bailing them out." It isn't logic grounded in some empirical truth. Bailouts - who gets them, as well as what would happen if not, are so subjective that there's no fair way to even go about it. What's worse is to perpetuate a culture, model, industry that doesn't deserve to continue to operate. And by deserve, it's not my opinion, rather logic of the market dictating things. As if that wasn't even, bailouts reward poor business practices - someone please prove otherwise!
- vikramkr 6y ago
  Softbank is the one that is too big to fail, and they are facing a lot more than just writing down wework right now

Traster 6y ago

Softbank walked away from the planned bailout of Neumann, so that $1Bn golden parachute for Neumann is long gone. Now he has to sue softbank to try and get it back but there's just no way it's ever going to happen.

onetimemanytime 6y ago
>>Now he has to sue softbank to try and get it back but there's just no way it's ever going to happen. You think Softbank will win the lawsuit? Any idea why?
- CydeWeys 6y ago
  Adam Neumann is delusional and/or a con artist. I don't see him being pitied in court.
  - lotsofpulp 6y ago
    In my experience, courts don’t take pity into account anyway, they work using the contracts that exist two parties, subject to the law of the jurisdiction.
  - AndrewUnmuted 6y ago
    However, he is a very good con artist. I could see him getting away with some more swindling at the courts, because really that's a game all about persuasion, not truth.
    - onlyrealcuzzo 6y ago
      Matt Levine has wrote at length about this. Neumann does not have a case. That being said, anything can happen in court.
      - AndrewUnmuted 6y ago
        Thanks for the insight on Matt Levine's work. Here's [0] an article I found that I found pretty compelling, in case others are seeking a starting point. [0] 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...

dforrestwilson 6y ago

Masa has been active on Twitter for the first time in years. Buying masks for public usage in Japan etc. He's not doing it for altruistic reasons. It's sophisticated rent-seeking via image glossing.

rchaud 6y ago

Wouldn't blame Neumann for this. He certainly made Western media outlets swoon with his haute couture brand of PT Barnum bullshit, but Softbank held the purse strings and knew what the financials looked like. I wonder what Japanese public opinion is regarding the central bank potentially bailing out a rich megacorp. Are they also resigned to the 'too big to let fail' philosophy that we in the west consider part and parcel of our brand of capitalism?

rangibaby 6y ago
AFAIK neither Son nor SoftBank are liked much by the Japanese public

LordOfWolves 6y ago

This sounds a bit similar to - and just as ludicrous as - American taxpayers financially assisting or “bailing out” massive companies which were/are so bad at cash flow management that their runway was/is only 1-3 months, despite hundreds of millions - if not billions - in annual revenue and a varying chunk of that being profit.

golergka 6y ago
American taxpayers invest their 401k money into american stock market, and they vote with their money for such companies. I'm against bailouts on libertarian principles, but if you're going to do bailouts at all, I don't see any reason why you wouldn't bailout these companies. (And, every time bailouts are mentioned, I have to notice that it's not free money, it's loans, with interests, and 2008 bailout have actually made money for american taxpayers in the end. May be not as much money as other investments would, but it also had a nice side effect of saving american (and probably world) economy from even worse disaster). Edit: OK, I was wroung about free money, by bad. But when the 2008 bailour is mentioned, I feel that most people discussing it still think of it as some sort of handout.
- jlmorton 6y ago
  That's not exactly true this time. The airlines, for instance, are getting about $35 billion in outright grants, and $15 billion in loans and warrants equal to 10% of the total. The large part of it is free money, and many major US airlines have been the worst offenders at financial engineering, spending the large part of their free cash flow on stock buybacks, and running the business on razor margins.
- onlyrealcuzzo 6y ago
  The loans are forgiveable if used for salaries and rent and interest on existing debt, as long as you hire back or keep 90% of your staff at 90% of wages. So any company can say that they used 100% of the money to pay for the approved things for 8 weeks, and that amount of money is forgiven. Most of the loan is like free money to most companies.
- 6y ago

raiyu 6y ago

Technically it wouldn't be for Adam Neumann personally. Softbank has pulled back it's tender offer for an additional $3B share re-purchase which would have mostly come from existing shareholders. https://www.cnbc.com/2020/04/02/softbank-pulls-deal-costing-weworks-adam-neumann-nearly-1-billion.html https://www.cnbc.com/2020/04/02/softbank-pulls-deal-costing-... This was the deal that would have been the golden parachute for Adam Neumann as well as providing a sizable return for Benchmark. This is now going to go to litigation, but highly unlikely that it will close as there were certain conditions to the deal closing which haven't been met.