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Adam Neumann planned for his children and grandchildren to control WeWork (techcrunch.com)
171 points by onetimemanytime 54 days ago | hide | past | web | favorite | 193 comments



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.


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...

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


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.


I wonder if a database of past videos of these people (after the truth is known) and machine learning would be able to make a bullshit/con detector? Maybe the same could be done with old PR news from companies that fail to deliver (pump and dump). Would ML be able to detect if the person truly believes what they are pushing?


What mannerisms are indicative that he's a con artist? Just seems like a good public speaker to me

I'm not sure how by just solely looking at people's mannerisms/behavior without evaluating what they are saying, I'd be able to detect con artistry


When you are more charismatic than the actor sitting next to you...

I love Ashton's response to why he isn't invested in WeWork though.


Immortal page of "how to ride an unicorn to death"


He looks set to walk away with $700m regardless. He deserves a chapter of his own in How To Sucker A VC.


"If SoftBank puts in a new $5 billion at a sub-$8 billion valuation, that will bring its total investment to about $15.8 billion, or about twice WeWork’s current value. If it doesn’t get a majority of the stock for that, it should just hand WeWork founder Adam Neumann the keys to its next $100 billion Vision Fund with a note saying “you are better at this than we are, here’s a present.” "

(Matt Levine on Friday)


Not unless he gets sued. And I hope he does


He borrowed money against his WW shares. There are rumours a margin call may be due.


At this point, he should really be looking to add a property in Florida before it is too late.


how does that work? I know from OJ that FL law protects the home, but will you have a $50 Million home with all the expenses but that cannot sell? Maybe he can borrow against it...

But I doubt he'll get sued. Unless he fudged the numbers it isn't his fault that supposedly sophisticated suckers gave him money.


I think it would be hard to prove anything outside out of gross incompetence. If he buys a Florida home and uses it as his primary residence, he would be able to keep the house even during bankruptcy. So he could buy the $40M, declare bankruptcy on the margin loan, and then sell the house eventually as far as I understand it.


But the valuation falling so badly and his shady antics perhaps there’s a case for failing as CEO to execute one fiduciary duty?

Any lawyers here on HN?


Well, he still made it out as a billionaire.


At least it was private money that hopefully learnt their lesson. Think of it as karmic wealth redistribution. Unless the private money turned out to be pension funds in which case oh shit.


Most likely it was pension funds or municipalities. It’s not the VCs own money


Most of it was the Saudi royal family’s money, they were the biggest investors in the Vision Fund.


Not sure I'd rip off Mohammed Bonesaw, but I guess he didn't do so directly.

The vision fund is the truly amazing case of serial capital destruction.

Of course it brings to mind something I heard from a PI years ago: if something doesn't make sense as a business, maybe it makes sense in some other way. Could this be somehow about moving money around? No clue, just wild speculation because it all looks so irrational.


did he? He's very levered against his stock.


Even worth the buildings owned and the cash payments for the word ‘we’?


He gave back the trademark payment iirc.

He got a few hundred million for stock he sold, and borrowed a few hundred million more against stock he still owned. We don't know the exact numbers though. He also gave away $100m+.


He was paid for 'we' in stock, not cash, and he ended up paying it back after their first IPO filing caused an uproar.


Or the immortal page for the definition of megalomania


What not to do? He made $700m, who doesn't want to do that?


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.


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.


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.


> 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).


Interesting -- thank you.


Why not? Markets are interested in capital gains and profit sharing, not necessarily steering the wheel directly.

How is it wrong for a founder to take a smaller cut of the profit in exchange for more power?

Founders (individuals) want a voice in their companies, and how much money does one need anyway? Investors (usually institutions) want to make money, and they need lots of it.

Seems like a fair trade.


If a dual-class share structure allows the CEO to divert 100% of dividends into his personal bonus, and prevents investors from having him removed even if he does, why wouldn't he?

Does an investment with those properties sound like a good investment to you?


> If a dual-class share structure allows the CEO to divert 100% of dividends into his personal bonus

> Does an investment with those properties sound like a good investment to you?

It's plainly obvious you don't hold an investment in a public company that does that. Your setup has a self-correcting action: the investors sell if they can't derive the expected benefit from owning the stock because the CEO is sending all the profit into their own bank account.

Why doesn't Zuckerberg do it for example? Because the stock would implode by 90%+ overnight and the best employees would immediately flee as they see their stock become worthless and future stock compensation goes to zero. Then the rest of the corporation would collapse in time without the employees required to keep it operating at a high level. Even monopolies can easily lose their position. Just downgrading your average employee by one grade, eg from a B to a C, will collapse elite tech companies over time. History is littered with examples (from HP to IBM) of what happens to companies when they can no longer attract the best.


The concrete point in the above is that that employees vested with stock would rebel. But of the employees weren't so vested yes Zuvk could go do that. I would rather he did to teach people this multi class stock business is silly.


If I’m not mistaken there are several large public US companies with a significant (or majority) control held by family members of the founders. Isn’t Walmart one? I think Ford was mostly controlled by family for a long time too.

I’m not saying I agree with nepotism in public companies, just saying there’s precedent.


They "work" because the real owners "Dallas Police Retirement Fund" et. al. are too far away from the situation to understand the screwjob.


>There is not really anything wrong with having a family business.

Shouldn't building a business be step one, though? Neuman didn't do that; he gambled a bunch of VC money on real estate.


Same goes for politic, yes? Because "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."


Monarchy is really underrated.


Once you get past the fact that murder is the primary way to change monarchical leadership, it's quite smart.


I certainly would prefer to live under a heritable monarch than a bunch of anonymous external shareholders. Of course any kind of autocracy is a gross violation of the rights of everyone living under it. But this is capitalism so democracy isn't even an option.


well there is something wrong if you want the company to be run well. if leaders of a company are selected by any other trait than merit, then the company will under-perform. if the company has a monopoly, that means a long and drawn out period of that particular market not achieving what it could or maybe even damaging peoples lives if the market is important.


That's not the point of control. Think of it as the company selecting their CEOs as any other company would, but the family that owns the company setting guidelines, like, even if we could use our tech in military projects as well, we're not going to get involved in military projects. They don't run the day to day business, but give them guidelines.


Right, so hedge your bets on unborn spawn. That’s the best we can do to steer a ship in the right direction for future generations.


[flagged]


What this has to do with a business being family-owned or not?


Your (grand-)children can’t guarantee you to preserve your values. Only policy maker can.


Wow, that escalated quickly.


> “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.


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?


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.


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.


I think the simple explanation here is that he's just an idiot.


I have another theory: he went from zero to a company valued $47,000,000,000. That's a drug...


Sounds like it was just a fantasy, rather than a scenario with internal detail.


It's interesting that he takes solace in the possibility of arbitrary exercise of authority by absentee owners.


To be fair, competition and investors tend to pressure corporations to place profit above any other values - the only way to maintain those values is to be forced by an external, 'arbitrary' force, like the law, or eccentric owner unconcerned with pure profit.


An external, accountable force like the law can work but not a truly arbitrary one like heirs not subject to any constraints.


But they are subject to constraints! They're subject to the law (ideally, anyway...), so the two options aren't in opposition. So yes, it can't work reliably, but still better than the pure profit motive, which is guaranteed to forsake any other values.


Do you know any projects that try to solve this problem?


Government regulation solved parts of it - stuff like environmental protections or labor laws. But in general, it's a very hard problem, and I don't think a theoretical solution exists yet. You can read more about it here: https://slatestarcodex.com/2014/07/30/meditations-on-moloch/


Hundreds of years later, company loses site of its mission, descendant of the great one (second coming) appears and steers company back to greatness.

Kind of a strange fantastical vision out of the fiction category. Not something I'd expect the would-be CEO of a public company to seriously suggest.


Honestly, it's kind of insulting to himself. If I had as many delusions of grandeur as he does, I'd assume I'd instill the company from birth with such unwavering great culture, that it'd never go astray even 300 years in the future.


It seems like he’s pretty confidant he’ll be able to instill unwavering values in his family though.

I wonder which of those is more likely, but they both seem pretty fantastical.


I don't think beings will even be "walking" into "rooms" to "say" stuff in 300 years.


do you think we will have ascended to pure energy or all be dead?

asking for a friend.


Likely those chosen ones shall ascend to the fourth plane of existence, leaving all others to suffer in the third. Just like in NG+.


Like the ancients, huh?


Says the guy who used company money to buy real estate and then lease hem back to the company.

Only a crook can say these kinds of preachy things.


'Money is truthful. If a man speaks of his honor, make him pay cash.'

- lazarus long (time-enough-for-love, r.a.h)


Damn, I mean what a family. The moral compass. Gosh, I hope I can achieve someday the level of moral righteousness that he has. Wow.


It often works and may even be required for corporations that exist for centuries.

The United States was founded by a group of men based on ideals strongly influenced by a fraternity. That fraternity has steered America for much of its history. Otherwise common ideals fracture quite easily under duress.

Probably that's what Adam had in mind. A family based institution culling certain ideals that serve as the guiding light for the company.


Like what Christian Bale did in Batman begins?


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


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.


I don't think those food delivery apps are a good comparison because a few of them actually survived and the market consolidated around them. The service they offer is clearly valuable for many people. I don't think it qualifies as a proper bubble.


Well 'bubble' is not defined by whether the industry's products are valuable (or we would never have a 'housing bubble')—I would base it on whether investors were putting too much money into a type of business. There were so many Uber-for-X startups going under that former YC President Sam Altman wrote this post on unit economics: https://blog.samaltman.com/unit-economics


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.


https://www.cnbc.com/2019/10/17/airbnbs-quarterly-loss-repor...

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


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.


Isnt Groupon just a modern take on Beenz? https://www.youtube.com/watch?v=5o9HEjuXsc0


Interesting how pets.com is so ridiculed but something like a books.com (amazon) became the one of most valuable companies in the world.


Amazon was really, really good at finding cost-effective ways to grow its business and brilliant at logistics. Pets.com infamously spent a fortune on branding and advertising without doing any market analysis, so they weren't prepared for just how small pet supply margins were or how slow adoption would be. It's not ridiculed mainly for being an online petstore, which could have been a viable business even in the 1990s

Worth remembering Amazon invested in pets.com though...


> infamously spent a fortune on branding and advertising without doing any market analysis

This actually sounds exactly like the current tech unicorn overvaluation party we find ourselves in.


> became the one of most valuable companies in the world

I don't follow the premise.

Amazon became so valuable because of AWS, not because of their retail operations. Its hyper low margin retail division might be worth $120-$150 billion in a sane market. It's considerably smaller and less profitable than Walmart for example. It's not trivial of course, however they'd still be a lot smaller than the other titans of market cap. More like Costco, less like Microsoft. And at this point their retail segment is slow growth, so the stock would probably be under compression duress about now, the bloom would be off the valuation rose.

Amazon's recent market value ramp begins when they start showing off the growth and profit potential of AWS. In the first part of 2015 they showed off the figures, the stock promptly skyrocketed four fold in three years afterward (it was previously on a slow, quite gradual climb and had not gone net higher in about 1 1/2 years).


Most tech growth companies have doubled or more since 2014. So Amazon being at $150B market cap back then probably still means they’d be around $300B+ today without AWS. I’d peg it at $350-375B minimum right now. Amazon’s mostly positive and beloved image to consumers (I know places like HN feel differently) would have still helped Amazon without AWS. In 2018, their operating income for North America was $7B+. International loss was $2B+. So they still did $5B in operating income. AWS adds in another $7B+ of course which is huge.

I’m not saying AWS is worth Amazon’s current market cap minus $375B. Could have both segments being valued less by the market as one combined company. It’s just I have a hard time seeing Amazon worth around $150B in late 2014, which def includes some of AWS pre-publicly being reported in earnings, not being worth around triple that amt now with the way stocks have gone. Assuming AWS was valued at $20 in 2014.

For the growth, their retail growth has slowed. Under 20% a year now. But their growth in subscription (Prime mostly) and advertising are still growing at above 1/3. Like AWS. So the company wouldn’t have nothing for the stock to be speculatively high on without AWS.


> 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.

Surely ‘Oh shit, point to point delivery for small items in a large built up urban area is actually really difficult and expensive’ is the Webvan equivalent?


"Uber wants to be the Uber for 'Uber for x' startups"

https://mashable.com/2016/06/09/uber-rush-api/


In some countries, the food delivery apps and companies aren't actually dead yet. Grab, Lineman, Lalafood, Get and FoodPanda to name a few.


We shall still wait a bit for all the chatbots-for-X and the AI-for-already-solved-problems to fade out, too.


I was alive for the .com bust but kind of forgot the scale. I looked up Pets.com. When they IPO'd they were valued at $290 million (about $294 million in inflation adjusted numbers).

They raised $110.5 million in private capital and $82.5 million at IPO [0].

WeWork has raised $14.2 billion in capital to date[1].

In other words, pets.com only raised a mere 1% of the current total that WeWork has raised.

If pets.com was the poster child for the dot com debacles then this new era of irrational startup exuberance exemplified by WeWork is another beast entirely.

[0] https://www.marketwatch.com/story/sock-puppet-kills-petscom [1] https://craft.co/wework/funding-rounds


"When they IPO'd they were valued at $290 million (about $294 million in inflation adjusted numbers"

That doesn't sound like the right amount of inflation. Maybe you mean $190M then or ~$435M now?


I could be wrong. I popped it into the first inflation calculator I Googled. 1998-Present and got the above.


Sure, but...common sense.

2% compounded for 20 years is about 50%. In fact, that seems to be very close to the correct amount.


Thank you for pointing out my lack of common sense.

Should I take this opportunity to point out that pet.com's $435 million is still a paltry sum compared to WeWork's $14.2 billion in capital, or has that larger point been rendered moot by my lack of common sense?


I have no idea if pets.com was actually a good comparison. Maybe there were others that raised far more?

Here's an article listing some of the failures from the late 90s:

https://www.complex.com/pop-culture/2012/06/stock-crash-the-...

Looks like eToys was close to $8B valuation around the time of its IPO. Although that doesn't mean they raised anywhere near that.

https://www.wsj.com/articles/SB927219879724795777

So, WeWork may have gotten 100x more investment, but its valuation is more like double or less.


Don't insult Pets.com by comparing them to WeWork. At least they actually produced technology even if it was just an ecommerce website.


There is no second bubble, just a waxing stage approach. Some of those internet companies were leveraged 1000 to 1 . Not even WeWork or Uber is close to that. There are revenues in even the worst cases unlike back then. So please don't exaggerate.


Don’t know the pets.com story, care to tell more or link resource?



Thank you, what a story!


you will probably enjoy Beenz one https://www.youtube.com/watch?v=5o9HEjuXsc0


You should have posted as a throwaway account....his great-great-great grandchildren might go after yours for this comment ;)


Neumann's basilisk?


They would need to go after most of HN then.


I wouldn't be surprised if Neumann's vision included We armed forces, so maybe that'd help.


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.


The organisation of shares is really a matter for the shareholders and many of the well known dual share class companies seem to have done well for investors. BRK, Ford, Google, Facebook. Even Uber is still valued at $54bn which is not bad for a taxi app.


Correlation is not causation, and the period of time that dual class has been used this way is not long enough to establish causation. Wait until there’s a real crisis that runs up against the dual class share issue. That’s when the wheels will come off.


Isn't Ford 100 years old? Not long enough?

The Ford family has 40% voting power and 2% share ownership.


Ford was around for like 53 years before they publicly offered stock. And they’re a success story for dual class sure. Check out hollinger for a case where dual class didn’t work out great. Theres definitely not enough source data to say that dual class is responsible for positive outcome.


Also the alternative arrangement where things end up controlled by wall street types trying to boost things short term to increase their bonuses often has not worked out great over the long term.


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


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


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.


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


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.


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.


> 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.


I don't totally disagree regarding "be sure you know what you get into", but I believe the dislike is mostly that one share, one vote is considered to be "fair" as in general elections one citizen, one vote. Anything that skews that is eyed suspiciously. They have more say than skin in the game.


510 < 951


Right, don't ever do math on stream. Thanks for pointing that out, I was mistaken; I wasn't paying attention to the numbers.


I don't know about other countries but the USA is very very lenient on how companies split up stocks and how they condition them. Especially with LLCs. What the Walton's did is perfectly legal and no one is forcing anyone to purchase the public shares. Walmart is actually doing pretty well.


>Where does this writer think shares go when someone dies?

I'll bet Sam Walton wasn't fantasizing about his children pushing people around the boardroom a couple years into Walmart...


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.”


As a shareholder, what's the difference between 50 years and forever, anyway? Are you locked into the shares to the point where you're not even allowed to sell them? If not, what's the likelihood anyway that you would have kept them for the full 50 year duration?


Well is anyone forcing them to buy the stocks? This is a private matter for company owners and stockholders, we don't need regulations for this. If there is fraud or fake financials reporting then yeah the government comes in.


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.


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?


> 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?


>How would you expect investors to know that?

An investor should research the company they are investing in. If it's a public company there is a wealth of current and historical data. It takes time, but it's not hard.

This is basic stuff, right?

In the specific case of WeWork, even though it was a private company, there was a massive amount of information questioning its business model, the founder, and its corporate structure.

I have no stake in WeWork, and I barely care about them, but even I knew what they were about.

>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?

NO!!! I'm flabbergasted someone would make such a statement. You have to take responsibility for your life. You can't just offload that responsibility on someone else. Just because a law is made, doesn't mean it's followed, doesn't mean there aren't loopholes, doesn't mean you're protected. Ask Bernie Madoff investors who lost their life savings even though there were laws and regulations that 'protected' them. You still have to do your own diligence. It's like crossing the street and getting hit by a car - does it matter if you had the right of way and the car broke the law if you're now disabled for life? You look both ways even when the light green before crossing the street.

I'm also not sure what a law to prohibit the children of founders from taking an active role in the operations of said company would even look like. How do you even begin to craft such a law?

And do you even want to? If a child of a founder was around a company from a young age learning how it is run, the culture, and the business - is it that bad if the board and shareholders decide this person, with a wealth of experience, would be chosen to run it? Maybe, or maybe not. This is why laws are a blunt instrument. A law could be made to prohibit this, but it would then prohibit all the cases where it would have been beneficial to the company.


> 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?

There are already numerous laws around securities. That is no excuse for lack of due diligence. Would you buy a house without getting a title search?


>Wouldn't it be better to just live under a system of laws that prevents insanity like this?

Not in my opinion. Laws are hard to uninstall or to change once enacted, and they tend to have unintended consequences.

And investors aren't like widows or orphans in needing lots of regulatory and legal protections. (The most useful protections for investors are probably the ones that ensure that the relevant published information is actually true.)


You've never heard of dual-class shares? When you're an investor you have to read the prospectus, dude.

I don't want to prevent this. For some companies I want voting rights controlled. I don't want other people in my position telling Google how to run. The founders do a better job than the short-term shareholders. So let them have Class B. As a Class A, I prefer this.


Softbank should have known. They had billions of dollars invested. They don't get to act surprised that Neumann was borrowing money from banks and then having the company cover those loans.


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.


Because this kind of behaviour is rife in the industry and hiding it under the carpet only because he was (eventually) removed from his position does not mean the true story does not deserve to be heard.


This one's a bit beyond the pale. No one is upvoting mundane tabloid gossip, this is bigger because it's not something ordinary.


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

Strike up the band!


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


It's another detail in the picture.

It's bearing witness, if nothing else. Showing a pattern (or showing a behaviour which may prove not to be a pattern) of fraud / control / incompetence.


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.


More human than human indeed.


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.


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


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


This is also an interesting one:

>WSJ: WeWork Founder Mixed Spiritual Group With Business

https://www.wsj.com/articles/wework-founder-mixed-spiritual-...


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.


I thought that it was a headline of the Onion.


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...


The answer is narcissism.

If you've ever worked or lived with someone that suffers from NPD, you'll know that their self-image is infallible. No mater how half-baked their ideas are, they truly, truly believe that it's the greatest thing ever.

This only gets amplified when they succeed at something. Even more so when being surrounded by yes men and sycophants.


Seems like being able to not see the holes in your own ideas, believing your own ideas are infallible i.e. narcissism as mentioned below, are very valuable traits in a founder, at least in certain phases. To this day, I still don't get why WeWork is a thing, but it just shows me that the whole system can be hacked given enough levels of self-delusion. And often times not for the better. I mean, people mentioned in religious writings are just like us, all the same, except their headspace is somewhere far different than the average man, and their responses to external stimuli end up being completely different or uninfluenced. A bit of reality distortion field, if you will. There is certainly a phase in the beginning of founding a company where few people will believe in your idea except yourself. And sometimes maybe those beliefs need to be a bit irrational as a defense until they gain traction in reality.

Projecting a little bit here, but, I personally am the opposite, always seeing holes in everything about what I think, what I know, shooting myself down all too quickly, such that a lot of my interactions with other people seem to end up with them sympathizing for my lack of confidence but glad to see me being honest. Sometimes, I'd wish to just be a bit more of the opposite.


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


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.


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


Have you ever met a baby? They are extremely vocal about even the slightest discomfort.


What’s the hole in this idea? I think it’s a decent idea (not a world changer) but he ran into supply chain issues. Also, WeWork is obviously having issues, but Adam did build an enterprise worth tens of billions of dollars. How are you qualified to call him delusional?


Unless your house has a cemented floor, I don't really see why would babies need kneepads. Considering their weight, how much pressure would actually be on their knees? Also, considering they tend to cry at the slightest discomfort, won't they be able to tell it themselves? Undoubtedly, Adam is extremely competent to build an enterprise of that scale but he can still be delusional about the potential of his ideas.


You’re accusing Adam of making false assumptions, but have nothing to back your position. All of that aside, however, it doesn’t matter one bit whether babies need knee pads. What matters is whether the person with the money believes that their child is in pain. The intent of the slogan is to change perception, as was all of their marketing. Some products solve a real problem and others create and then solve an imaginary one. Again, how does this make him delusional?


Fair enough. From a purely business perspective, maybe even baby kneecaps make sense irrespective of their utility.


Steve Jobs is turning in his grave at this and other comments on this post.


> 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.


> 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.


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.


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.


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.


People see it as a "schadenfreude" story. How the hottest of the hot unicorn startups got it's due. A great story to repeat over and over and over.



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


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

https://www.inc.com/melissa-chu/announcing-your-goals-makes-...


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)


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.


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


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.


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


Not uncommon in Canadian companies. coughBombardiercough


> The moral compass of the company

Neumann seems like a black hole of arrogance.


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


WeOwn


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).


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


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


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.


Disable all js, and you don't get the popup. I use umatrix to disable js on these sites (medium is another one that is a lot better without js).


I'm giving this a go but it might be a situation where it just breaks too many things. I realize it gives you the power to fix things up relatively easily, but over half the sites I've visited so far have required changes.


Yes, add these to your `/etc/hosts` file:

https://raw.githubusercontent.com/StevenBlack/hosts/master/h...


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.


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

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


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


Yeah, that's what I normally do, but sometimes i click a HN link without checking where it goes... like today.


Try outline.com/<url>.


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?"


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…




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