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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

#131

Post by ehsankia »

asdkhadsj wrote: post #89
nalfien wrote: post #81

Earlier quoted context omitted.

"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.

I think the reality of the situation is that some of these investors actually like the "visionary leader who full control and isn't dragged down by investors" model.

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

#132

Post by notyourday »

rhizome wrote: post #126
JumpCrisscross wrote: post #98

Earlier quoted context omitted.

> You can thank loose monetary policy I'm not so sure. WeWork is the product of three capital sources. One, Mortimer Zuckerman, who was "not just their landlords AND seed investor," but also "happened to own Fast Company and NY Post which were instrumental in propping up WeWork in the press before anybody knew who they were" [1]. Two, MBS, who backed the Vision Fund to the tune of $45 billion [2]. Three, Masa Son. Mr…

Aren't there also tax strategies/techniques that offer benefits from these investments when they fail as well? That both making and losing money in the VC/FinEng context each have their tax advantages (in the US)? My impression is that upon this foundation and US interest rate/monetary policies create a perverse incentive where the investor doesn't really have to care too much how the company turns out. Like sure, a…

> Aren't there also tax strategies/techniques that offer benefits from these investments when they fail as well? That both making and losing money in the VC/FinEng context each have their tax advantages (in the US)?

Nope. It is always better to have income and pay taxes on it than to have losses and not pay taxes on the losses when we are dealing with entities over certain ( rather small ) size.

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

#133

Post by JumpCrisscross »

rhizome wrote: post #126
JumpCrisscross wrote: post #98

Earlier quoted context omitted.

> You can thank loose monetary policy I'm not so sure. WeWork is the product of three capital sources. One, Mortimer Zuckerman, who was "not just their landlords AND seed investor," but also "happened to own Fast Company and NY Post which were instrumental in propping up WeWork in the press before anybody knew who they were" [1]. Two, MBS, who backed the Vision Fund to the tune of $45 billion [2]. Three, Masa Son. Mr…

Aren't there also tax strategies/techniques that offer benefits from these investments when they fail as well? That both making and losing money in the VC/FinEng context each have their tax advantages (in the US)? My impression is that upon this foundation and US interest rate/monetary policies create a perverse incentive where the investor doesn't really have to care too much how the company turns out. Like sure, a…

> Aren't there also tax strategies/techniques that offer benefits from these investments when they fail as well?

The Vision Fund will have a $10bn capital loss to write off against future capital gains taxes. But those losses are worth a hell of a lot less than $10bn in cash.

WeWork has no federal guarantees and basically no assets. Its downside scenario is grim for shareholders. The only one walking away with cash might be Adam, though I expect he'll burn a good amount of it defending against litigious shareholders and possibly prosecutors.

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

#134

Post by rhizome »

Gene_Parmesan wrote: post #87
shartshooter wrote: post #58

Earlier quoted context omitted.

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 sho…

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.

Do you know any companies that have made this kind of transition?

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

#135

Post by ineedasername »

It seems too late for this to make much of a difference in IPO valuation for investors (really SoftBank) to get the exit they want. Neumann's actions may have been a catalyst, but now everyone is really questioning the "tech startup" valuation and unit economics.

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

#136

Post by ineedasername »

thedogeye wrote: post #53

WeWork 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, that can all be true, but is there really enough "startup" business to really justify the growth expectations, or even the current valuation?

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

#137

Post by rightbyte »

iamleppert wrote: post #40

What 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.

It was quite common among monarchs to use "we" instead of "I".

https://en.wikipedia.org/wiki/Royal_we

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

#138

Post by evrydayhustling »

JumpCrisscross wrote: post #98
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.

> You can thank loose monetary policy I'm not so sure. WeWork is the product of three capital sources. One, Mortimer Zuckerman, who was "not just their landlords AND seed investor," but also "happened to own Fast Company and NY Post which were instrumental in propping up WeWork in the press before anybody knew who they were" [1]. Two, MBS, who backed the Vision Fund to the tune of $45 billion [2]. Three, Masa Son. Mr…

I think you are actually illustrating the point. Zuckerman's investment is too far upstream of WeWork's size to take the blame. And the fact that competing companies are able to rely on loans and mortgage easing is exactly why folks with a surplus of capital (Saud + Son) have to accept worse terms - they have more competition.

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

#139

Post by ineedasername »

jnwatson wrote: post #113
hef19898 wrote: post #64

Earlier quoted context omitted.

I'm not sure if any other employee in any other company could get away with something like that. Sounds like a clear conflict of interest to me. Same goes for some of Elon's and Tesla's business transactions, so. Sounds like an overall bad idea to me, just how SoftBank accepted any of it is beyond my imagination. I'm all for letting founders cash out to a certain degree before an IPO, but 700M and the lease agreement…

Eddie Lampert, former CEO if Sears, seems to have gotten away with it.

Sears went bankrupt. In this context, for We, "getting away" with it doesn't really mean "Adam keeps the money." He got the money, there's no question there. Getting away with it has more to do with how the company fairs, so a bankrupt Sears isn't the best example.

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

#140

Post by DebtDeflation »

wpietri wrote: post #85
tptacek wrote: post #51

Earlier 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?

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 f…

> SoftBank in particular gave $10+ billion

This is the fundamental conundrum. Softbank has invested a total of $10.65B for a 29% stake in a company that (if valued like the commercial real estate firm it actually is instead of the tech unicorn that it isn't) is probably worth $5-6B if we're being generous. Further complicating matters, We is posting losses and burning cash at an incredible rate and will need additional financing in the very near future. It only makes sense for Softbank to continue to prop We up if they believe they can dump it on a greater fool in the very near future, which is looking less and less likely by the day.

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