
How Do You Like We Now - smacktoward
https://www.bloomberg.com/opinion/articles/2019-10-23/how-do-you-like-we-now
======
freefal
When you’ve got supermajority shares, you can basically put a gun to your own
head.

Great summary of the situation from the article: “Neumann created a company
that destroyed value at a blistering pace and nonetheless extracted a billion
dollars for himself. He lit $10 billion of SoftBank’s money on fire and then
went back to them and demanded a 10% commission. What an absolute legend.”

~~~
wpietri
It amazes me that they didn't call his bluff. They could have said, "We'll let
you keep some of your shares, so if this ever works out, you'll make some good
money." Because if somebody didn't put up a lot of money, Neumann would get
bupkis. His negotiating position was extraordinarily weak.

But clearly this is about preserving Masayoshi Son's ego. And reputation, of
course. Why would he care if he burns another 5 billion if it helps him keep
getting future $100bn investments from his LPs?

~~~
g2ah5z
> It amazes me that they didn't call his bluff. They could have said, "We'll
> let you keep some of your shares, so if this ever works out, you'll make
> some good money."

If they had said that, Neumann would have just continued to nuke the company
until SoftBank's remaining $8 billion of equity in the company went to $0.
SoftBank paid him off to prevent him from further destroying the company.

~~~
wpietri
Why exactly would have he done that? His shares would go to zero as well, and
he'd have been more clearly associated with the failure.

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AVTizzle
Watching WeWork's IPO fall apart was satisfying because it felt, in part, like
a small bit of justice being served.

Sadly, this outcome for Neumann is the undoing of both that sense of
satisfaction and of justice.

(Note to self: don't let this jade you. Keep focusing on creating wealth by
creating value.)

~~~
wpietri
Steve Blank, I think in his original, self-published "Four Steps to the
Epiphany", said something like, "But if another bubble comes along, ignore all
this, because my advice only makes sense if creating value for customers is
rewarded".

I think he was right, and I really hope WeWork is the end of the "Uber for X"
wave, wherein losing gobs of money was somehow seen as a sign of success, and
not a cause for great shame. It's be nice to get back to actually serving
customers.

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wootie512
[https://outline.com/V5eEFX](https://outline.com/V5eEFX)

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Reebz
“[SoftBank] put into WeWork, an astounding total of more than $18.5 billion
for a company it values at $8 billion.”

Wow. I think when they do end up writing that HBS case, this will also serve
as a wonderful example of sunk cost fallacy.

~~~
rootsudo
Not really - they just bought it on a Huuuuuuge discount compared to what, a
month ago?

~~~
xrd
It being the value they already tied themselves to? It's technically correct,
but Neumann seems to have understood they could either buy him out now and
save some of that value, or not buy him out now and lose most of it.

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nooron
The penultimate slide (132/133) of the Softbank Vision Fund deck from
6/25/2010 is just the words "We (movie)". This now sounds prophetic. If you're
curious, you can see the whole strange deck here:
[https://cdn.group.softbank/en/corp/set/data/irinfo/presentat...](https://cdn.group.softbank/en/corp/set/data/irinfo/presentations/vod/2010/pdf/press_20100625_01.pdf?fbclid=IwAR1SyvfHXENSyQ_0eT6IRGDRK5g0dhdkLm9J34EI9GfxXqBI8H1jVzTIxQ8)

~~~
onlyrealcuzzo
Are we on pace for the CPU, Memory, and Network projections for 2040?

It has microprocessor transistors to go from 3bn to 3 quadrillion. Memory to
go from 32Gb to 32Pb. And network speed to go from 1Gbps to 3Pbps.

I was under the impression that it's looking very unlikely for CPUs to
transistors to keep growing exponentially, and that Moore's Law stopped a few
years ago? Will we not run into similar physical (?) limitations for memory
and bandwidth in the near future?

~~~
nooron
I have no idea. I meant my comment in jest— this episode is likely to end in a
movie about We— since there’s no evidence MS had heard of WeWork as early as
2010.

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skybrian
Matt Levine is amusing as always, but I'm wondering what really happened at
Softbank? How did they end up trusted with huge amounts of money?

~~~
leroy_masochist
S__D_ _R_B__

Would you like to buy a vowel?

~~~
brohee
Which makes me think, MBS may not be as amused as we are and the odds of
Neumann falling in a meat grinder are non null...

~~~
leroy_masochist
If I were him I'd be more worried about being seen on the street in any city
where there's a WeWork by a current/former employee who went from planning how
they were going to spend their options windfall to wondering how they were
going to pay the mortgage next month.

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JohnFen
I like We even less since Neumann was handsomely rewarded for his misbehavior.

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neonate
[http://archive.is/SHVCO](http://archive.is/SHVCO)

------
draw_down
It is pretty interesting watching Neumann get demonized in realtime. It's not
like he broke into people's homes and stole a billion dollars. Softbank gave
it to him, and apparently thought everything was going great until a couple
months ago. That was their money to set on fire, I have no skin in this game
and no reason to hate him.

The part I do agree with is the workers who are angry at him for getting rich
while they're about to lose their jobs. Terrible optics, for one thing.

~~~
wpietri
Do the math on how many seed and A rounds that could have been funded with
what he burned. That certainly gets me mad, all those entrepreneurs who didn't
get a shot.

~~~
InvisibleCities
Fuck seed rounds. How many homeless people could be given shelter with that
money? How many starving people could have been fed? How many people who died
needlessly because they were unable to afford medical treatment could have
lived if this money had been given to them instead? There is a tremendous
moral rot at the core of American capitalism, and the story of We is exhibit
A.

~~~
perl4ever
The wealth that was being destroyed from the perspective of society, or the
starving, is the losses of WeWork day by day and year by year.

I think it's important not to confuse that with the wealth that was merely
transferred from one book entry to another.

The spectacular destruction of the abstract entity ensures that the slow
bleeding doesn't go on.

Like, if I have $1B, which is really just a note in a computer and you steal
it from me by hacking that computer, or playing a confidence game, that's not
the same as if a billion dollar factory burns down.

~~~
JohnFen
> you steal it from me by hacking that computer, or playing a confidence game,
> that's not the same as if a billion dollar factory burns down.

I honestly don't follow this logic. What is the essential difference?

~~~
perl4ever
The difference between kicking a stuffed toy and a live pet?

~~~
JohnFen
I don't see how that's an apt analogy at all. Both of the circumstances you
cite appear to be the same fundamental thing to me -- they're both live pets,
just of different breeds.

~~~
perl4ever
Money in an account is just a note that someone is entitled to actual
resources at some indefinite time in the future. You don't see a difference
between erasing that note and destroying the resources it quantifies? I mean,
I'm not saying that what people write down can't affect the real world, but
it's a fundamentally different thing from the physical world. Erasing a number
could have any positive or negative consequence, maybe soon, maybe far in the
future. It's very tenuous. Destroying the _stuff_ has a specific cost, for
certain, that applies to society and not just the owner. Destroying or wasting
_stuff_ in large amounts is obviously "stealing" from the needy, while numbers
changing because of people having their hopes and dreams deflated is not.

When hopes and dreams die, the cost or benefit depends entirely on how it
motivates humans, which is very complex and often unpredictable, but can as
easily be good as bad, even if it's painful.

Perhaps I am talking to a being from another dimension, or a ghost who exists
only on the internet, in which case I'm probably wasting electrons.

How about this:

Suppose you have a lottery ticket, and you think you've won $1M. But then you
notice that you read a number wrong, and it's actually worthless. You may feel
like you've lost $1M, but actually you just gained something extremely
valuable - if you continued thinking you'd won, you might have done something
destructive like quit your job before you found out you didn't. And that
action in the real world, would have had negative consequences for you, your
employer, your loved ones, and so on. Society in other words. For some reason,
even (or maybe particularly) people who think money is evil fall into the trap
of thinking it's real as...(google says "a donut").

