
Adam Neumann will determine WeWork's fate - paulsutter
https://www.axios.com/adam-neumann-wework-softbank-takeover-306243f9-95d5-40ef-b388-b06ef8d8bafd.html
======
semiotagonal
How are the people putting the actual, real-world money into these businesses
so unable to protect themselves against getting taken to the cleaners by a
departing CEO?

~~~
justinator
Something tells me this isn't a whole lot of money for said people...

~~~
0xB31B1B
Disagree, there is a big difference between investing 200m where you can
expect a return on investment and just giving someone 200m to go away. There
is a return on the other money SoftBank has invested, but the 200m itself is a
cost, and rather large. Most money transfers of this size are exchanges of
capital for equity or debt, not gifts of cash.

~~~
ericand
They are buying control, no? Neumann sold economic interest (non voting
equity) to Soft Bank earlier. Now they want the voting power and they are
offering him 200M for it. It has to be worth something. It sounds like it is
unclear if that is enough (although if they are reporting it I assume it is)
for him to agree.

------
hashberry
This is not much when considering Neuman took out a $500 million loan earlier
this month.[0]

[0] [https://techcrunch.com/2019/10/04/report-wework-cofounder-
ad...](https://techcrunch.com/2019/10/04/report-wework-cofounder-adam-neumann-
may-have-to-unload-property-to-pay-off-a-giant-loan/)

------
brentm
For Neumann this whole thing must be such a nightmare. On one hand you did it.
You built a huge company and become super rich at the end. But on the other
hand the IPO blew up, the company is losing billions, employee options are
fucked, "everyone" thinks you're an idiot, etc. If it was me this would ruin
it all, especially since he has been living the rich guy lifestyle for many
years now. I hope he didn't do anything more shady than we know though because
the next saga to this story could easily be securities fraud, indictments,
investor lawsuits, etc, etc. This amount of capital doesn't usually blow up
quietly.

~~~
otterley
Man, I hope to be “ruined” to the tune of $200 million someday. I would cry
all the way to the bank.

~~~
meddlepal
$900 if you include the $700 he gave himself.

~~~
brentm
A majority of that 700M was a line of credit tied to his shares of the
company. Good chance he will face a margin call on that (since the shares are
now worth a lot less) and either have to come up with the cash (maybe why he
wants this 200M to leave) or pledge more shares to make up the difference in
value.

------
fortran77
To me, the real villains are Adam Neumann's enablers. The people that
"created" Adam Neumann aren't much different from those that "created"
Elizabeth Holmes. They keep looking for a quirky Steve Jobs-like charismatic
leader who distorts reality.

Of course, Holmes wishes she had Neumann's playbook so she could have walked
away with hundreds of millions.

------
claudeganon
Does it strike anyone as strange how much of the economy seems to be built
around bizarre, failed, often seemingly blatant scams nowadays? It almost
seems as if no matter how transparently irrational and corrupt these schemes
are, what’s important is to maintain the semblance of it all, the specific
articulation of power. The CEO, the visionary, the “disruption,” have become
almost abstract fetishes, removed from any broader function.

~~~
wil421
How much of the $20 trillion US economy so you think this is? If WeWork was a
$40 billion dollar company it would be .2% of the economy. Apple, Google, and
Amazon combined are about 4-5%.

~~~
claudeganon
That’s what I wish could be sussed out to a greater degree actually. How much
of the US economy is comprised of things like tech scams, MLMs, various cults,
etc. and what influence does this have on how businesses function more broadly
and what is seen as legitimate. I’ve looked around, but there are only a few
books on the history of things like MLMs and this good podcast about them
called _The Dream_ :

[https://www.stitcher.com/podcast/stitcher/the-
dream](https://www.stitcher.com/podcast/stitcher/the-dream)

~~~
erikpukinskis
10% is outright fraud or bait and switch. About 60% is just racketeering (not
exactly scams, but products and services they buyer can’t really refuse...
Comcast, cigarettes, etc) and 30% is actual services and production.

------
meddlepal
If Neumann declines the offer what happens here? He feels like the kind of guy
who would rather watch it all burn down than sell out.

~~~
throwaway5752
The chairman of the board of a company doesn't get to "burn it all down"
because that would be a breach of fiduciary duty. I may be wrong but wouldn't
he be exposed to personal liability at that point?

~~~
SirensOfTitan
I’m clueless here, but WeWork is a private company: does Neumann have any de-
jure fiduciary duty?

~~~
quaquaqua1
I believe so, he has the duty to private "accredited" investors. IIRC, this is
sort of what toppled Shkreli-- he mishandled investor money in a criminal
manner, despite actually not losing any of their money.

~~~
throwaway5752
Regardless of that execrable Shkreli, you have de jure fiduciary duties if you
are on the board of a private company, yes. At least in the most common forms
of incorporation. I am not even sure if it requires you have other
shareholders, let alone if you are a controlling shareholder or they are
accredited investors.

------
reilly3000
I personally wouldn't choose to mess with the Saudi's money on that scale.
That would seem imprudent.

------
thrower123
This kind of stuff is really the best that Softbank could find to invest in? I
am not sure I would want to be one of the people who pulled the trigger or
advised for these deals, when the backers start asking where their money went.

~~~
brentm
They are so far in the whole on this company it wouldn't be wise to let it
die. I doubt they want someone else in charge of what they funded.

After they clean the company up it will be a good business. It's just not a
tech company and never was a tech company but there is still good money in
leasing office space for $1, making it look nice and then subleasing it for $4
or $5, they just need to knock off the bull shit.

------
rodgerd
I have to admire the purity of this breathtaking rinsing of VCs.

------
jessaustin
Everyone is just so amazed and consternated at how amazing and consternating
TFA is. To me, that's a pretty good indication it's mostly bullshit. How
likely are the "multiple sources" to be Neumann and his wife?

------
facethrowaway
This seems strikingly similar to Travis Kalanick being paid to leave Uber. Is
Benchmark involved?

~~~
maldeh
Benchmark is a major investor, actually. But it sounds like they might be
getting the short end of the stick on this deal, like almost everybody else.

This case could be quite different from Uber per the thesis of this article by
Stratechery: [https://stratechery.com/2019/neither-and-new-lessons-from-
ub...](https://stratechery.com/2019/neither-and-new-lessons-from-uber-and-
vision-fund/)

While Benchmark was looking to preserve its assets from being squandered on
possibly the startup-catch of a lifetime, Softbank on the other hand relishes
being the Big Stack Bully, leaning hard on their portfolio companies to aim
for home runs everytime, and their excessive leverage allows them concessions
from companies most VCs can only dream of.

------
irjustin
Corrupt? Thief? Say what you will, there is something to be said for having
walked away with so much money - legally.

~~~
_iyig
I think many would call for punishment of the WeWork CEO, along with the
investors who failed their due diligence. Sometimes the law of the day does
not deliver justice. Seems like another instance where everyone not taken in
by the hype saw the crash coming.

~~~
ISL
The investors who made the wrong bet lost a spectacular amount of capital.

~~~
_iyig
For sure. But of the capital they managed, how much belonged to someone else?
Did that someone else trust Softbank (for example) to do their due diligence
before making a significant investment in WeWork?

