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WeWork Needed a Bailout, But Adam Neumann Still Leaves a Billionaire

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Re: WeWork Needed a Bailout, But Adam Neumann Still Leaves a Billionaire

#91

Post by askafriend »

compsciphd wrote: post #90
askafriend wrote: post #88

Earlier quoted context omitted.

It wasn't necessarily the right move. He/she likely had asymmetric information about where Google was going and how likely it was to continue succeeding. If they couldn't sufficiently exploit that, then that's on them (assuming they had access to all the relevant metrics). It's great to diversify, but blindly selling isn't some sort of virtue to optimize for...

depend, as I wrote above. If I give you 2 options. 1) $300K in GOOG 2) $300K in cash if you dont believe that using all of the $300K in cash to buy GOOG immediately is the smart move, yes, you should be blindly diversifying.

I think we're largely in agreement.

If you can't leverage the asymmetric information about your company to make a competent buy/hold/sell decision then yes by all means diversify it all.

I just want to make sure the point about asymmetric information is clear though. And it's more relevant in private companies than public ones.

If you're not willing to buy and hold private company equity even after having access to asymmetric information about the firm, then you should consider leaving the company entirely. If you don't then that defeats the entire purpose of taking a chance on a private company and being compensated in equity which can't be acquired through traditional means. You're accepting the equity presumably because you think it's worth a lot more based on the asymmetric information and market opportunity.

Re: WeWork Needed a Bailout, But Adam Neumann Still Leaves a Billionaire

#92

Post by xiphias2 »

hintymad wrote: post #86
indemnity wrote: post #32

Earlier quoted context omitted.

Every time I see these shenanigans it validates my position of turning options into cash if I’m above water ASAP, and getting as much of my raises into base salary as possible. Twice burned (2001, 2009)...

I can think of many counter examples too. Say, Netflix, Arista Networks, Google, Facebooks, and etc. I guess the key is to pick a good company instead of avoiding options. And of course, leave a company immediately if it shows fundamentally bad signs.

The key at this point is to pick a good public company (except Beyond Meat that is highly overvalued compared to half year ago). In that case it doesn't matter that much if you're getting options or cash.

I don't see any reason for working for overvalued options at a not-early-stage private company. Also I view being an early stage employee too risky to worth it.

Re: WeWork Needed a Bailout, But Adam Neumann Still Leaves a Billionaire

#93

Post by chadcmulligan »

Pfhreak wrote: post #53
chadcmulligan wrote: post #35

Earlier quoted context omitted.

This isn't a failure of capitalism, its just due to blind optimism and lack of governance with people falling under the spell of a charismatic CEO imho. If it had worked, everyone would be saying this guys a genius. I looked at WeWork at one stage for an office, the prices seemed crazy, I didn't understand how any one was using it, you've been able to get serviced offices for years for way cheaper. He did OK though,…

You aren't asking "why" enough. It's not just a bad actor... Why was it possible for him to do what he did? Why was he allowed to personally succeed and leave others the debt?

greed, and a lack of oversight? I'm no fan of capitalism, it has many flaws. I'm not upset at VC's losing money though, thats the risk they take, it's a high stakes game, thats why the IPO failed, there are more rules for a listed company. The only alternative I can see is to regulate who can invest their money in what, I can't see that working, unless I'm missing something.

There is a failure for the employees, but everyone knows, or should know they're rolling the dice working for a startup, as others have said shares are lottery tickets, and the system is stacked against you as an employee ever making money.

Re: WeWork Needed a Bailout, But Adam Neumann Still Leaves a Billionaire

#94

Post by jjeaff »

ageyfman wrote: post #46
anonu wrote: post #42

Earlier quoted context omitted.

I don't think they have many assets on their books, relatively speaking. They lease most, if not all, their property. Neumann took personal loans to buy properties, keep them off balance sheet, and leased it back to wework. This news came out well before the s1. It's a miracle it took the s1 to get investors to give a damn when there were so many governance issues and conflicts of interest out in the open well before…

they're one of (if not the) largest lessees in NYC (and other cities around the world), with long-term leases. A lot of landlords would have a conniption if these guys went out of business. Would rock the commercial RE market.

I find it hard to believe they are the largest lesee in NYC. They aren't even the largest co-working space rental company (it's Regus, by a landslide).

Re: WeWork Needed a Bailout, But Adam Neumann Still Leaves a Billionaire

#95

Post by jjeaff »

rapsey wrote: post #73
empath75 wrote: post #25

I have to ask when are the investors in softbank or the vision fund going to question this bail out? I’d be furious if it were my money being flushed down the toilet this way.

I read somewhere that softbank is a huge benefactor in japan central bank QE. So basically vision fund is for people with more money then they know what to do with and didn’t really earn it the hard way. They could have spent it more wisely.

It's almost entirely Saudi money. Although the new vision fund is supposedly Saudi free.

Re: WeWork Needed a Bailout, But Adam Neumann Still Leaves a Billionaire

#97

Post by PhantomGremlin »

nihonde wrote: post #79
rapsey wrote: post #73

Earlier quoted context omitted.

I read somewhere that softbank is a huge benefactor in japan central bank QE. So basically vision fund is for people with more money then they know what to do with and didn’t really earn it the hard way. They could have spent it more wisely.

There is a hell of a lot of money that doesn’t have a safe home. If you’re wealthy in 2019, it may cost you money just to stash it somewhere low risk. Now extend that to sovereign funds, etc., and you can start to see why these obvious shenanigans are tolerated. A zero percent “return” is a net gain over holding in savings or bonds in a lot of places.

It depends on your definition of "wealthy".

If you're worth less than 12 digits, you can easily "stash" your money in 3-month US treasury bills. They currently yield about 1.63%. https://www.bankrate.com/rates/interest-rates/91-day-treasur...

Granted, if you're a Russian Oligarch or similar, this might not meet your definition of "a safe home". Otherwise, they're about as low risk as possible.

I agree with your take on sovereign funds etc. The whole world can't just park its excess cash in T-bills.

But unless you're talking about the dumbest of this money, it should be very broadly diversified: worldwide stock markets, bonds, real estate, natural resources, and smaller amounts to things like venture capital.

Re: WeWork Needed a Bailout, But Adam Neumann Still Leaves a Billionaire

#98

Post by svaha1728 »

jscotto wrote: post #61
WisNorCan wrote: post #34

Earlier quoted context omitted.

I completely agree. I recommend selling along the way. You may lose some upside, but you definitely lose some downside. Unfortunately, WeWork employees aren’t given that choice. They are getting fired with underwater options while Adam makes billions. I wonder how he can rationalize this to himself.

Why would he need to rationalize this to himself? He just made over a billion dollars.

He can, and will, continue to fail upwards.

Re: WeWork Needed a Bailout, But Adam Neumann Still Leaves a Billionaire

#99

Post by anm89 »

dehrmann wrote: post #63
anm89 wrote: post #41

This redefines failing upward. The lunacy of this is astounding.

Not really. WeWork had $12.8B in funding. Now they're valued at $8B. They'll be valued at a lot less if they go bankrupt, so if Softbank can stabilize the company, they can cap their losses. Risk is also baked into that valuation, so if Softbank fixes things, they'll come out ahead.

Another perspective would be he got probably one of the 10 or 20 biggest pay days in history for giving We an 80% haircut. And that was directly on him. All he had to do was stop being a jerk and they probably would have slid through.

I'm comfortable calling 80 a failure.

Re: WeWork Needed a Bailout, But Adam Neumann Still Leaves a Billionaire

#100

Post by mavelikara »

WisNorCan wrote: post #28

There is another less discussed downside to Vision Fund’s reckless spending and overvaluation of startups. While Travis & Adam make their billions, the employees at Uber and WeWork are granted overvalued options and stock that subsequently crashes. The Uber stock is still below where it was 5 years ago and may never recover. The WeWork stock will likely never recover. As an employee, I would avoid working for a compa…

I have asked this here before, but did not get a good answer.

When a startup takes money from an investor with significant preferences and ratchets, why is the 409a valuation for common stock the same as those the investors got? At the startup I worked, during the initial rounds the common and investor class were priced significantly differently. But in later rounds they converged almost to the same price. What is the rationale for doing this?

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