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> As WeWork CEO, Neumann on multiple occasions purchased buildings and then leased the space back to WeWork.[56] Observers noted this as a potential conflict of

> As WeWork CEO, Neumann on multiple occasions purchased buildings and then leased the space back to WeWork.[56] Observers noted this as a potential conflict of interest and one that would not be allowed if WeWork were a public company. Isn't it unethical? The VCs in the podcast All In and the firm a16z defended Neumann because he bootstrapped a real-estate sector into a billion-dollar business even before getting huge VC investment. I don't doubt that, but didn't everyone say the most the important thing in a leader is integrity? Yet I hardly see how one can trust Neumann again as he skimmed his own company's money.

rsanheim 4y ago
It was incredibly unethical. VCs defend it because they were riding along w Neumann the whole time, throwing more and more money into the trash fire as the we work valuation rose to insane levels. And of course they were the first to get out with a profitable return before things come crashing down.
- fragmede 4y ago
  Or maybe the VC's don't see it as unethical because that's just a tiny view of how things really work under the covers.
inthewoods 4y ago
VCs talk a game about being ethical, but let's be real - if it works they probably don't care. Uber is a great example of this - the rules can be bent to serve the purpose.
digitaltrees 4y ago
There may be facts that make it not only reasonable but prudent for the equity holders and executives to buy assets for use by a business. For example, imagine the that the business can’t get a line of credit independently but the founder can individually. The founder could buy an asset and lease it back to the company. While there is a clear possibility of unjust enrichment by acting against the interests of the company there are mechanisms in corporate governance to review and sign off on these types of transactions by having the board review the details and ensure that the terms are the same as would be in place with a third party. For example, that the lease rate was what a random sample of similar market leases. We now know that Neumann had access to large personal lines of credit from large banks secured by his we work equity. So these transactions allowed we work to have access to properties without taking on liability for a mortgage but enjoying perhaps a more reasonable landlord that wouldn’t terminate a lease or refuse to renew in order for extract the value of renovation (which is unfortunately really common). I am not justifying any particular action or transaction, just saying 1. The facts matter in this situation because it could have been totally in the company’s interest 2. We should equivocate we work with others like FTX where the facts appear that they told customers they would safeguard assets as a custodian (which has a very specific legal definition and set of obligations FTX must abide by) but then used the assets for risk taking investments without disclosure or Theranos where they knowingly lied about their technology it’s efficacy and prospects for further advancement. Both of those were fraudulent misrepresentation. We work was instead a related party transaction that arguably has a win-win for both parties and was signed off by the board after full and complete disclosure.
- hintymad 4y ago
  Yeah, facts matter indeed, and thanks for the perspective.
andirk 4y ago
In American politics, one fails UP. People admire a bigtime scumbag. Since he proved he can con people out of money, that in itself is a virtue to many people.
- ngc248 4y ago
  Its amazing that we have reached this point. Time was when grifting/scamming were condemned but now people glorify these grifters/scammers so much. Seems like all it matters in the end is how much they made and not the means nor the ethics.
  - andirk 4y ago
    Capitalism. It's even in the name of the ideology.

rsanheim 4y ago

It was incredibly unethical. VCs defend it because they were riding along w Neumann the whole time, throwing more and more money into the trash fire as the we work valuation rose to insane levels. And of course they were the first to get out with a profitable return before things come crashing down.

fragmede 4y ago
Or maybe the VC's don't see it as unethical because that's just a tiny view of how things really work under the covers.

inthewoods 4y ago

VCs talk a game about being ethical, but let's be real - if it works they probably don't care. Uber is a great example of this - the rules can be bent to serve the purpose.

digitaltrees 4y ago

There may be facts that make it not only reasonable but prudent for the equity holders and executives to buy assets for use by a business. For example, imagine the that the business can’t get a line of credit independently but the founder can individually. The founder could buy an asset and lease it back to the company. While there is a clear possibility of unjust enrichment by acting against the interests of the company there are mechanisms in corporate governance to review and sign off on these types of transactions by having the board review the details and ensure that the terms are the same as would be in place with a third party. For example, that the lease rate was what a random sample of similar market leases. We now know that Neumann had access to large personal lines of credit from large banks secured by his we work equity. So these transactions allowed we work to have access to properties without taking on liability for a mortgage but enjoying perhaps a more reasonable landlord that wouldn’t terminate a lease or refuse to renew in order for extract the value of renovation (which is unfortunately really common). I am not justifying any particular action or transaction, just saying 1. The facts matter in this situation because it could have been totally in the company’s interest 2. We should equivocate we work with others like FTX where the facts appear that they told customers they would safeguard assets as a custodian (which has a very specific legal definition and set of obligations FTX must abide by) but then used the assets for risk taking investments without disclosure or Theranos where they knowingly lied about their technology it’s efficacy and prospects for further advancement. Both of those were fraudulent misrepresentation. We work was instead a related party transaction that arguably has a win-win for both parties and was signed off by the board after full and complete disclosure.

hintymad 4y ago
Yeah, facts matter indeed, and thanks for the perspective.

andirk 4y ago

In American politics, one fails UP. People admire a bigtime scumbag. Since he proved he can con people out of money, that in itself is a virtue to many people.

ngc248 4y ago
Its amazing that we have reached this point. Time was when grifting/scamming were condemned but now people glorify these grifters/scammers so much. Seems like all it matters in the end is how much they made and not the means nor the ethics.
- andirk 4y ago
  Capitalism. It's even in the name of the ideology.