I wish a company going public could only release one class of shares. One vote per share.
It doesn't appear this company will go public anytime soon, if ever. I give it 90 days before it collapses.
Some WeWork Board Members Seek to Remove Adam Neumann as CEO
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Re: Some WeWork Board Members Seek to Remove Adam Neumann as CEO
#72With $700M extracted and long term leases to the company for properties that he owns... One could easily ride off into the sunset. It will be interesting, and insightful, to see if that is the tact he takes. If he does... It will add credibility to the already strong case for this being deliberate deceit versus unchecked ignorant hubris.
He’s quoted as saying he wants to be “President of the World” and live forever. This guy isn’t riding off into the sunset.
He may wind up dragged behind the horse into the sunset, though.
Re: Some WeWork Board Members Seek to Remove Adam Neumann as CEO
#73Earlier quoted context omitted.
This is true of many large companies today, though. Facebook comes to mind.
It's true of some large companies, yes. But it's still extraordinarily uncommon overall. Zuck's Facebook arrangement was essentially unique at the time of the IPO, and Facebook's success led to more founders on unicorn trajectory demanding and receiving similar terms, but it's still far from the norm.
Google has 3 share classes as well and the founders control more than 50% of the voting power.
Re: Some WeWork Board Members Seek to Remove Adam Neumann as CEO
#74Earlier quoted context omitted.
It's true of some large companies, yes. But it's still extraordinarily uncommon overall. Zuck's Facebook arrangement was essentially unique at the time of the IPO, and Facebook's success led to more founders on unicorn trajectory demanding and receiving similar terms, but it's still far from the norm.
Preferred shares existed before Facebook, and it may not the be norm, but there's a reason we no longer see the hostile takeovers from the 80's.
> Preferred shares existed before Facebook, and it may not the be norm, but there's a reason we no longer see the hostile takeovers from the 80's.
That has nothing to do with preferred shares. Most of public companies adopted poison pills aka shareholder right protection plans which work along the lines of this:
1. If someone acquires a certain percentage of company shares without board of directors agreeing to it, then the company automatically issues a very large number (2x to 3x) of shares and allows shareholders of record of a certain past date before the hostile party launched the acquisition to obtain newly issued shares at a discount.
2. Board members have staggered terms so the acquiring party cannot replace more than a small percentage of board members thereby preventing the one's ability to flood the board one's supporters
It used to be that preferred shares were a special class of equity that paid higher dividends. The funny part is that tech companies tend not to pay any dividends what so ever and now with the special classes of shares that have nearly no voting rights ( compared to the 'preferred shares' that are controlled by the insiders ) the same companies make a virtual mockery out of the concept of a "public company". Facebook is not a public company in any sense other than the name -- it is Mark's personal piggybank that he shares with a few insiders with the crums off the table being given to the people whom he used to call "stupid".
Re: Some WeWork Board Members Seek to Remove Adam Neumann as CEO
#75Earlier quoted context omitted.
Slim margins means it isn't a great product, at least by standard business definitions. A product with slim margins is one that you divest from so you can focus on the products with good margins.
I was referring to the quality of the product from the customer POV.
From the customer's POV, selling dollar bills for fifty cents each is also a high-quality product.
Re: Some WeWork Board Members Seek to Remove Adam Neumann as CEO
#76WeWork is a useful product. Office real estate is broken for startups. Landlords make us take 5-10 year leases when startup planning horizons are almost never longer than 18 months. WeWork earning 30-40% margins by allowing us to take shorter terms that better fit our needs. Should be a good business.
Sure it's useful. And there's also no barrier to entry except enough capital to buy or lease a building. If WeWork goes under, the need will be met by others.
Re: Some WeWork Board Members Seek to Remove Adam Neumann as CEO
#77What kind of company that is controlled by a single man insists on branding itself as “we”? Even the name of the company is a bold-faced lie.
Is your argument that companies that use plural pronouns in their name should have certain types of ownership structures?
Re: Some WeWork Board Members Seek to Remove Adam Neumann as CEO
#78Earlier quoted context omitted.
It's true of some large companies, yes. But it's still extraordinarily uncommon overall. Zuck's Facebook arrangement was essentially unique at the time of the IPO, and Facebook's success led to more founders on unicorn trajectory demanding and receiving similar terms, but it's still far from the norm.
Preferred shares existed before Facebook, and it may not the be norm, but there's a reason we no longer see the hostile takeovers from the 80's.
It's not preferred shares that are letting these founders retain control, it's having multiple classes of common stock where either the public investors get no votes for their shares, or the founders have 10+ for each of their shares, so that their vote always wins. This article gives a good overview of some of the changes that have occurred that have allowed this issue to proliferate (although the main issue seems to be a glut of capital and FOMO for these deals):
https://corpgov.law.harvard.edu/2017/05/26/snap-and-the-rise...
Re: Some WeWork Board Members Seek to Remove Adam Neumann as CEO
#79Earlier quoted context omitted.
Help me understand how this is a coherent argument. I could see making the argument that investors share some of the blame for what the CEO did. How could they have more of the blame?
Because they decided to invest and never demanded oversight or questioned his voting power with each new term sheet they handed to him? The point of the board is in part to keep the CEO in check. They had many opportunities to do so well before weeks before the now shelved IPO roadshow.
Yeah, but all that would have been fine if he’d acted responsibly. Obviously giving him that much power is a dangerous game to play, but it doesn’t absolve him of responsibility for his behavior. Ultimately he — not the investors — is the one who built this sandcastle on partying, self-dealing and a cult of personality.
One of the things about blame is that it’s never zero sum, and in this case there’s more than enough to go around.
Re: Some WeWork Board Members Seek to Remove Adam Neumann as CEO
#80WeWork is a useful product. Office real estate is broken for startups. Landlords make us take 5-10 year leases when startup planning horizons are almost never longer than 18 months. WeWork earning 30-40% margins by allowing us to take shorter terms that better fit our needs. Should be a good business.
Right, that's the theory, which is how they got this far. But that's not a new thing; companies have been in the same business for years. WeWork's valuation is wildly out of proportion to its competitors.
WeWork probably does have an advantage specifically for tech startups. But startups are definitionally not a large market, nor are they generally a good one. When we're small, we're cheapskates. And then we pretty quickly either go out of business or become like other companies, willing and able to deal with building owners directly. It's high churn, which is expensive.
Startup investment is also pretty cyclical; anybody who was around after Bubble 1.0 knows how quickly the party stops when investors get nervous. So WeWork has a lot of long-term commitments, with no obvious way to cover them in the next recession. And since we're already in the longest peacetime economic expansion, the possibility of recession is definitely on investor's minds.