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The whole saga is fascinating, but I do wonder about the level of consternation over this. To oversimplify, it seems Adam Neumann was probably either deluded, d
by asdfasgasdgasdg 5y ago
The whole saga is fascinating, but I do wonder about the level of consternation over this. To oversimplify, it seems Adam Neumann was probably either deluded, dishonest, or a bit of both, and conned some rich people into giving him a bunch of money. Isn't this a bit of a morality play, though? These other rich people (i.e. investors in Softbank, Saudi Arabia, other venture firms, etc.) would have never had a problem in the first place if they weren't chasing outsized gains. If these people were happy to track the market, they would not have been conned in the first place.
As far as I can tell, your average Joe or Josephine not only does not invest in these vehicles, they cannot! Because they are not accredited investors and/or Softbank's Vision Fund is not accepting new capital. So if you're a normal person worrying about getting conned after reading about WeWork, don't! If you're a rich person, consider settling for the market average rather than trusting an individual like Masayoshi Son with your money.
As far Masayoshi Son going to jail, the payoff for Neumann was likely contractually obligated or negotiated to get better leadership into place. Unless some law was broken -- which I doubt, and almost certainly not provably -- criminal charges do not seem to be appropriate. Bankruptcy does not seem to be in the cards either considering he did not have that much exposure to WeWork.
- qeternity 5y ago> As far as I can tell, your average Joe or Josephine not only does not invest in these vehicles, they cannot! The absolutely do, even if they might now realize it. The stickiest and most sought after capital for funds is typical from pensions or large asset managers.
- asdfasgasdgasdg 5y agoI feel really bad for anyone whose pension is controlled by an active manager. They'd be much better off with that value in the S&P 500. Fortunately pension funds are insured to some degree in the US, so if a pension fund failed, the cost of making the pensioners whole would really be paid by the taxpayer, not the average person. But in the specific case of Softbank, Saudi Arabia and a few other named billionaires provided more than half of the seed capital.
- kortilla 5y ago“Insured to some degree” is not “insured”. The pensioners could take a huge cut.
- asdfasgasdgasdg 5y agoFrom what I can read the amount of the guarantee is about 60k/year at standard retirement age. https://www.pbgc.gov/wr/benefits/guaranteed-benefits/maximum-guarantee https://www.pbgc.gov/wr/benefits/guaranteed-benefits/maximum... Is my reading of this incorrect? Do a large fraction of pensioners draw more than this? I had assumed not but maybe I'm wrong?
- ghaff 5y agoI don't think so. Public sector pensions are a bigger deal than (mostly legacy) private sector pensions but the guarantees are still relatively high compared to typical payouts.