141–150 of 188 posts
This has to be tough for all of the WeWork employees who were paper millionaires and now have stock options that likely won't survive all of SoftBank's preferences when and if WeWork finally IPOs.
I'll be honest here, cry me a river. Everyone who joins a pre IPO company should value their stock at 0.
Other news sources are reporting that Adam Neuman will be paid $200m to resign from the board of directors... just, wow.
Earlier quoted context omitted.
Also, from another article (by Axios): "SoftBank will pay former WeWork CEO and current non-executive chairman Adam Neumann around $200 million to leave the board of directors, give up his voting shares and support SoftBank's takeover, according to multiple sources familiar with the situation." https://www.axios.com/adam-neumann-wework-softbank-takeover-...
I'm utterly confused on how Neumann walks away with so much. Given the burn rate and the capital requirements, I cant imagine many other players who can step in at this point. And if no one steps in, the firm is worth zero. So isnt this a recapitalization of the firm? Why would they need to pay $200M for control if the alternative is some variation of bankruptcy followed by a firesale and cheap buy?
Because it is obvious if they do Firesale and Cheap buy they would have destroy the company and buy something that everyone knows isn't remotely worth that much. By trying to save it now they could at least get back some of its investment via IPO.
My question is what if Neumann decides to be an ass, and just want to watch everything burn? After all he has the voting shares.
Earlier quoted context omitted.
I'll be honest here, cry me a river. Everyone who joins a pre IPO company should value their stock at 0.
That seems uncharitable given the CEO looks to be walking away with ~$900M total from the endeavor while everyone else gets... nothing? Probably?
It's very difficult to see how SoftBank breaks even on this new deal. They're investing $5bn now, with the hope that it's worth more than that when they IPO, but several things have killed that idea. Firstly, their brand is tarnished. Secondly, the growth play will be gone by the time they IPO. Thirdly, the charismatic leader is gone, so the message of "Disrupting" and "We're a tech play' is gone. They've put $5bn in…
It's very difficult to see how SoftBank breaks even on this new deal. They're investing $5bn now, with the hope that it's worth more than that when they IPO, but several things have killed that idea. Firstly, their brand is tarnished. Secondly, the growth play will be gone by the time they IPO. Thirdly, the charismatic leader is gone, so the message of "Disrupting" and "We're a tech play' is gone. They've put $5bn in…
Does WeWork ever need to IPO? If it turns WeWork profitable by cutting costs and implementing responsible leadership, it just keeps its share of all future profits. SoftBank wouldn't be doing this if it didn't think those profits were likely to be more than total investment so far. In other words, WeWork got acquired instead of IPO-ing.
Yes. The Vision Fund, like all VC funds, has a finite lifespan that all the investors agreed to when they funded it.
So Softbank will have invested nearly $16Bn (10.5 already + 5 now) in something that even they think is only worth $8Bn? Am I reading this correctly because that makes no sense whatsoever. Except for Neumann who walks away with his $700Mn regardless!
If they truly think they will get $8Bn worth for investing 4-5Bn now, it's a rational choice.
Adding your past investments to the tally is an instance of the sunk cost fallacy.
So Softbank will have invested nearly $16Bn (10.5 already + 5 now) in something that even they think is only worth $8Bn? Am I reading this correctly because that makes no sense whatsoever. Except for Neumann who walks away with his $700Mn regardless!
If they don't intervene, they lose all their previous investment guaranteed. So just consider all of that previous investment gone (sunk cost).
If they invest $5b they may make an $8b valuation. And they may still think there is upside beyond that.
Not sure if that's what they really think, but a lot of posters here seem to accuse softbank of sunk cost fallacies without considering that they are surely aware of investing 101.