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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

#81

Post by nalfien »

Donald wrote: post #35
jeremyjh wrote: post #17

> Mr. Neumann still has allies among the directors and the ability to fire the entire board thanks to shares he controls that carry extra votes. It defies imagination that a fund would put 10B into a company whose CEO is accountable to no one. I think we may also see new leadership in SoftBank, or at least their next fund.

You can thank loose monetary policy that has created an unbalance between capital seeking returns and the number of investment opportunities. Executives have leveraged this into abusive multi-class share structures that sacrifice shareholder's ability to reign in company behavior. The result is a few tech executives wielding unaccountable authority over incredibly powerful economic resources.

"Abusive"? That's a bit over the top. No one is forcing these people to put money into these companies if they dont like the terms.

Re: Some WeWork Board Members Seek to Remove Adam Neumann as CEO

#82

Post by Dunedan »

goatinaboat wrote: post #56
akulbe wrote: post #44

Question, because I don’t know how this works. Who sets the valuation on a company? Does a CEO have anything to do with that, or is it wholly external?

If you declare your company has a billion shares and I buy 1 for $1 then you have a valuation of... one BILLION dollars. If I later buy 1 share for $2 then your valuation has doubled. That is basically SoftBank’s business model.

Basecamp even made a headline out of it a while ago: https://www.linkedin.com/pulse/basecamp-valuation-tops-100-b...

Re: Some WeWork Board Members Seek to Remove Adam Neumann as CEO

#83

Post by grandridge »

nalfien wrote: post #81
Donald wrote: post #35

Earlier quoted context omitted.

You can thank loose monetary policy that has created an unbalance between capital seeking returns and the number of investment opportunities. Executives have leveraged this into abusive multi-class share structures that sacrifice shareholder's ability to reign in company behavior. The result is a few tech executives wielding unaccountable authority over incredibly powerful economic resources.

"Abusive"? That's a bit over the top. No one is forcing these people to put money into these companies if they dont like the terms.

If they actually had to earn the money they'd treat it different. Free money just enables stupid shit like this at all our expenses. The comment you responded to is on point

Re: Some WeWork Board Members Seek to Remove Adam Neumann as CEO

#84

Post by mpalmer »

jakelazaroff wrote: post #79
tempsy wrote: post #63

Earlier quoted context omitted.

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 enou…

> Yeah, but all that would have been fine if he’d acted responsibly.

> if he’d acted responsibly

> if

The "if" is the point. SoftBank had the ability to eliminate the risk of this "if", and didn't.

Re: Some WeWork Board Members Seek to Remove Adam Neumann as CEO

#85

Post by wpietri »

tptacek wrote: post #51
tempsy wrote: post #26

Didn't investors, especially SoftBank, enable this behavior? They deserve as much blame for this mess as he does, if not more.

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?

I could argue it either way. But I think it's reasonable to suggest that there will always be people who are scammers (or so oblivious that it amounts to the same thing). We've only heard of Adam Neumann because investors gave him billions. SoftBank in particular gave $10+ billion [1], and I understand that's really just Masayoshi Son making those decisions. So I think it's reasonable to give him a lot of the blame for empowering somebody whose business plan appears to have been surprisingly close to that of the Underpants Gnomes [2].

[1] https://www.bloomberg.com/news/articles/2019-09-06/wework-ip...

[2] https://knowyourmeme.com/memes/profit

Re: Some WeWork Board Members Seek to Remove Adam Neumann as CEO

#86

Post by rossdavidh »

notyourday wrote: post #74
fragmede wrote: post #52

Earlier quoted context omitted.

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, t…

While there are issues with Zuckerberg, I think it bears noting that the FB IPO wasn't done because he needed the money, but rather because they were forced too by law because too many people had ownership. So, he didn't give great terms in the IPO because he didn't really need any cash; FB was already cashflow-positive. This is a marked contrast to WeWork.

Re: Some WeWork Board Members Seek to Remove Adam Neumann as CEO

#87

Post by Gene_Parmesan »

shartshooter wrote: post #58
cm2012 wrote: post #55

Earlier quoted context omitted.

The issue is if the global economy downturns fewer people want to rent short term, WeWork is still committed to paying the long term lease costs.

Short term rentals are an inferior good. An economic downturn could lead to more business for them

Any earlyish startup (smaller than a certain size) that's facing cash flow problems during a larger economic downturn would likely just move to a remote-only model, maybe with very short-term rentals for high-stakes meetings. No, it's not ideal, but if the survival of the business is at stake, cutting out your coworking fees seems like the easiest way to reduce overhead.

I'm no economist, but to me, it seems that short term rentals can't be an inferior good if a large percentage of startups are already currently using them. You'd need a majority of them to be leasing a traditional office space in order for coworking to be seen as a viable lesser option. And I don't really see larger, more established startups that do have traditional office space (like Duolingo for instance) moving out into a WeWork.

Re: Some WeWork Board Members Seek to Remove Adam Neumann as CEO

#88

Post by notatoad »

tptacek wrote: post #51
tempsy wrote: post #26

Didn't investors, especially SoftBank, enable this behavior? They deserve as much blame for this mess as he does, if not more.

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?

Obviously Adam deserves the blame for what he did, but if you interpret "this mess" as referring more to the scale of the company in it's current state than specifically the actions of the CEO, then the investors deserve more of the blame. If WeWork didn't have access to all of softbank's capital, there's no chance that WeWork would be trying to do a multi-billion-dollar IPO, and if they weren't trying to do a multi-billion-dollar IPO it wouldn't be much of a problem.

A CEO trying to run a small little nothing company in a weird way isn't a big deal. It's only a problem because of the scale.

Re: Some WeWork Board Members Seek to Remove Adam Neumann as CEO

#89

Post by asdkhadsj »

nalfien wrote: post #81
Donald wrote: post #35

Earlier quoted context omitted.

You can thank loose monetary policy that has created an unbalance between capital seeking returns and the number of investment opportunities. Executives have leveraged this into abusive multi-class share structures that sacrifice shareholder's ability to reign in company behavior. The result is a few tech executives wielding unaccountable authority over incredibly powerful economic resources.

"Abusive"? That's a bit over the top. No one is forcing these people to put money into these companies if they dont like the terms.

I mean, it sounds like it is abusive, but it's an abusive relationship investors sought out.

At this point it's akin to someone who seeks out abusive partners due to mental health issues. It doesn't make the partners any less abusive, but lets not kid ourselves and think the seeker is a healthy individual.

Their greed is killing them.

Re: Some WeWork Board Members Seek to Remove Adam Neumann as CEO

#90

Post by BubRoss »

notyourday wrote: post #74
fragmede wrote: post #52

Earlier quoted context omitted.

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, t…

The shares with no voting power would still be converted in the case of a buyout of a company though, right?
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