
Adam Neumann planned for his children and grandchildren to control WeWork - onetimemanytime
https://techcrunch.com/2019/10/18/adam-neumann-planned-for-his-children-and-grandchildren-to-control-wework/
======
gigatexal
The more we learn about this guy the more I can’t wait for him to ride the
wave into obscurity and irrelevance except for in the immortal pages of case
studies of what not to do.

~~~
75dvtwin
Agreed.

I also use this opportunity to learn how these con artists present themselves.

So watching interviews with them to learn their verbal and physical
expressions (and people around them).

This is one particular interview I find useful in the above context.

[https://www.cnbc.com/video/2019/01/14/watch-cnbcs-full-
inter...](https://www.cnbc.com/video/2019/01/14/watch-cnbcs-full-interview-
with-ashton-kutcher-and-wework-ceo-adam-neumann.html)

Between this and another con artist (Elizabeth Holms, Therano's founder),
there a representative sample developing.

~~~
jeffdavis
Generally speaking, people know how to spot a con artist intuitively. The
difficulty is figuring out who is part of the con, and who is a mark.
Sometimes one person is both, or changes from partner to mark overnight.

------
timwaagh
There is not really anything wrong with having a family business. Many of the
German automobile makers are run that way. In this day and age where pump-and-
dump short term trading often prevails, the security benefits of limiting the
power of public shares often seem worth considering. Indeed the market has
spoken on Wework, as it always does, but it had little to do with this. It had
to do with him flying around in things the company could not afford.

~~~
throwaway744678
Well it's a bit like trying to "have your cake and eat it": if you want to run
a family company, fine, but you can't ask the markets for capital and yet keep
the control! Those dual class of shares have always seem odd to me; I mean, I
kind of understand the point for your average young startup - where the voting
power somehow represents the risk everyone took, and you don't want to
destabilize the company. For a mature company, the justification is less
clear.

~~~
ISL
Dual class structures are easier for investors to swallow in good times. When
things go bad, those investors will discover the downsides.

I own shares in two dual-class companies:

Berkshire is one, and there, the dual class nature has the effect of giving
more-serious/rich investors more votes. The coming century will test whether
that is a good idea.

Starrett is the other; there the dual class structure is designed to protect a
once-family business that is still run by the family. To me, at present, it is
a feature, not a bug. Without the dual-class, Starrett probably would have
been bought out in a hostile takeover/leveraged buyout. Instead, the company
endures, with a long-term vision. The coming decades will test my optimistic
thesis.

~~~
microtherion
> Without the dual-class, Starrett probably would have been bought out in a
> hostile takeover/leveraged buyout

Recently, in Switzerland, there was a company (Sika AG), where the founding
family held 54% of the vote with 16% of the shares. When they wanted to cash
out, they simply sold their shares to an outside investor at a sizable
premium, and the remaining shares could potentially have ended up worthless
(ultimately, after a multi year lawsuit, a compromise prevailed).

~~~
ISL
Interesting -- thank you.

------
Hendrikto
> “It’s important that one day, maybe in 100 years, maybe in 300 years, a
> great-great-granddaughter of mine will walk into that room and say, ‘Hey,
> you don’t know me; I actually control the place. The way you’re acting is
> not how we built it,'” he said.

> These may sound like more outlandish proclamations from Neumann, who has a
> flair for the dramatic.

~~~
_Nat_
Does anyone know what sort of " _moral compass_ " Neumann may've been
imagining his great-great-granddaughter imposing in 300 years?

I mean, that's just a really weird scenario. Even ignoring the implausibility
of modern offices being a thing in 300 years from now, much less being
controlled by the same company, what exactly would've motivated Neumann's
great-great-granddaughter to walk into an office space in which she'd
apparently be an unknown stranger to critique the behavior of someone in it?

To be clear, I'm not asking for someone to make this sound reasonable -- just,
what sort of scenario, reasonable or otherwise, might Neumann have been
imagining here?

~~~
md_
In fairness, this is kind of how people expected great media dynasties (like
the Bancrofts or Sulzbergers) to work. And this is also a bit weird, because
while now the idea of publishers as having a critical democratic function—and
being more than just profit-seekers—is well-established, fifty years ago they
were also brash big businesses, a bit like tech companies now.

I guess my point is that “changing the world” vs “making a buck” seem to be
weirdly in the eye of the beholder.

Neumann seems to have either believed or tried to convince others that WeWork
had some sort of greater mission beyond merely short-term office space. I
think it’s nuts, frankly, but this is the logical extreme of the more well-
established phenomenon of trying to convince investors your food/cookie/pot-
delivery website is a “tech company” to justify insane PE ratios.

I don’t know my point. Maybe there are just a lot of idiots out there. But is
it the founder, the VC, or the customer who’s the idiot? Seems to generally
depend upon timing.

~~~
AJ007
My theory is when you are trying to run a business that doesn’t generate
cashflows and have no idea how you are going to get to that point, you start
wasting your time with crazy stuff.

Everyone knows there is a big difference between a company like WeWork and
Apple. There is also a big difference between other money losing unicorns that
have a path to generating positive cash flow, albeit perhaps at a much smaller
valuation.

Consider this is a person who was operating a company with a (SoftBank
granted) valuation of a company that should have been throwing off billions of
dollars in free cashflow. Instead, this guy had never run a successful or
positive cashflow company in his entire life. If you pulled the average person
off the street, told them they were extremely smart and successful, and put
them in the exact same position as Mr Neumann, I’m going to guess they would
be doing things as weird as he was if not much, much stranger.

------
ridruejo
I kept wondering what would be the pets.com of this second bubble. I wonder no
more

~~~
firasd
I think all the 'Uber-for-X'/food delivery apps that popped up circa 2015 and
went under a couple years later were actually the pets.com equivalents. That
bubble popped and people didn't think much about it, because Facebook, Google
et al were doing well.

WeWork is an outlier case since Softbank caused the problem by giving them all
this money but will probably keep them afloat as well.

~~~
skinnymuch
All the Groupon copycats largely failed too. Including Living Social. The
other related companies that survived were around before and weren’t focused
or only doing Groupon’s schtick (Retail Me Not, Coupons.com parent company,
Slickdeals, and the cash back sites like Ebates/Rakuten). Otherwise they all
died.

The gig economy startup scene was much much bigger. But it also didn’t
completely die out. Airbnb is wildly successful. Apps like Taskrabbit have
survived. Handy was surviving. Probably a number more that survived outside
the big names.

~~~
JohnJamesRambo
[https://www.cnbc.com/2019/10/17/airbnbs-quarterly-loss-
repor...](https://www.cnbc.com/2019/10/17/airbnbs-quarterly-loss-reportedly-
doubled-in-q1.html)

Airbnb is successful but is it sustainable? That’s the question we need to be
asking of the Uber generation.

~~~
skinnymuch
Yeah good thinking. Maybe not sustainable at a $35B+ valuation. However it is
likely sustainable as a $10B+ company.

Their marketing is largely the reason in that article. Their growth has slowed
so that makes sense. Airbnb has been slightly profitable before. And unlike
Dropbox who have been in the same position, they don’t have the same
competition level.

Article also says they still have $3B in cash and a $1B credit line which is a
good sign vs total raised amt.

------
lordnacho
The dual share class thing needs to be phased out, at least as it pertains to
separating voting rights from economic rights. (Seems fine for other purposes
like cross border listings.)

It's a bubble symptom that investors are happy to go with reduced influence,
both wrt equity share classes as well as looser covenants on debt.

As for planning for your kids to own the company, that's pretty common.

~~~
robbiep
There’s nothing wrong with setting up company structures that have radically
different rights wrt. Shares; what is important is that the market prices them
correctly. And the market clearly has no idea how to price the control. Look
at Facebook or many of the other major tech exits that have allowed ords to be
priced from a ‘control’ perspective.

The market believes in a BDFL model at the moment and is being taught a bit of
a lesson

~~~
tim333
I guess if you are going to have a benevolent dictator, check they really are
benevolent.

~~~
zaphar
The hard of a benevolent dictator isn't finding a benevolent person. Its
ensuring they stay benevolent. That type of power has a track record of
corrupting the holder.

------
unreal37
Isn't Walmart controlled by the children of Sam Walton? [1]

"Sam Walton's heirs own over 50 percent of Walmart through their holding
company Walton Enterprises and through their individual holdings. "

Where does this writer think shares go when someone dies?

[1]
[https://en.wikipedia.org/wiki/Walmart](https://en.wikipedia.org/wiki/Walmart)

~~~
luckylion
The difference is that they actually _own_ those shares. This is about
different kinds of shares being issued, i.e. the founder gets some that have
10 times the voting power of normal shares. He now only needs more than 5% of
the company to provide the majority in votes.

~~~
unreal37
But the story is talking about "generational ownership" of companies, that
pass control to heirs when the founder dies.

Whether through dual class shares, or retaining a large % stake, it's the
same. The Ford heirs control Ford. The Walton heirs control Walmart. There are
many, many companies in this world controlled by the children and
grandchildren of the founder. That's never been a huge problem.

I just think this Techcrunch story is poorly written. It's acting "shocked"
that a child or grandchild of a founder could still control a company. Nothing
to be shocked about there.

~~~
phire
> _Whether through dual class shares, or retaining a large % stake, it 's the
> same._

But is it the same?

In one case, the family owns the majority of the company and controls it. In
the other case, the family only owns a small percentage, yet still controls
the company.

Can a family that doesn't own a company be trusted to act in the company's
best interests, or can they be trusted act in their own interests, using their
control to extract as much money from the company into their own pockets,
destroying the company in the process?

That's what I think the story is getting at, but it's poorly written.

------
luckylion
This quote sums it up very well:

Warned Jackson, “Those companies are asking shareholders to trust management’s
business judgment — not just for five years, or 10 years, or even 50 years.
Forever.” Such perpetual dual-class ownership “asks them to trust that
founder’s kids. And their kids’ kids. And their grandkid’s kids . . . It
raises the prospect that control over our public companies, and ultimately of
Main Street’s retirement savings, will be forever held by a small, elite group
of corporate insiders — who will pass that power down to their heirs.”

~~~
macspoofing
I don't see it as a problem because of this line: "Those companies are ASKING
shareholders..."

Don't invest in companies that are making dumb decisions, or divest from
companies that are making changes you feel are dumb.

~~~
dccoolgai
As someone who is at least somewhat well-informed, I literally never heard
this. How would you expect investors to know that? Wouldn't it be better to
just live under a system of laws that prevents insanity like this? And then
you could spend your time learning and being productive instead of poring over
the details of how you're being duped in any given situation?

~~~
palunon
> How would you expect investors to know that?

Something called due diligence.

Plus, this insanity is removing power from investors. If they are not even
going to look at the company share structure, what kind of decision were they
going to make?

------
alex_young
Why is this news? This guy has been pretty solidly shamed, removed from power,
and his former company practically destroyed.

At this point it seems pretty shallow celebrating more stories of missteps
here.

~~~
amiga_500
I could dance on the grave of WeWork, softbank and the general "startup"
culture for a little longer.

Strike up the band!

~~~
dang
Please don't do this here. Critique is welcome, but curiosity withers under
repetition and internet rage is uninteresting.

------
xwdv
So imagine Niander Wallace from Bladerunner 2049, CEO of Wallace Corp, whose
headquarters is a massive pyramid building about 2 miles tall and has plans of
expanding business to other worlds.

Now imagine instead of doing something important such as solving the world’s
food shortage or building replicants, Wallace Corp simply rented out office
space to fledgling startups, and now you will have some idea of the future
Adam Neumann envisioned for himself.

~~~
JohnJamesRambo
More human than human indeed.

------
velox_io
I don't believe this for a second. This is a hybrid fine-art / Ponzi scheme.
Investors pay over the odds to inflate the valuation, hoping that more will
follow after them, raising the value further, repeating the cycle.

------
cannabis_sam
Noob! He needs to institute primogeniture to make sure the power stays
consolidated

~~~
Agathos
Ah, my favorite Crusader Kings II minigame: stitching my kingdom back together
after a gavelkind succession.

------
Jerry2
This is also an interesting one:

> _WSJ: WeWork Founder Mixed Spiritual Group With Business_

[https://www.wsj.com/articles/wework-founder-mixed-
spiritual-...](https://www.wsj.com/articles/wework-founder-mixed-spiritual-
group-with-business-11571232391?mod=breakingnews)

------
rpmcmurdo
I am curious what their hiring strategy was. I met someone who worked there a
few weeks ago at a networking event. This was after most of the bad news had
broken. Wow, was he drinking the Kool Aid. I felt like I was getting an Amway
or Scientology pitch (the main thought going through my mind was "you should
really be using this opportunity to look for a job"). It made me wonder if
they systematically hired people who were easy marks, like the type of people
cults would look for, and did they have a hiring protocol for screening them.

------
seapunk
I thought that it was a headline of the Onion.

------
shubhamjain
I know founders can sometimes be eccentric, but for Adam it's just delusion
and that's well evident from his first venture [1].

> Working out of his Tribeca apartment, he started Krawlers, which sought to
> make baby clothes with knee pads to make crawling more comfortable. The
> slogan, he has said: “Just because they don’t tell you, doesn’t mean they
> don’t hurt.”

Are founders like Adam really incapable of seeing obvious holes in their
ideas? Or they just conveniently ignore them?

[1]: [https://www.wsj.com/articles/this-is-not-the-way-
everybody-b...](https://www.wsj.com/articles/this-is-not-the-way-everybody-
behaves-how-adam-neumanns-over-the-top-style-built-wework-11568823827)

~~~
dmitryminkovsky
I don’t get what you’re saying. This seems like a good idea and a good tagline
for our times.

~~~
zb
Babies don't have (ossified) kneecaps - their knees are already padded. And,
as 100% of parents will agree, babies will definitely, definitely tell you
when they hurt.

~~~
zaphar
Father of five, and I can confirm. They will most definitely tell you when
something is uncomfortable.

------
danso
> _The outlet reports that in a speech Neumann gave to employees in January of
> this year, footage of which it says it has viewed, Neumann is seen saying
> that WeWork isn’t “just controlled — we’re generationally controlled.”_

Maybe Business Insider (who first reported this, but for their premium paywall
offering) has some info, but I’m really curious to hear how WeWork employees,
including mid level managers and executives, took this proclamation? I’m
assuming some of WeWork’s workforce has some regard for the concept of
meritocracy. Hearing your CEO declare that he foresees WeWork to be controlled
by his bloodline for the next 300 years would seem to be off putting.

~~~
luckylion
> Hearing your CEO declare that he foresees WeWork to be controlled by his
> bloodline for the next 300 years would seem to be off putting.

Unless you're that deep into the cult that you actually believe in him being
the prophet and you're calmed by the thought that his eternal consciousness
will stand watch and defend the company from outside influence.

------
thosakwe
Is there a specific reason that WeWork comes up so much on HN? I've never
heard of it otherwise, but I see at least one story on it hit the front page a
week.

~~~
bronz
for the same reason theranos used to come up all the time. because investment
and hype didnt appear to align with the true value of what the company in
question was offering.

~~~
stjohnswarts
There really isn't much to compare to theranos, as it was based completely on
a lie. The only thing in common here is just a crappy CEO. WeWork has a solid
premise, it's just highly over-leveraged and over-valued.

------
neonate
[https://web.archive.org/web/20191019022454/https://www.busin...](https://web.archive.org/web/20191019022454/https://www.businessinsider.com/wework-
adam-neumann-said-family-control-company-300-years-january-2019-10)

------
codegladiator
I don't think public shamig works anymore, .... Wait, did it ever work ? Would
love know know cases where it did.

------
awaisraad
"Research Reveals That Publicly Announcing Your Goals Makes You Less Likely to
Achieve Them"

[https://www.inc.com/melissa-chu/announcing-your-goals-
makes-...](https://www.inc.com/melissa-chu/announcing-your-goals-makes-you-
less-likely-to-ach.html)

~~~
minxomat
One instance where the (otherwise insultingly bad) Mitchen translation of Tao
Te Ching makes sense:

> The slow overcomes the fast. > Let your workings remain a mystery. > Just
> show people the results.

36
([https://terebess.hu/english/tao/mitchell.html#Kap36](https://terebess.hu/english/tao/mitchell.html#Kap36))

------
macspoofing
This is actually a point in favour of Neumann since it shows he actually
believed the bullcrap he was selling around what WeWork was. Like many have
noted, it was a landlord with a particular focus on the startup and tech
markets. That's it.

~~~
whyenot
It could also be that this was just something he was using to look more
sincere.

------
stjohnswarts
I like the idea of WeWork but my god it's not worth anywhere near what they
were trying to IPO for, also their CEO is an idiot. Good riddance.

------
cryptica
If someone as dumb as Neumann can go so far, how smart are all the people
leading all other tech unicorns and corporations?

------
dblohm7
Not uncommon in Canadian companies. _cough_ Bombardier _cough_

------
BLanen
> The moral compass of the company

Neumann seems like a black hole of arrogance.

------
kgantchev
This just shows that people with a bad mission and values eventually get
exposed only to crash and burn.

------
ycombonator
WeOwn

------
kuon
After seeing a lot of headlines on HN I finally understood that WeWork is a
company and not some sort of US institution or some communist worker union (no
pun intended, we have those in Europe).

~~~
Hamuko
If Neumann is to be believed, WeWork is no mere company.

~~~
TheOtherHobbes
If the trend in current valuations is to be believed, it's not even a company.

------
nottorp
Kinda off topic: is there a way to opt out of tracking on sites like
techcrunch that seem to use a seriously obfuscated opt out screen?

I've never dared to click past the second dialog for fear that I'll opt in to
something by mistake.

~~~
Angostura
Good question. I haven't found a way around, so I've stopped visiting.
Presumably one day they'll get a kicking from a GDPR regulator - but they have
bigger fish to fry at the moment.

~~~
personlurking
If you copy the URL fast enough after clicking, you can check Archive (.is) to
see if it's been archived. In this case, it was.

[http://archive.is/NLqpE](http://archive.is/NLqpE)

There's also Outline. Not sure if one service is better than the other.

~~~
icebraining
Instead of copying, you can just click Stop on the browser before the dialog
opens.

------
baybal2
Very much like a Jobs, Musk, or Holmes styled persona. They have a very
peciliar way to cultivate their image among very trusting people.

Just have a conversation with a kid working for a client about all those guys.
In conversation about Mr. Musk: "If somebody gives you $1.8B credit in cash,
and you still manage to screw up, you must have been doing something wrong"

How do you call them in America? "New ageians?"

~~~
microtherion
Except that Jobs, to my knowledge, never tried to have his kids run Apple.

They’re still rather young, of course. For all we know, in 5 years Reed Jobs
will ride up to Apple Park on a white stallion, wielding a sword he pulled
from the SF Bay…

