WeWork Valued at 35 Billion

[Guest cherzeca]

I really question softbank's thinking here.  JPM had Neumann (and the company) by the short hairs.  this could have been squeezed for far more juice (ie SoftBank could have bought JPM's debt, probably even at a small discount), though of course I am sure there are many details that haven't come to light

[JRM]

I really question softbank's thinking here.  JPM had Neumann (and the company) by the short hairs.  this could have been squeezed for far more juice (ie SoftBank could have bought JPM's debt, probably even at a small discount), though of course I am sure there are many details that haven't come to light

 

Maybe M. Son is falling on his sword to retain his honor.

[TwoCitiesCapital]

Hey all:

 

Looks like the founder, Adam Neumann is out at WeWork.

 

Everything is not too bad for him though.  In order for him to bow out AND sell his shares back to the company, he is exiting with about $1.7BB.  Not too bad a pay day!

 

According to Business Insider, a lot of employees are "pissed" at that amount of money.

 

Are they "pissed" because of the low valuation of the company?  Thus hurting their stock/options value?  Or maybe that Neumann got so much $$$$ with the company losing money by the TRAINLOAD, broken business model, and being on the verge of insolvency?

 

I wonder how much capital Softbank will put behind WeWork?

 

Seems to me that if you have a multibillion company that is losing $1 for every dollar in revenue, you don't really have a valid business model?

 

If I'm an employee, I'm pissed that he leaves a billionaire while the company is on the brink of bankruptcy and my options are worthless. I'm also pissed I didn't get an opportunity to cash out as well

[stahleyp]

Hey all:

 

Looks like the founder, Adam Neumann is out at WeWork.

 

Everything is not too bad for him though.  In order for him to bow out AND sell his shares back to the company, he is exiting with about $1.7BB.  Not too bad a pay day!

 

According to Business Insider, a lot of employees are "pissed" at that amount of money.

 

Are they "pissed" because of the low valuation of the company?  Thus hurting their stock/options value?  Or maybe that Neumann got so much $$$$ with the company losing money by the TRAINLOAD, broken business model, and being on the verge of insolvency?

 

I wonder how much capital Softbank will put behind WeWork?

 

Seems to me that if you have a multibillion company that is losing $1 for every dollar in revenue, you don't really have a valid business model?

 

If I'm an employee, I'm pissed that he leaves a billionaire while the company is on the brink of bankruptcy and my options are worthless. I'm also pissed I didn't get an opportunity to cash out as well

 

I'm surprised that's even legal.

[thepupil]

If I’m the founder of a fast growing business, I know Masoyoshi will take care of me if things go south.

 

Have a little vision guys!

 

Extend your time horizon to 300 years!

[CorpRaider]

Maybe he can go on shark tank like the gopro guy.

[Spekulatius]

Hey all:

 

Looks like the founder, Adam Neumann is out at WeWork.

 

Everything is not too bad for him though.  In order for him to bow out AND sell his shares back to the company, he is exiting with about $1.7BB.  Not too bad a pay day!

 

According to Business Insider, a lot of employees are "pissed" at that amount of money.

 

Are they "pissed" because of the low valuation of the company?  Thus hurting their stock/options value?  Or maybe that Neumann got so much $$$$ with the company losing money by the TRAINLOAD, broken business model, and being on the verge of insolvency?

 

I wonder how much capital Softbank will put behind WeWork?

 

Seems to me that if you have a multibillion company that is losing $1 for every dollar in revenue, you don't really have a valid business model?

 

If I'm an employee, I'm pissed that he leaves a billionaire while the company is on the brink of bankruptcy and my options are worthless. I'm also pissed I didn't get an opportunity to cash out as well

 

I'm surprised that's even legal.

 

I worked for a company a good while ago that got bought out. The chief executives could cash out their stock and options right away because they had a provision for accelerated vesting, the common serfs didn’t . The wheels came off quite quickly after the merger. Some animals are more equal than others.

[Guest cherzeca]

I really question softbank's thinking here.  JPM had Neumann (and the company) by the short hairs.  this could have been squeezed for far more juice (ie SoftBank could have bought JPM's debt, probably even at a small discount), though of course I am sure there are many details that haven't come to light

 

Maybe M. Son is falling on his sword to retain his honor.

 

should have used his sword (leverage) to preserve his investment

[merkhet]

Hey all:

 

Looks like the founder, Adam Neumann is out at WeWork.

 

Everything is not too bad for him though.  In order for him to bow out AND sell his shares back to the company, he is exiting with about $1.7BB.  Not too bad a pay day!

 

According to Business Insider, a lot of employees are "pissed" at that amount of money.

 

Are they "pissed" because of the low valuation of the company?  Thus hurting their stock/options value?  Or maybe that Neumann got so much $$$$ with the company losing money by the TRAINLOAD, broken business model, and being on the verge of insolvency?

 

I wonder how much capital Softbank will put behind WeWork?

 

Seems to me that if you have a multibillion company that is losing $1 for every dollar in revenue, you don't really have a valid business model?

 

If I'm an employee, I'm pissed that he leaves a billionaire while the company is on the brink of bankruptcy and my options are worthless. I'm also pissed I didn't get an opportunity to cash out as well

 

I'm surprised that's even legal.

 

I worked for a company a good while ago that got bought out. The chief executives could cash out their stock and options right away because they had a provision for accelerated vesting, the common serfs didn’t . The wheels came off quite quickly after the merger. Some animals are more equal than others.

 

Fantastic Animal Farm reference.

[Spekulatius]

If I were employee, I would ask for tequila shots with every lay-off and restructuring. This was one thing that Neumann got right. Reminds me of this scene:

[Cigarbutt]

The following summarizes well the last restructured bail-out:

https://www.reuters.com/article/us-wework-softbank-group/wework-board-accepts-softbank-rescue-deal-source-idUSKBN1X11JN

 

Read somewhere this AM in the populace comments section: The departing CEO, on his way out, has negotiated a name change for the now qualified moonshot investment: YouWork/iRetire

 

In debating terminology, this is like using an extreme example to make a point or to show how the opposing view is wrong.

I would say this is not only entertainment but also history in the making.

[Broeb22]

This could be the greatest example of commitment bias in history.

 

It's unbelievable, and borderline unethical, that Neumann can walk away a billionaire from a business that has not created any sustainable value for society, and is still likely to go bankrupt over time. Unless they are able to wiggle out of many of their leases in a short period of time, this capital infusion still only gets them a few years of liquidity at even dramatically reduced burn rates.

 

 

[TwoCitiesCapital]

This could be the greatest example of commitment bias in history.

 

It's unbelievable, and borderline unethical, that Neumann can walk away a billionaire from a business that has not created any sustainable value for society, and is still likely to go bankrupt over time. Unless they are able to wiggle out of many of their leases in a short period of time, this capital infusion still only gets them a few years of liquidity at even dramatically reduced burn rates.

 

Right?!?!??!

 

Where are all the liberal politician to comment on ill-gotten gains here? If I'm Bernie Sanders or Elizabeth Warren or AOC, this a much easier lay-up to tackle than trying to demonize Bezos for bringing thousands of high paying jobs to NYC just because he accepted tax incentives or doesn't pay all of his workers $15/hr.

[Broeb22]

Neumann is worse than a modern-day Steve Case. At least AOL was selling something that was actually useful. Even though it was merely a transitionary product with no real competitive advantage, at least it was somewhat beneficial.

 

He is only slightly less bad than Holmes at Theranos. At least no people were hurt in the perpetration of this fraud.

 

While we're on the topic of liberal politicians, maybe this whole episode with WeWork will be spun into a political thing. Maybe Son, like Gabbard and Jill Stein, is a foreign asset attempting to de-stabilize the middle east by taking billions of Saudi oil money and essentially setting it on fire through some of these investments. Less plausible ideas have been proposed by major news outlets.

[Pelagic]

Neumann is worse than a modern-day Steve Case. At least AOL was selling something that was actually useful. Even though it was merely a transitionary product with no real competitive advantage, at least it was somewhat beneficial.

 

He is only slightly less bad than Holmes at Theranos. At least no people were hurt in the perpetration of this fraud.

 

While we're on the topic of liberal politicians, maybe this whole episode with WeWork will be spun into a political thing. Maybe Son, like Gabbard and Jill Stein, is a foreign asset attempting to de-stabilize the middle east by taking billions of Saudi oil money and essentially setting it on fire through some of these investments. Less plausible ideas have been proposed by major news outlets.

 

My personal favorite implausible conspiracy theory is that the Saudis invested in the Vision Fund which then invested in WeWork at their behest to buoy existing Saudi real estate investments in major American cities. If it all worked out WeWork's presence in real estate assets would increase their value and they get a nice cash out at WeWork's IPO.

 

The whole thing is a mess. In what world does giving Neumann 1.7B make any sense when the company was desperate for a 4-5B infusion last week just to keep things going.

[Guest cherzeca]

what I would want to know is whether SoftBank made an offer to JPM to buy out its debt position (certainly on the loan made to Neumann, but also to the company).  that would have been the right power move.  take ver the company and put Neumann between a rock and a very hard place.  JPM "should" have jumped at that offer if made.  some nitwit JPM executive might have nixed it on theory that JPM would have suffered repetitional harm if it cut and ran from WE and Neumann, but that argument would be, imho, total BS.

[Munger_Disciple]

This op-ed piece is a better description of what happened, LOL:

 

https://www.bloomberg.com/opinion/articles/2019-10-23/how-do-you-like-we-now?srnd=premium

 

Excerpt:

 

Son: What does your company do?

 

Neumann: We lease office buildings, spruce up the space and sublet it in small chunks.

 

Son: Hmm I invest in visionary tech stuff, this doesn’t really sound like my thing.

 

Neumann: Did I mention we are a state of consciousness. A generation of interconnected emotionally intelligent entrepreneurs.

 

Son: Okay yeah that’s more like—

 

Neumann: The world’s first physical social network. We encompass all aspects of people’s lives, in both physical and digital worlds.

 

Son: You’re crazy! I love it! But could you be, say, ten times crazier?

 

Neumann: You’re going to invest $10 billion in my company, which I will use as kindling to light the whole edifice on fire, and then when we are both standing in the ashes you will pay me another billion dollars to walk away while I laugh at you.

 

Son: All my life I have dreamed of meeting someone as crazy as you, but I never really believed this day would come.

 

Neumann: I’m gonna use your money to buy a mansion with a room shaped like a guitar, where I will play the world’s tiniest violin after all your money is gone.

 

Son: YES PUNCH ME IN THE FACE.

 

Neumann: Also I’ll rename the company “We” and charge it $6 million for the name.

 

Son: RUN ME OVER WITH A TRUCK.

[thowed]

OMG - Munger_Disciple, many thanks for that.  Hilarious.  And jaw-dropping.

[TwoCitiesCapital]

This op-ed piece is a better description of what happened, LOL:

 

https://www.bloomberg.com/opinion/articles/2019-10-23/how-do-you-like-we-now?srnd=premium

 

Excerpt:

 

Son: What does your company do?

 

Neumann: We lease office buildings, spruce up the space and sublet it in small chunks.

 

Son: Hmm I invest in visionary tech stuff, this doesn’t really sound like my thing.

 

Neumann: Did I mention we are a state of consciousness. A generation of interconnected emotionally intelligent entrepreneurs.

 

Son: Okay yeah that’s more like—

 

Neumann: The world’s first physical social network. We encompass all aspects of people’s lives, in both physical and digital worlds.

 

Son: You’re crazy! I love it! But could you be, say, ten times crazier?

 

Neumann: You’re going to invest $10 billion in my company, which I will use as kindling to light the whole edifice on fire, and then when we are both standing in the ashes you will pay me another billion dollars to walk away while I laugh at you.

 

Son: All my life I have dreamed of meeting someone as crazy as you, but I never really believed this day would come.

 

Neumann: I’m gonna use your money to buy a mansion with a room shaped like a guitar, where I will play the world’s tiniest violin after all your money is gone.

 

Son: YES PUNCH ME IN THE FACE.

 

Neumann: Also I’ll rename the company “We” and charge it $6 million for the name.

 

Son: RUN ME OVER WITH A TRUCK.

 

I'm dead!

[Munger_Disciple]

OMG - Munger_Disciple, many thanks for that.  Hilarious.  And jaw-dropping.

 

You are welcome!

[Spekulatius]

Despite the fact that the financials are a mess and the execution was lacking, I actually think that the Wework model is here to stay.I believe startups will be paying for networking in these offices and flexibility is enticing for both startups, but also for mature companies that want to have offices in different locations or want ties to the startup culture. The business model requires a lot of cash and probably needs a whole lot of equity to survive a downturn, but I think it makes sense and probably will be imitated with some variations.

[thepupil]

https://www.google.com/amp/s/www.independent.co.uk/news/business/news/regus-valued-at-up-to-pound16bn-in-second-attempt-at-flotation-700023.html%3famp

[LC]

Wework is doubly dependent on cheap capital. It needs cheap capital to acquire and maintain its leases. And the startup companies who are Wework's customers require the same cheap capital for funding. If that situation changes I would expect a lot of pain.

[Broeb22]

Despite the fact that the financials are a mess and the execution was lacking, I actually think that the Wework model is here to stay.I believe startups will be paying for networking in these offices and flexibility is enticing for both startups, but also for mature companies that want to have offices in different locations or want ties to the startup culture. The business model requires a lot of cash and probably needs a whole lot of equity to survive a downturn, but I think it makes sense and probably will be imitated with some variations.

 

IWG and Regus have been running this model for a while so isn't it already kind of here to stay? How many people do you know who actually use co-working space? What premium above their current rates would mature companies be willing to pay for the privilege of being close to startup culture? If they are not paying a huge premium because they have bargaining power, then how profitable are those seats from mature companies anyways? What % of the average building needs to be filled by high-margin tenants to make the building a profitable location?

[Gamecock-YT]

The Fall of WeWork: How a Startup Darling Came Unglued

 

https://www.wsj.com/articles/the-fall-of-wework-how-a-startup-darling-came-unglued-11571946003

 

WeWork was going public and each executive wanted Mr. Neumann to list on their exchange. In return, he wanted their support for a cause he had championed—environmental sustainability—and asked them to ban meat or single-use plastic products in their cafeterias, according to people familiar with the matter.

 

NYSE President Stacey Cunningham offered to eliminate plastic cups and utensils but drew the line at meat. Nasdaq’s Adena Friedman offered to create a new index, the We 50, of companies committed to sustainability. Nasdaq won.

 

..

 

Back in New York, Mr. Neumann spent much of the summer working on the document, known as an S-1, in the Hamptons, regularly helicoptering employees out from the city to help. His wife, Rebekah Neumann, WeWork’s chief brand officer, insisted it be printed on recycled paper, then rejected early printings as low-quality, according to people familiar with the matter. The process was set back by days and the printing shop originally hired for the job refused to work with the company. WeWork gave part of the job to a small New York paper company that rents space in one of its offices.