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.
Between this and another con artist (Elizabeth Holms, Therano's founder), there a representative sample developing.
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
I love Ashton's response to why he isn't invested in WeWork though.
(Matt Levine on Friday)
But I doubt he'll get sued. Unless he fudged the numbers it isn't his fault that supposedly sophisticated suckers gave him money.
Any lawyers here on HN?
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.
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+.
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.
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).
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.
Does an investment with those properties sound like a good investment to you?
> 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.
I’m not saying I agree with nepotism in public companies, just saying there’s precedent.
Shouldn't building a business be step one, though? Neuman didn't do that; he gambled a bunch of VC money on real estate.
> These may sound like more outlandish proclamations from Neumann, who has a flair for the dramatic.
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?
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.
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.
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.
I wonder which of those is more likely, but they both seem pretty fantastical.
asking for a friend.
Only a crook can say these kinds of preachy things.
- lazarus long (time-enough-for-love, r.a.h)
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.
WeWork is an outlier case since Softbank caused the problem by giving them all this money but will probably keep them afloat as well.
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.
Airbnb is successful but is it sustainable? That’s the question we need to be asking of the Uber generation.
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.
Worth remembering Amazon invested in pets.com though...
This actually sounds exactly like the current tech unicorn overvaluation party we find ourselves in.
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).
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.
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?
They raised $110.5 million in private capital and $82.5 million at IPO .
WeWork has raised $14.2 billion in capital to date.
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.
That doesn't sound like the right amount of inflation. Maybe you mean $190M then or ~$435M now?
2% compounded for 20 years is about 50%. In fact, that seems to be very close to the correct amount.
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?
Here's an article listing some of the failures from the late 90s:
Looks like eToys was close to $8B valuation around the time of its IPO. Although that doesn't mean they raised anywhere near that.
So, WeWork may have gotten 100x more investment, but its valuation is more like double or less.
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 Ford family has 40% voting power and 2% share ownership.
The market believes in a BDFL model at the moment and is being taught a bit of a lesson
"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?
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.
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'll bet Sam Walton wasn't fantasizing about his children pushing people around the boardroom a couple years into Walmart...
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.”
Don't invest in companies that are making dumb decisions, or divest from companies that are making changes you feel are dumb.
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?
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.
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?
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.)
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.
At this point it seems pretty shallow celebrating more stories of missteps here.
Strike up the band!
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.
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.
>WSJ: WeWork Founder Mixed Spiritual Group With Business
> 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?
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.
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.
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.
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.
> The slow overcomes the fast.
> Let your workings remain a mystery.
> Just show people the results.
Neumann seems like a black hole of arrogance.
I've never dared to click past the second dialog for fear that I'll opt in to something by mistake.
There's also Outline. Not sure if one service is better than the other.
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?"
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…