From the article, 2,400 employees is 19% of the peak of 12,500 employees on June 30. There was no mention of where the cuts were made however.
I am curious how many "white collar" type jobs WeWork would have, since I heard from previous discussions here that they were hiring for roles in unrelated-to-real-estate things like machine learning. I would imagine that there are lots of hourly-type roles managing the sites, but 12,500 seems reasonable for 849 locations (from https://www.wework.com/locations), ~14 people per location, assuming that they are included in that 12,500 number.
I currently keep a wework hotdesk and they do have a sizable headcount at each location - 3 rotating front desk people, a location manager, and maybe 3/4 rotating maintenance staff. I think they might contract out the maintenance staff, but that's still 4x number_of_locations just for that.
One of the big overheads of WeWork was staffing a faux-technology organisation in order to justify the disruptive silicon valley tech valuation. I image a lot of those people are long gone. I'm sure there's a load of IPO related staff that are ripe for cutting too.
More context: many employees of WeWork wrote a letter to management, covered also in NYT: "‘We Are Not the Adam Neumanns of This World’: What WeWork Employees Told Their Bosses" [1]
Certainly nothing to merit 12k, but they do have close to 1,000 locations and it's fundamentally a brick and mortar managed office space company, so every location needs at least a few people to keep things running / deal with client issues. The question is how big their back office operations really needs to be.
Do they seriously have employees at each? I assumed it was either a franchise or contractor thing. Rare for a tech company to actually hire people directly for that sort of thing.
> and have the appropriate employees for this type of business
I disagree. WeWork has 836 locations and 12.5k (now 10k) employees, or ~12-15 employees per location. Regus/IWG has 3,306 locations and 9.6k employees, or ~3 employees per location.
How is 4-5x the number of employees for a comparable non-tech company appropriate?
You'd have to know how the two companies split functions between employees and contractors. Though I'd not be surprised if WeWork were staffed relatively heavily. To note something random, WeWork has an (unstaffed) booth at Kubecon which suggests they do marketing activities that someone like Regus generally doesn't.
On top of that, Regus pays a huge portion of the employees at center hourly. I know Regus is not sexy, but they should get credit for focusing on economics that work at scale rather than just pumping up some ridiculous valuation with no chance of liquidity outside of getting bought or IPOing.
Something I love is how companies have been able to convince people that they are a tech company just because they have an app even when they do something which has existed before the internet was even around.
WeWork has not only been in the business of running offices, they have been in the business of _producing_ new offices at scale. They have contracted and built out over 800 locations within 9 years. Probably 100-200 a year as of late - which requires a horde of lawyers, real estate people, project managers, area managers, recruiters and so forth. They even have their own factory for (cheap and shitty) tables and chairs. If every office location has 1000 seats, we are talking 100k tables a year.
Even if average Employee cost was $20,000/year, that is a whopping $48,0000,000 (Million) profit added to the shareholders. What is their actual revenue ?
I don't really agree with this. I despise Facebook and happily retweeted a post a few weeks ago specifically aimed at helping FB engineers find work elsewhere.
I'd prefer to help good people get out of bad places.
Then they should research the companies in the post and if they're interested in a change apply as well. No listing in that post is catering to an ex-FB employee by any means.
It’s not about doing “research“. They would love to work at Facebook if they could. FB software engineer is a dream job for many outside of SV bubble, and even for many inside.
I don't think most reasonable employers hold it against prospective employees if they have "bad" former employers. Obviously the exception being if they were employed in executive (and perhaps in some cases, managerial) capacities. But certainly not line engineers.
I wish I had gotten that level of sympathy as a software engineer at an investment bank in 2008. In fact, rather than sympathy, more often I was told I was the problem.
Not that I would personally blame you, but the collapse of WeWork hasn't directly affected peoples' jobs, home values, or retirement savings. The implosion of the company has left the rest of the world pretty unscathed.
It has not imploded because it was privately bailed out.
If it did implode (Ch 11 or Ch 7 BK) - it will start to have major impacts on the NYC and other real estate markets. It’s the largest lease holder in many cities.
I still don't think that would have had the same downstream macroeconomic effects as, say, exploding mortgages for millions of working and middle class Americans. Nobody leasing their commercial properties to WeWork is one missed paycheck away from homelessness or health crisis.
I feel you as someone who was in the same boat at that time. The reality is, these people are being let go at a time of historically low unemployment, they will be just fine and likely be able to get higher salaries elsewhere. I know a guy whose last real job was in 2009. He was older, but not yet at retirement age. He has been a cautionary tale to me though- always stay technical and hands-on. He was like many of that era where he just "managed" and while he was very smart, did not write a line of code- which might have been forgivable if the entire eng team wasn't 6 people (including him and a systems/network guy). Those types did not fare well in the recession.
Imagine the employees with options worth millions a few months ago. Waiting for ipo and the wait period to cash out. Imagine the retirements, homes, vacations, goals, etc that people were dreaming of. Now all gone. It's must be like buying the winning lottery ticket only to lose it. Lots of hopes and dreams died for sure.
I still can't believe this guy gets to walk away with 1.7 billion dollars just for building up fluff while all the people who helped him grow have dire consequences both financial and personal. Unbelievable that this guy gets a clean chit, and all this isn't considered criminal. This to me is almost at the scale of Theranos. Only, this guy was smarter in the legal side of things, perhaps.
I'd argue that they would have been reasonably happy with their salaries (and any other perks) while they were employed (otherwise they would have gone elsewhere). And whilst I've not read the article chances are there will be some severance payout. And whilst it's inconvenient there's a good chance many of them will find employment elsewhere. Lastly, the writing's been on the wall for some time now. I'd like to think that they would have braced themselves for this eventuality.
Look even if you want to be obtuse and pretend its not bad that people got lured into jobs that couldn't possibly last, and may have uprooted families only to get laid off now, and have to uproot them again, even pretending that is no big deal, which it is, but let's pretend.
MAYBE you can feel some emotion for the investors whose money was essentially stolen, by a scam artist?
I feel no emotion for the investors since these are professional VC funds which should be fully aware of the risks involved. However, the situation would have been very different if they pulled out the IPO, cashed out to (among others) individual investors and then folded.
I don't agree with the person you are replying to either, however I don't feel much emotion for VCs who throw their money around and don't do their proper due diligence.
A property leasing company that sub-leases property owned personally by the CEO is a massive conflict of interest and a huge red flag, how these "professional investors" came to the conclusion that it would be a good idea to invest is beyond me.
> MAYBE you can feel some emotion for the investors whose money was essentially stolen, by a scam artist?
I've got plenty of sympathy for people being laid off I was just putting forward the case that it was good while it lasted. Less so for investors. From the perspective of the latter you win some, you lose some. And any concerns should be raised with people that funded the company to the tune of billions with what appears to be little governance or due diligence.
>MAYBE you can feel some emotion for the investors whose money was essentially stolen, by a scam artist?
Honestly, I think investors were quite aware of what kind of business WeWork is. They were hoping to dump the whole hot mess to public markets and walk away, and they failed.
>MAYBE you can feel some emotion for the investors whose money was essentially stolen, by a scam artist?
Please explain what the scam was, and how money was forcefully or fraudulent taken from the investors. Was the scam the public knowledge of a CEO using private jets to smoke weed and vacation with company money and speaking in cultish phrases? Was it the lack of cash flow? Was it the obvious lack of any moat?
You could look at this as a shifting of talent. Instead of those 2,400 people wasting their time managing short term office rentals for yuppies, perhaps they'll move on to more meaningful work! Some will start companies, some will join companies that provide more value to society, some will spend time with their families.
Which new reality? The one where most of the population can read and write and where most hold degrees and diplomas? This isn’t the 1900s industrialization era, where employees were picked out of the farm fields to work in factories, having never gone to school. People are smart these days, layoffs aren’t as destructive as they used to be.
I don't think most people are that smart. Out of the 50 or so I work around daily, one or two are truly smart. The rest are average or below, honestly.
I mean, I don't know you personally, but if those are your priorities, then there are plenty of big stable boring companies to work for. Maybe apply at one of those instead of wildly unprofitable startups with idiosyncratic founders?
> for the people who got laid off, obviously it's very bad, they should sue and they may get something back as settlement.
On what possible grounds? They were fairly compensated and got severance. There is no indication that they were hired under false pretenses. They're angry cause they didn't get to rip off Softbank too.
To be clear, Neumann's $1.7 billion payout is from SoftBank shareholders. There's nothing obviously criminal about SoftBank's bailout. But I agree SoftBank didn't have to do it. WeWork was ostensibly bankrupt and SoftBank could have dictated pretty much any terms they wanted.
SoftBank is trying to obtain a $2.8B loan for turning around WeWork [1]. Sunk cost fallacy at scale. SoftBank should've burned WeWork and Neumann's comp to the ground, while still paying out severance to the rank and file ("shoot the hostage").
Instead, SoftBank looks incompetent, Son looks incompetent, Neumann walks away a billionaire for delivering nothing of value, and layoffs are still happening. They're doubling down on financially destructive decisions. This is what happens when you have more money and vanity than courage.
They're doubling down to save face. They're betting that WeWork can survive as a much smaller company and that in 5 years people will forget what a disaster this was.
If I owned shares in softbank, I’d be livid about him flushing more money down that hole. It makes me suspect that if WeWork collapses, softbank would go down with it.
Well if you define a market simply as a mechanism of wealth transmission from dumb people to smarter people then I think that Adam Neumann deserves every single cent of 1.7 billion dollars.
> if you define a market simply as a mechanism of wealth transmission from dumb people to smarter
Who defines a market with that kind of cynical, silly definition? I don't think most of us want that kind of "market". And if that's the only way to make Neumann look good, then maybe the reverse is true.
There is a definition of stock market as a mechanism of wealth transfer from active investors to patient/intelligent investors.
Most of the people are jumping one over the other to lose money as quickly as possible on some fantastical promise of profits. Human nature is like that. Intelligent people made money out of this sentiment since money had been invented.
The employees deserve more cause they didn't get their share of the grift? By all accounts they were well compensated for working in a wealth destroying venture.
I presume that by all the people who helped him you mean the WeWork employees and not investors like SoftBank. Well, these employees aren't walking away empty handed either. They've been getting paid all these years and most of them will probably continue getting paid for some time. That's also a fruit of Neumann's scheming. These people didn't have to fight for jobs in a real business, they are benefiting from the WeWork illusion of grandeur and bringing in paychecks month after month.
Options in a startup are always a lottery ticket. I would argue that no rational person assigns any significant value to them, because even career investors aren't able to pick winners and instead earn money by betting on a lot of different startups.
People aren't and will never be rational economic actors -- homo economicus -- and while we can chide them for making mistakes a rational person wouldn't, I feel like there must be a way to structure the world that doesn't set up this expectation no one will ever live up to. (edit to fix a typo)
Big difference between a startup and a massive valuation that everyone assumes is about to IPO.
WeWork deflated more than any company in HISTORY. You’re technically correct but people are irrational and I’m sure they were being lied to their face in all hands about how great the future would be.
At that stage as an employee you’re counting on those to be able to put down a down payment or do a much needed renovation, or hopefully not payback debt.
>WeWork deflated more than any company in HISTORY.
Cisco went from 77$ per share in 2000 to $10 per share in 2002, while being public (so the value was much more real than WeWork, you could hit the 'sell' button to make it real money in 5 minutes, unlike WeWork equity).
IIRC it was valued around 500 billions in 2000, so it was much larger destruction in value. It still hasn't recovered, with $45 per share right now, never reaching its 2000 peak during these 19 years.
The reason he made bank is because Softbank decided it would be a good idea to let Neumann burn money, gave Neumann a shit ton of money without actually buying control of Wework from Neumann, found that nobody else thought burning money was a good idea and so WeWork couldn't IPO, decided that burning money wasn't a great idea after all, found that Neumann liked burning money and would continue to run WeWork into the ground burning money every step of the way, found that they couldn't do shit because WeWork still belonged to Neumann, couldn't walk away because they were billions in the hole, and so decided to give Neumann even more money so they could actually control the company this time.
The employees pretty much got the typical outcome of working at a startup (startup runs along for a couple years, then fails). The fact that Adam Neumann made bank is rankling, but Rich People Burning Money and Also Accidentally Giving Some Away to Undeserving People Because They Did Incredibly Stupid Things isn't exactly something we can or should stop. You can't make it illegal to be stupid.
Options are a risk you take, and every analysis out there says that one should discount them almost to zero, especially for startups.
It does suck for those employees that their risk didn't work out, but for most of them it was a conscious decision to take on the risk, presumably for a high potential upside.
And if you accept the risk, then its unfortunate that it didn't work out, but that is what risk is.
> These people didn't have to fight for jobs in a real business, they are benefiting from the WeWork illusion of grandeur and bringing in paychecks month after month.
Yikes. I have worked in two different startups that imploded quickly, largely due to an inability to find an effective sales and growth strategy. The fact that I was sold on the vision and that vision wasn't realized doesn't make the work I was doing any less challenging, nor did it make the job or business any less real.
The jobs are definitely real and I was careful to not make any claims otherwise. I've worked in failed startups myself, so I certainly know.
As far as WeWork not being a real business, I think this was fairly well documented during the IPO attempt. However, more generally, when I say real business I mean a business that can survive without getting most of its funds from an unrelated source, i.e. investors. All evidence points towards WeWork not being able to continue without continued burning of investor money and there's no path to profitability on the horizon even.
Investors did not do due diligence (unless there was fraud, but I have not heard of that). It is therefore not surprising AN got away with it. There are several companies with the same business model as WeWork that do not have nearly the same valuation (before all the recent hullaballoo, that is). There have been a number good articles about this topic in the WSJ lately. There is no reason to compare Adam Neumann to Elizabeth Holmes at this point.
Agreed, all the public statements from them were highly bullish, right up until the point where they realized the public markets weren't going to be suckered after the Uber IPO bombed.
Hey, it's the bank's fault they approved a 20K credit limit without even checking my ID. They should've done their due diligence beyond seeing the credit score /s
Your statement doesn't make sense to me. If you're claiming that this WeWork situation is similar to someone fraudulently obtaining $20,000 by claiming they are someone else, I have to disagree because there has been no misrepresentations in the WeWork saga that I am aware of.
Then I don't understand how a lender that lends money using the information they requested has been wronged. Even if borrowing money without intending to pay it back is wrong, it's still not relevant to this WeWork situation, so I don't see the point.
I don’t really see why it’s his fault investors over valued his company — he believed in his own spin and was phenomenally successful at building a large, real business. This was not like Theranos where he was straight up lying about a product working — anyone could analyze the business based on the fundamentals, and investors seemed ever willing to invest at high valuations.
The self dealing was reprehensible and evidence of low morals in my view, but none of those events actually materially impact the value of the business. Instead, overnight, investors just came to their senses about what kind of value this type of business is worth. Definitely a strategic misstep on his part, but it’s not like he stole billions of value away from the company. The drop in value is more like what happened to Uber or Blue Apron post IPO, except, unfortunately for the employees, it happened before they could exit.
> I don’t really see why it’s his fault investors over valued his company
> he believed in his own spin
It's his fault because he accepted the price for his business! He was in numerous conversations where people wanted to invest in WoWork and he told them that the valuations they were investing at were not just reasonable, but under the real market price - which is why venture buys into companies.
> none of those events actually materially impact the value of the business
> overnight, investors just came to their senses about what kind of value this type of business is worth
These things seem like they contradict each other. If Neumann's actions are not material, why did his removal reveal the true value of the company? Material just means it changes the value of the company. There are lots of "material" events that don't have anything to do with business fundamentals.
Not before paying, I don't know, something like 10-20 million to have the deal and everything else made watertight and 110% legal. Other that, you cannot blame him for the 1.7 billion. For the way how he got them he can be blamed so, IMHO.
I think it's unlikely that Adam would be liable for having accepted an inflated valuation. Courts typically give management pretty wide latitude to make business decisions as along as they can give some plausible explanation. It's called the "business judgment rule" in corporate law and gives the company quite a bit of deference[0]. It derives from Delaware General Corporate Law § 141(a), then gets carved out through case law.
That said, there are a few ways to overcome it. Self-dealing is one way, assuming Adam didn't disclose the transactions. Fraud would be another.
All this stuff is pretty fact-specific. We can guess, but there's a lot we won't know until it gets litigated.
>It's his fault because he accepted the price for his business! He was in numerous conversations where people wanted to invest in WoWork and he told them that the valuations they were investing at were not just reasonable, but under the real market price - which is why venture buys into companies.
What? It's his fault that he was able to hoodwink all these amazingly smart venture capital owners into investing?
No. What happened was some venture capital owners made a bet that they could find a bigger sucker to dump their shares on. But that bet went sideways. Nothing more. There is no indication of any fraud yet. Just some people that thought an eccentric personality could help them ride the wave of funding.
VC-s as a rule of thumb do due diligence before investing. They didn't throw money at him on the whim. They examined the books and everything else you could think of (or should have done so).
Unless he was cooking the books or conned some other way - you may say he is the one scumbag to rule them all if you like for walking with fuck you money squared while his employees get the shaft, but he did nothing wrong in pitching high valuations that the others side accepted.
> I don’t really see why it’s his fault investors over valued his company ... This was not like Theranos where he was straight up lying about a product working
Hell of a low bar you're setting.
Self dealing is fraudulent. It sends a message to con-artists of the future to do exactly what Neumann did for a potential big payout.
> The self dealing was reprehensible and evidence of low morals in my view, but none of those events actually materially impact the value of the business.
Materially WeWork is a real estate company selling itself as a tech company to get a higher valuation. Sure, it's expected that founders don't have a realistic idea of what their company is worth, investors should have done more research. But Neumann's ethical failings in regards to self-dealing is closely related to failing to accurately represent the state of his business. I think Neumann is fully responsible for WeWork's overvaluation, even if he fully believed his own spin.
I'm not arguing that Neumann's actions meet the legal definition of fraud. I'm arguing that he has a moral responsibility. Investors are responsible for believing Neumann. But I think that if he had been an ethical person who did not self-deal, WeWork might not have been over valued so much. I think self-dealing and dishonestly representing your company's worth is related.
The self dealing was not hidden, so I am perplexed why one would think a company with self dealing is worth more than a company without self dealing.
Neumann, as a seller, went out into the market and found some buyers. A seller sells for the most they can, and the buyer buys for the least they can. Except in this case, the buyer wanted to flip it, so the buyer wanted to over value it, so that they could claim it was worth even more (due to the rate of increase in "valuations") when they try to IPO it.
If anyone was lacking in morals, it would be the buyer who intentionally paid more than they knew they would if their aim was to hold onto it as a business, just so they could pawn it off onto someone else who didn't know better.
> was phenomenally successful at building a large, real business
What? How? He built an 8b business with 16b in investment. Anyone can do that. Take 16b, put it in index funds, call yourself an investment bank. You'd get better returns than -50%, for sure.
Looks like you've got it backward - as long as your $16b doesn't turn into $8b (negative fifty percent), you're doing better than this guy. If you put the $16b in any kind of mutual find, you're going to get a positive return, even if it's a single digit percentage, and it'll be much better than this guy.
Overall I agree with the point, but I was considering the idea of risk and the stock market, and I looked at what kind of return you would get if you invested in a major index at a peak and sold at the low point, and historically it's been in the ballpark of -70%.
So the odds are lower and the timescale is longer, but you could still lose more, potentially.
The issue i have with all these arguments is that while you can turn x into 2x, when you layer on interest, taxes, and any fees you encounter in the process...your cut won’t be what you thought it was going to be. Making money isn’t cheap and anyone who thinks it is hasn’t actually tried to do it yet.
Completely untrue. Even if all you do is take advantage of the investment opportunities that someone with, say, a million dollars get access to that someone with 20 doesn't, it's easy to grow large amounts of money.
"To turn $100 into $110 is work. To turn 100 million into $110 million is inevitable". Edgar Bronfman
Wow, well, you obviously haven't done it. I have, and I am here to tell you that it wasn't so easy. Even with 7 figures, I don't have access to anything special. I guess those perks kick it at some higher figure, maybe 8, dunno. Maybe at the $100M mark it is that way, I probably will never know.
Earning a steady 10% is really fucking tough. It's kind of a joke, really,
Getting anything resembling decent investment return is god damn hard.
So you have a good argument, but that basically means all that stands between someone making $10million is getting the credit to start their business? I’d love to offer you that credit and take half your profits after interest and taxes.
I guess I just don't know what you're saying then. It's easy to make money if you already have it? Maybe in terms of quantity, but in terms of % return i don't feel the ease of producing a return is really super linear or logical.
Or as Matt Levine might say, take the $16b, light half of it on fire, and put the other half under your mattress. Boom: You've just beaten negative interest rates.
> phenomenally successful at building a large, real business.
That's like saying the Soviet Union was successful at building a strong consumer economy. Anything can look good when you're able to under-price your services using someone else's money.
Agreed. This is the direct and intended result of a society which values those with money (investors) over those without money (people who invest their time, talent and effort).
He did nothing wrong in this society, so maybe we ought to fucking change society.
That seems like an odd statement, considering that to participate in WeWork, employees got paid, customers got subsidized, and investors (Saudis, I guess) got charged vast amounts to no benefit for them. Nothing about it suggests valuing investors, but the opposite.
Ah yes, "if it's legal, it's not his fault." It's not "his fault" for the gross incompetence that lead to this outcome? Whose was it? I would suggest that it is in fact "his fault," but why would he ever have cared? He lacked any incentive to fret any potential negative outcomes for the business, since after a point he had assured that they all ended in him being astronomically wealthy regardless.
This sort of thing sends ripples across peoples' lives. Normal people (outside of the idle rich who can afford to waste money on speculation with effectively no consequences) do lose out when things like this blow up.
The lack of regulation and legal accountability here is shocking. The fact that regulation doesn't currently exist shouldn't be used as a justification for excusing the behavior of bad actors!
> ...he believed in his own spin and was phenomenally successful at building a large, real business.
Successful at building a large, real business selling $10 bills for $8. It's a dreadful business, they lose money hand over fist with no path to stopping the bleeding.
For a while now, any company who could claim to be a "tech" company like WeWork (an objectively real estate company) did was able to raise on terms that are only suitable for zero-marginal-cost businesses. That is unlikely to continue.
There's a case to be made that the benefit of a recession is that it kills off these types of wildly unsustainable businesses as they're forced to prove their model. It's been over a decade since the last one. This allows us to remove some of the froth from the market without necessarily going through the same level of hardship en route.
Just one small comment -- instead of investors, it was mostly Masayoshi Son at SoftBank that was pumping capital into WeWork and each round invested pumped up the valuation as well, so never had to face any reality from other investors, but it all came to a head in the prospectus for the IPO.
Wait, did he not use company funds to buy real estate in his own name and then lease them back to the company? That is still not illegal but super shady. You cannot paper over things with "investors overvalued it" logic. He went to extra lengths to make his cheating legal.
“WeWork isn’t really a real estate company. It’s a state of consciousness, a generation of interconnected emotionally intelligent entrepreneurs.” -Adam Neumann.[1]
Even after hearing that media raved about him/WeWork, analysts were bullish and investors pumped Billions. Startup media are generally happy with their funding related news as it is glamorous.
And due to the funding noise, Startup ecosystem has forgotten that a Startup is a Business and a Business should make money, else it's just a hobby.
I don't even know who their target audience was. Many people who work from home do so because they enjoy the privacy of working from home. People who want more social interaction go to coffee shops, and plenty of people do both.
I don't see who would want to pay a few hundred bucks a month to work on a conference table surrounded by strangers.
A lot of people do this – coworking spaces are a huge thing, especially when they can host small companies who can't afford their own office.
Outside of smaller independent coworking spaces and WeWork's existing customer base there is IWG which does the same (albeit more sustainably): https://www.iwgplc.com
I can't help but think that Neumann's taret audience was deep pocketed old-generation investors who've worked in corner offices for decades and fell hook, line and sinker for the "gig economy is the future" spiel.
Please don't give your opinion on something you don't know anything about. You've clearly never even seen the inside of a WeWork because the majority of them were office spaces. The audience was small companies who preferred short time leasing, which in large cities, there were plenty of. Every wework I've been to in Manhattan has been completely full. There are 1-5 person offices, and sometimes single larger spaces, and you rented the "offices", which were just rooms. It's not like it's just a table where people sit together, that's crazy. It's office space. The benefit was you could get a place for a few months and then move somewhere else if your company isn't stable yet and you don't want to sign a year lease.
As I understand it, the goal was also to network with other small businesses using the same space. The spaces were set up to encourage people to find opportunities to work together -- cross-marketing, sharing resources, new ideas. Kind of an incubator, without the financial support or design.
Not inherently a bad idea, though it's full of Silicon Valley optimism where one serendipity produces tons of money while a lot of other things just fail to gel -- but some people get paid regardless.
I don't understand how that doesn't trip the bullshit detectors of anyone that still has money to invest in the first place. That's language I'd expect from someone flogging a pyramid scheme.
They know, they just do it to inflate the valuation & exit at the right time i.e. before the company goes down; The investor just before that is the real looser.
Most investors are smart enough to recognize BS and pass. But they don't issue press releases announcing "We just decided not to invest in this much-hyped startup." It only takes one deep pocketed investor to buoy a deeply flawed startup for a while.
Even well beyond the usual norms of Silicon Valley, this dude has lost so many people so much money um, I gotta wonder what sort of security detail he has for himself to prevent some pissed off people from making themselves feel a little bit better.
He really doesn't. For that kind of investor, the portfolio is more about having strategic connections to big players rather than purely making money. I'd imagine the next time Son comes around to ask for money, MBS will have more leverage than he previously did.
He'll Epstein his way back into the good graces of the upper classes. Fully expect to see the "Adam and Rebekah Neumann centre for cancer research" or something like that at a major university sooner rather than later.
If he was not able to manage that kind of money the first time, he will not go very far the second time. Most likely he will come up with a similar Ponzi scheme and burn all his cash.
I think you could consider WeWork worse than Thernanos in many ways. Far more people understood what was going on at the highest level, and when all was said and done Elizabeth Holmes walked away with nothing but criminal prosecution. Both screwed their investors, arguably Thernanos did worse, but investors prepare for potentially big losses.
The employees on the other hand are all screwed: at Thernanos Holmes was the most screwed given the potential jail time, but at WeWork Neumann is walking away with over a billion, which is sort of like spitting on your employees.
WeWork (Neumann) preached about the 'We Generation' and 'elevating the world to a new consciousness,' but really his actions were traitorous against the people who made him. Thernanos never claimed the moral high ground, nor did the leader get off like a bandit.
I’m pretty neutral. Why does he deserve it less than the billionaire VCs who didn’t do due diligence before handing it over? I don’t see moral superiority on either side of the table from where I’m standing.
Besides by that principle his employees didn’t deserve to get paid either, since by your reasoning his employees were only paid by the fruits of fraud. That doesn’t make sense to me.
He's not getting that for building fluff. Adam is walking away with 1.7 billion dollars because he fooled whoever is in charge at Softbank into getting into bed with him for WeWork and Softbank decided that that was an appropriate amount to pay in order to get rid of him.
What's not to believe, or be (more than momentarily) surprised by? His behavior is not only perfectly consistent with, but emblematic of the governing ideology of his, and our time:
I wouldn't say workers suffered from "dire personal and financial consequences". The employees had good jobs that could help build their career with relatively little risk.
> while all the people who helped him grow have dire consequences both financial and personal.
That's definitely a glass half empty way to look at this;
On the other hand, with 20/20 hindsight, knowing it was selling space it rented for a $.80 for $1 of cost, knowing that this hype meant and in a low unemployment time means that these were effectively a jobs program, with above average market salaries, funded by Softbank (and the Saudis).
Also a jobs program for any companies that would have paid $1/$1 of office space but saved the discount.
And, from a being laid off perspective; while it's not fun to have a job end at someone else's discretion, if you worked at WeWork and the August headlines weren't a hint to get the resume ready, I'm not sure what else might; Effectively, 4+ months of notice combined with now actual severance.
The downstream effects of this are probably worse from a capitalism / worker piece; As WeWork reduces leasing office space, buildings or service companies will likely pocket the contract termination fees while reducing jobs/hours of contract staff -- who, unlike wework employees, were closer to minimum wage, may not even have benefits, and definitely won't get severance.
There is an startup bubble funded by central bank low interest rates. It’s understandable that capital is seeking higher gains. What is not so ok is that we are building a casino like economic bubble funding ideas which are not profitable. If interest rates where higher bets would be more selective.
Hypothesis: Events like this are the modern moral equivalent of the giant, gaudy, gilt-encrusted palaces of the 17th century.
Economic disparity has reached a point where those at the top end literally have more money than they know what to do with and are increasingly spending it on stupider and stupider things out of some perceived need to do something.
I like your hypothesis but fear the reality is less benign. To me it seems most ('those at the top' as you put it) do what they do in an attempt to obtain ever more money and power - never satisfied with how much they already possess.
Interesting observation, but a) events of the last 10 years are documented at an exponentially higher rate and resolution than events of the 17th century, and b) this list has lots of events which hardly raise to the level of the large scale revolutions of the 17th century, aaand c) none of these events are taking place in global centers of wealth and power. Today's elites are without a doubt more protected than the denizens of Versailles precisely because their power and wealth operate on a global scale.
Re global centers - is it because elites are better protected, or because there are fewer people willing to die on barricades? Vast majority of Americans have a decent life today (eg not starving, not being exploited and treated like slaves by the elites), unlike the vast majority of population in the 17th century in Europe.
I mean, both. But there are plenty of self proclaimed radicals in America who claim they'd be willing to die on the barricades, but a) there's no central set of barricades upon which to die, even in the global "centers" and b) the ones that do exist are way too well protected. Remember Occupy Wall St? That was essentially an attempt to besiege (albeit non-violently) the financial power centers, but it was easily swatted away by local municipalities armed to the teeth with military grade crowd control tools.
Events like this are the modern moral equivalent of the giant, gaudy, gilt-encrusted palaces of the 17th century.
I think this vastly overstates it. Versailles cost some significant fraction of France's GDP - possibly as much as 25% in some years. WeWork's $10B is a mere drop in the US' $20T GDP.
I think there's an argument that taxpayers are indirectly funding all of this.
If you assume that the government needs $X to perform its function then when tax rates are cut for corporations and those wealthy enough to game the system, its everyone else whose taxes pay the shortfall. The reason there is so much money floating around the top end is specifically because they've figured out how to foist their tax burden onto others.
WeWork is just one part of it, however. Uber is another Ponzi scheme, living on underpriced rides and multi-billion losses for as long as their bond rating holds up.
I use Uber all the time, as does everyone I know. Hell, I even drove for them for a while.
They provide a needed service and they are subsidizing that to get rid of competition like Lyft and to grow a huge user base. Then, it's likely they will raise prices and start making money.
But it is not a Ponzi scheme. Last I checked, a local taxi company that is still in business wants $30 to take me into town, which is 5 miles away. Uber is $7.
> But it is not a Ponzi scheme. Last I checked, a local taxi company that is still in business wants $30 to take me into town, which is 5 miles away. Uber is $7.
The cost of that $7 are the billions they lose every quarter. It's not sustainable. They're a public company now, so to come up with fresh cash, they have to issue bonds and pay interest on them. How will they repay it when they aren't generating fresh cash through profits? They can't rely on VCs opening their wallets whenever they needed money.
> The cost of that $7 are the billions they lose every quarter. It's not sustainable.
They will raise prices eventually, they are in the "get a lot of regular users" phase still, growing that until they are ubiquitous.
Yes, they may face monopoly concerns then, but that is down the road.
What they will not face is competition from the $30 taxi companies, because unlike the taxi company they do not own any cars and the resultant costs of that.
Honestly I'm surprised there are 2400 employees who have stuck around this long, waiting for the other shoe to drop. How could they not see the obvious implosion coming? The proverbial tidal wave of ugly news has been steady for months now.
Having recently gone through a job search as a decently qualified candidate in an area with a lot of demand and low supply for my skillset, I'd say absolutely.
Hiring doesn't happen overnight and it's much more difficult when you're doing it actively, as opposed to passively responding to the recruitment vultures. Especially when there's a time crunch, since severance doesn't last forever and hiring doesn't happen overnight.
It's not between sticking around or quitting. They could have gone out and found a new job. One that presumably pays more than unemployment and quite possibly given the current stage of the economic cycle, more than their current job.
There are places that demand your high school and/or college diplomas even if it's been 30 years. There are places that give programmers tests with flow charts. At some stage of maturity you realize there's no point in worrying about pleasing everybody, because many of them are unreasonable and you'll never get the chance anyway.
Whenever there are unreasonable rules and you really do want to get around them, all you have to do is find a way to demonstrate your talent sufficiently that people will bend them for you.
for a funny and informative recap of Adam Neuman's life leading up to the formation of WeWork, check out this episode from the Grubstakers podcast. Really, really wild the stuff this guy pulled and the bull it took to do so.
https://soundcloud.com/grubstakers/episode-95-adam-neumann-w...
Positive press of this magnitude can help propel your next big idea.
If you have a reputation of compensating employees well when startup ideas don't pan out they will be more likely to want to join the next one.
Though there are probably more news worth things you could do with 300m.
Well he's not you, so he's keeping 1.7 billion. No one cares at large. Investors actually respected Shkreli, and the masses don't even remember who that is. Just cover your legal bases lol
I'm sure he could just donate a few mil to some charities and then bribe or otherwise manipulate journalists with another few mil, and generate MUCH more positive press overall with that money.
why would that upset you? you still have a job? that's like saying you'd be upset if a homeless person got a free meal at a restaurant where you had purchased a meal. also it's his money not public tax base - how can you can be upset about what someone chooses to spend their money on.
Why corporate boards are so inept, and allowed to remain so, I'll never understand.
If you buy into the goal being "shareholder value" then plainly Softbank failed. One could make the argument that WeWork's board did the things that they thought created the most value - but if you implode in on yourself, you clearly failed. Even if the self-dealing was not outright legal fraud, it was plainly not to anyone's benefit apart from Adam Newmann - which again is complicit behavior on the part of both boards. None of it is good business.
The board has the perspective of _ownership_. The employee has the perspective of _being commanded_.
Imagine something nice that you own- like your car. Do you feel compelled to understand your car? Must you be an excellent driver to own that car, if you can afford it?
No. And while it's not exactly the same, the people generally look at the company as a machine that makes them money. They don't have to be good at anything to own that machine, and if they want, they can even share it with their drug addict fail-child.
This is the ultimate problem with how we've structured public corporations/LLCs in the US. When markets are working correctly in an environment of low innovation, companies themselves becomes the product, and the company's product itself just become a cashflow on a balance sheet. Grow the company (and its userbase) to a point where it can be harvested (go public) and then processed while you get paid out.
Nothing else in the environment matters if it's not on the balance sheet (most notably pollution, social disruption, and general human suffering). Yvon Chouinard has a great perspective on this in his book "Let My People Go Surfing" where he meditates on the paradox of running a private business that fights itself by automatically giving away portions of its revenue to charity rather than paying out shareholders/reinvesting in growth. What do you do when you see every sale your company makes as a failure in the fight against consumption/towards sustainability?
Before a company goes public, the only way you get to be on the board is by being a cheerleader. After a company goes public you have a lot more responsibilities.
Right - I get that - but my thinking is, why would you make short-sighted greedy choices that are fundamentally bad business decisions? One could say hindsight is 20-20, but I don't buy that. WeWork at its core was a legit business (I say this as a former customer), unlike a say Theranos. It could have legitimately been a wildly successful company without the shenanigans. It seems trite to simply say that the board hoped they would get theirs before everything imploded.
I think they justified it by saying that they were aiming to be tech unicorn, not merely a real estate company; and it's par for the course for the board to pump and dump a tech unicorn once they realize the horn is about to fall off.
I see what you're saying, but what I'm saying is not even on that axis. If you don't have a history of talking up the startups you are attached to, you don't get invited to be on the board of startups.
If you are critical of the growth plan or business practices, you are fired from the board.
When you see big, tall men with forceful personas running roughshod in positions of leadership, you realize that perhaps we should always remember that we are just primates that learnt how to use tools well.
Sucks for the employees and everyone else who built up the founder's ego and his wallets. But honestly, this is an indefensible business model with clearly unsustainable economics. This deal and Theranos has convinced me that venture capitalists aren't as a group particularly insightful or worthy of admiration. Personally I hope the collapse of WeWork takes Meetup.com with it.
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[ 4.4 ms ] story [ 272 ms ] threadI am curious how many "white collar" type jobs WeWork would have, since I heard from previous discussions here that they were hiring for roles in unrelated-to-real-estate things like machine learning. I would imagine that there are lots of hourly-type roles managing the sites, but 12,500 seems reasonable for 849 locations (from https://www.wework.com/locations), ~14 people per location, assuming that they are included in that 12,500 number.
Meanwhile, Adam Neumann is still collecting a $1.7 Billion payout.
[1] http://archive.is/8bVvY
I disagree. WeWork has 836 locations and 12.5k (now 10k) employees, or ~12-15 employees per location. Regus/IWG has 3,306 locations and 9.6k employees, or ~3 employees per location.
How is 4-5x the number of employees for a comparable non-tech company appropriate?
Just my guess.
I'd prefer to help good people get out of bad places.
https://twitter.com/EricaJoy/status/1190701524210438144
As in, you hope they find new employment at a legitimate company?
If it did implode (Ch 11 or Ch 7 BK) - it will start to have major impacts on the NYC and other real estate markets. It’s the largest lease holder in many cities.
MAYBE you can feel some emotion for the investors whose money was essentially stolen, by a scam artist?
A property leasing company that sub-leases property owned personally by the CEO is a massive conflict of interest and a huge red flag, how these "professional investors" came to the conclusion that it would be a good idea to invest is beyond me.
I've got plenty of sympathy for people being laid off I was just putting forward the case that it was good while it lasted. Less so for investors. From the perspective of the latter you win some, you lose some. And any concerns should be raised with people that funded the company to the tune of billions with what appears to be little governance or due diligence.
Honestly, I think investors were quite aware of what kind of business WeWork is. They were hoping to dump the whole hot mess to public markets and walk away, and they failed.
Please explain what the scam was, and how money was forcefully or fraudulent taken from the investors. Was the scam the public knowledge of a CEO using private jets to smoke weed and vacation with company money and speaking in cultish phrases? Was it the lack of cash flow? Was it the obvious lack of any moat?
Student loan debt cannot be discharged.
Unsecured personal debt is at all-time highs.
Nearly half of Americans have less than $1000 in savings.
You are wrong.
https://studentaid.ed.gov/sa/repay-loans/deferment-forbearan...
> Nearly half of Americans have less than $1000 in savings.
Those both sound like bad financial planning. Pumping more money into the equation won't solve that.
I mean, I don't know you personally, but if those are your priorities, then there are plenty of big stable boring companies to work for. Maybe apply at one of those instead of wildly unprofitable startups with idiosyncratic founders?
You have agency.
For the existing employees who saw their stock options value deflated overnight, well tough luck. it's hard to become a millionaire
For the investors who just throw money to whoever in sight just to see what sticks, no tears at all
On what possible grounds? They were fairly compensated and got severance. There is no indication that they were hired under false pretenses. They're angry cause they didn't get to rip off Softbank too.
Instead, SoftBank looks incompetent, Son looks incompetent, Neumann walks away a billionaire for delivering nothing of value, and layoffs are still happening. They're doubling down on financially destructive decisions. This is what happens when you have more money and vanity than courage.
[1] https://asia.nikkei.com/Business/SoftBank2/SoftBank-in-talks... (SoftBank in talks with Mizuho and Japan banks for $2.8bn loan)
Who defines a market with that kind of cynical, silly definition? I don't think most of us want that kind of "market". And if that's the only way to make Neumann look good, then maybe the reverse is true.
Most of the people are jumping one over the other to lose money as quickly as possible on some fantastical promise of profits. Human nature is like that. Intelligent people made money out of this sentiment since money had been invented.
That's certainly not a definition. Investing is not zero-sum.
Does anyone?
But their employees were heavily compensated with options that are now worthless.
Of course options are a risk, but they didn’t work there if they didn’t think those options would be at least worth something in the future.
WeWork deflated more than any company in HISTORY. You’re technically correct but people are irrational and I’m sure they were being lied to their face in all hands about how great the future would be.
At that stage as an employee you’re counting on those to be able to put down a down payment or do a much needed renovation, or hopefully not payback debt.
Cisco went from 77$ per share in 2000 to $10 per share in 2002, while being public (so the value was much more real than WeWork, you could hit the 'sell' button to make it real money in 5 minutes, unlike WeWork equity).
IIRC it was valued around 500 billions in 2000, so it was much larger destruction in value. It still hasn't recovered, with $45 per share right now, never reaching its 2000 peak during these 19 years.
The employees pretty much got the typical outcome of working at a startup (startup runs along for a couple years, then fails). The fact that Adam Neumann made bank is rankling, but Rich People Burning Money and Also Accidentally Giving Some Away to Undeserving People Because They Did Incredibly Stupid Things isn't exactly something we can or should stop. You can't make it illegal to be stupid.
It does suck for those employees that their risk didn't work out, but for most of them it was a conscious decision to take on the risk, presumably for a high potential upside.
And if you accept the risk, then its unfortunate that it didn't work out, but that is what risk is.
Yikes. I have worked in two different startups that imploded quickly, largely due to an inability to find an effective sales and growth strategy. The fact that I was sold on the vision and that vision wasn't realized doesn't make the work I was doing any less challenging, nor did it make the job or business any less real.
As far as WeWork not being a real business, I think this was fairly well documented during the IPO attempt. However, more generally, when I say real business I mean a business that can survive without getting most of its funds from an unrelated source, i.e. investors. All evidence points towards WeWork not being able to continue without continued burning of investor money and there's no path to profitability on the horizon even.
One (likely in my opinion) possibility is they did, and they were betting they could find a bigger fool.
The self dealing was reprehensible and evidence of low morals in my view, but none of those events actually materially impact the value of the business. Instead, overnight, investors just came to their senses about what kind of value this type of business is worth. Definitely a strategic misstep on his part, but it’s not like he stole billions of value away from the company. The drop in value is more like what happened to Uber or Blue Apron post IPO, except, unfortunately for the employees, it happened before they could exit.
> he believed in his own spin
It's his fault because he accepted the price for his business! He was in numerous conversations where people wanted to invest in WoWork and he told them that the valuations they were investing at were not just reasonable, but under the real market price - which is why venture buys into companies.
> none of those events actually materially impact the value of the business
> overnight, investors just came to their senses about what kind of value this type of business is worth
These things seem like they contradict each other. If Neumann's actions are not material, why did his removal reveal the true value of the company? Material just means it changes the value of the company. There are lots of "material" events that don't have anything to do with business fundamentals.
That said, there are a few ways to overcome it. Self-dealing is one way, assuming Adam didn't disclose the transactions. Fraud would be another.
All this stuff is pretty fact-specific. We can guess, but there's a lot we won't know until it gets litigated.
[0] https://en.wikipedia.org/wiki/Business_judgment_rule
What? It's his fault that he was able to hoodwink all these amazingly smart venture capital owners into investing?
No. What happened was some venture capital owners made a bet that they could find a bigger sucker to dump their shares on. But that bet went sideways. Nothing more. There is no indication of any fraud yet. Just some people that thought an eccentric personality could help them ride the wave of funding.
Unless he was cooking the books or conned some other way - you may say he is the one scumbag to rule them all if you like for walking with fuck you money squared while his employees get the shaft, but he did nothing wrong in pitching high valuations that the others side accepted.
Hell of a low bar you're setting.
Self dealing is fraudulent. It sends a message to con-artists of the future to do exactly what Neumann did for a potential big payout.
Materially WeWork is a real estate company selling itself as a tech company to get a higher valuation. Sure, it's expected that founders don't have a realistic idea of what their company is worth, investors should have done more research. But Neumann's ethical failings in regards to self-dealing is closely related to failing to accurately represent the state of his business. I think Neumann is fully responsible for WeWork's overvaluation, even if he fully believed his own spin.
Sellers don't get to dictate what something is worth.
Neumann, as a seller, went out into the market and found some buyers. A seller sells for the most they can, and the buyer buys for the least they can. Except in this case, the buyer wanted to flip it, so the buyer wanted to over value it, so that they could claim it was worth even more (due to the rate of increase in "valuations") when they try to IPO it.
If anyone was lacking in morals, it would be the buyer who intentionally paid more than they knew they would if their aim was to hold onto it as a business, just so they could pawn it off onto someone else who didn't know better.
What? How? He built an 8b business with 16b in investment. Anyone can do that. Take 16b, put it in index funds, call yourself an investment bank. You'd get better returns than -50%, for sure.
Softbank funded WeWork via the Vision fund, which is primarily funded with Saudi money.
No need to be pedantic.
So the odds are lower and the timescale is longer, but you could still lose more, potentially.
"To turn $100 into $110 is work. To turn 100 million into $110 million is inevitable". Edgar Bronfman
Earning a steady 10% is really fucking tough. It's kind of a joke, really,
Getting anything resembling decent investment return is god damn hard.
She.
He's talking about the WeWork guy, not the theranos woman. I think it's a strange sentence, but technically correct.
That's like saying the Soviet Union was successful at building a strong consumer economy. Anything can look good when you're able to under-price your services using someone else's money.
How was he "phenomenally successful" if the company needed an emergency bailout because they were about to run out of cash?
He walked away with $1.7 billion.
He did nothing wrong in this society, so maybe we ought to fucking change society.
This sort of thing sends ripples across peoples' lives. Normal people (outside of the idle rich who can afford to waste money on speculation with effectively no consequences) do lose out when things like this blow up.
The lack of regulation and legal accountability here is shocking. The fact that regulation doesn't currently exist shouldn't be used as a justification for excusing the behavior of bad actors!
But yes, normal employees are paying the price here.
Successful at building a large, real business selling $10 bills for $8. It's a dreadful business, they lose money hand over fist with no path to stopping the bleeding.
For a while now, any company who could claim to be a "tech" company like WeWork (an objectively real estate company) did was able to raise on terms that are only suitable for zero-marginal-cost businesses. That is unlikely to continue.
There's a case to be made that the benefit of a recession is that it kills off these types of wildly unsustainable businesses as they're forced to prove their model. It's been over a decade since the last one. This allows us to remove some of the froth from the market without necessarily going through the same level of hardship en route.
The classic "We lose money on every sale, but make it up in volume" approach.
It didn't even buy properties.
I think Galloway explains it well in this video -- https://www.youtube.com/watch?v=3UdhLWGrtDI
Even after hearing that media raved about him/WeWork, analysts were bullish and investors pumped Billions. Startup media are generally happy with their funding related news as it is glamorous.
And due to the funding noise, Startup ecosystem has forgotten that a Startup is a Business and a Business should make money, else it's just a hobby.
[1]:https://www.nytimes.com/2018/02/17/business/the-wework-manif...
I don't see who would want to pay a few hundred bucks a month to work on a conference table surrounded by strangers.
Outside of smaller independent coworking spaces and WeWork's existing customer base there is IWG which does the same (albeit more sustainably): https://www.iwgplc.com
Not inherently a bad idea, though it's full of Silicon Valley optimism where one serendipity produces tons of money while a lot of other things just fail to gel -- but some people get paid regardless.
The employees on the other hand are all screwed: at Thernanos Holmes was the most screwed given the potential jail time, but at WeWork Neumann is walking away with over a billion, which is sort of like spitting on your employees.
WeWork (Neumann) preached about the 'We Generation' and 'elevating the world to a new consciousness,' but really his actions were traitorous against the people who made him. Thernanos never claimed the moral high ground, nor did the leader get off like a bandit.
Sports, TV, designer stuff... all heavily dependent on emotional attention. The attention economy is older than we realize.
Brand building is at the core of this, and we’ve seen this with of elite brand builders over and over.
Those who can do. Those who can’t are CEOs
Besides by that principle his employees didn’t deserve to get paid either, since by your reasoning his employees were only paid by the fruits of fraud. That doesn’t make sense to me.
https://en.wikipedia.org/wiki/Neoliberalism
The overarching goal of which might well summed up succinctly as: "Socialization of risk; privatization of gain."
That's definitely a glass half empty way to look at this;
On the other hand, with 20/20 hindsight, knowing it was selling space it rented for a $.80 for $1 of cost, knowing that this hype meant and in a low unemployment time means that these were effectively a jobs program, with above average market salaries, funded by Softbank (and the Saudis).
Also a jobs program for any companies that would have paid $1/$1 of office space but saved the discount.
And, from a being laid off perspective; while it's not fun to have a job end at someone else's discretion, if you worked at WeWork and the August headlines weren't a hint to get the resume ready, I'm not sure what else might; Effectively, 4+ months of notice combined with now actual severance.
The downstream effects of this are probably worse from a capitalism / worker piece; As WeWork reduces leasing office space, buildings or service companies will likely pocket the contract termination fees while reducing jobs/hours of contract staff -- who, unlike wework employees, were closer to minimum wage, may not even have benefits, and definitely won't get severance.
For it to be like theranos the offices wouldn't exist.
Economic disparity has reached a point where those at the top end literally have more money than they know what to do with and are increasingly spending it on stupider and stupider things out of some perceived need to do something.
[1] https://en.m.wikipedia.org/wiki/List_of_revolutions_and_rebe...
Re protection: it’s only good if those who are supposed to protect you are on your side.
I think this vastly overstates it. Versailles cost some significant fraction of France's GDP - possibly as much as 25% in some years. WeWork's $10B is a mere drop in the US' $20T GDP.
(Hopefully someone more knowledgable can chime in,) but I always thought VC was a mix of government, private, and institutional funds?
If you assume that the government needs $X to perform its function then when tax rates are cut for corporations and those wealthy enough to game the system, its everyone else whose taxes pay the shortfall. The reason there is so much money floating around the top end is specifically because they've figured out how to foist their tax burden onto others.
I use Uber all the time, as does everyone I know. Hell, I even drove for them for a while.
They provide a needed service and they are subsidizing that to get rid of competition like Lyft and to grow a huge user base. Then, it's likely they will raise prices and start making money.
But it is not a Ponzi scheme. Last I checked, a local taxi company that is still in business wants $30 to take me into town, which is 5 miles away. Uber is $7.
The cost of that $7 are the billions they lose every quarter. It's not sustainable. They're a public company now, so to come up with fresh cash, they have to issue bonds and pay interest on them. How will they repay it when they aren't generating fresh cash through profits? They can't rely on VCs opening their wallets whenever they needed money.
Cheap rides are to gain marketshare and customer acquisition. Not saying the strategy will be fruitful but it is a strategy.
They will raise prices eventually, they are in the "get a lot of regular users" phase still, growing that until they are ubiquitous.
Yes, they may face monopoly concerns then, but that is down the road.
What they will not face is competition from the $30 taxi companies, because unlike the taxi company they do not own any cars and the resultant costs of that.
Hiring doesn't happen overnight and it's much more difficult when you're doing it actively, as opposed to passively responding to the recruitment vultures. Especially when there's a time crunch, since severance doesn't last forever and hiring doesn't happen overnight.
I for one wouldn't mind being unemployed for 3 months.
A 3-month hole in your resume will be something you'd have to explain to your future employers for the rest of your life.
Huh? People take time off between jobs all the time.
Whenever there are unreasonable rules and you really do want to get around them, all you have to do is find a way to demonstrate your talent sufficiently that people will bend them for you.
How many of those Meetup employees are sitting on, or exercised, worthless WeWork options?
Talk about no lube...
Based on one friend of mine... he's patching up his resume while waiting for his manager to offer a severance package.
If you're affected by the WeWork layoffs and looking for a new role, fill this out:
https://docs.google.com/forms/d/e/1FAIpQLSdx4TOVN7AdgvyAZGbq...
If you're interested in recruiting ex-WeWork folks, you can look them up here:
https://docs.google.com/spreadsheets/d/14CAtBsn3ZTL59tNMVbew...
original source: https://news.ycombinator.com/item?id=21199247
Imagine the positive press you could drum up about yourself! All while keeping 1.5 billion dollars!
Though there are probably more news worth things you could do with 300m.
750M given away, still have a billion dollars and a bunch of goodwill.
If you buy into the goal being "shareholder value" then plainly Softbank failed. One could make the argument that WeWork's board did the things that they thought created the most value - but if you implode in on yourself, you clearly failed. Even if the self-dealing was not outright legal fraud, it was plainly not to anyone's benefit apart from Adam Newmann - which again is complicit behavior on the part of both boards. None of it is good business.
Imagine something nice that you own- like your car. Do you feel compelled to understand your car? Must you be an excellent driver to own that car, if you can afford it?
No. And while it's not exactly the same, the people generally look at the company as a machine that makes them money. They don't have to be good at anything to own that machine, and if they want, they can even share it with their drug addict fail-child.
Nothing else in the environment matters if it's not on the balance sheet (most notably pollution, social disruption, and general human suffering). Yvon Chouinard has a great perspective on this in his book "Let My People Go Surfing" where he meditates on the paradox of running a private business that fights itself by automatically giving away portions of its revenue to charity rather than paying out shareholders/reinvesting in growth. What do you do when you see every sale your company makes as a failure in the fight against consumption/towards sustainability?
If you are critical of the growth plan or business practices, you are fired from the board.
edit: actually we might be agreeing.