WeWork Accepts SoftBank Takeover Offer
reuters.com[edit: deleting comment]
Reuter is giving better picture of how this is being worked upon.
SoftBank has agreed to give him (Neumann) $500 million to refinance his personal loans, as well as pay him a $185 million consulting fee. SoftBank will additionally launch a tender offer for up to $3 billion to acquire WeWork shares from existing investors and employees.. Neumann’s ability to tender his shares will be capped at $970 million.
https://www.reuters.com/article/us-wework-softbank-group/wew...
OK, we've changed to that from https://www.nytimes.com/2019/10/22/business/dealbook/wework-.... Thanks.
Well, he did spend 12 billion dollars building a 8 billion dollar company, so surely, he deserves some reward for his efforts..?
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Would you please stop posting unsubstantive, ranty comments to HN? It isn't that you owe dysfunctional companies or dislikeable billionaires any better. But you owe this community better if you want to keep posting here.
There are lots of places on the internet to vent rage. There are not as many to gratify intellectual curiosity. These two things are incompatible. Here we want intellectual curiosity. If you wouldn't mind reviewing https://news.ycombinator.com/newsguidelines.html and taking that spirit to heart, we'd appreciate it.
It was a flip, lighthearted comment and I thought that was pretty self-evident. But fine, I’ve deleted it.
Flip and lighthearted often comes across as snarky and ragey on the internet. Objects in the mirror are closer than they appear.
The problem isn't just one comment, it's that you've been posting like this repeatedly. We need higher-quality, more thoughtful comments on HN. It's not enough to rage at someone who got more money than you think they deserve. That sort of thing damages the container by lowering signal/noise ratio and encouraging worse from others.
I don't mean to pick on you personally at all—it's a systemic problem and lots of users underestimate how much they do it by 10x or more. But you've been here a long time and are a good user and we need people in that category to represent the values of the site.
I strongly dislike WeWork, even may have issues with its fundamental business model, but it's difficult for me to understand how someone could label it as a failure. WeWork is not Theranos: they have a product offering that works well for a lot of businesses.
A single product offering doesn't make a sustainable business. Ultimately, for it to work for these businesses, they need to prove that they can sustain the business model without capital injections.
True! And why would you expect a billionaire to invest some money i to his own company when said billionaire is a serial entrepreneur!
Yea, and Elizabeth Holmes should've gotten richer for her "innovation" and "job creation"... /s
Let's not reward charlatans. Here's how we used to treat them:
https://en.wikipedia.org/wiki/Jeffrey_Skilling#Legal_proceed...
I'm not defending Adam N, but Jeffrey Skilling committed out right fraud, as far as i know, no one has accused that of happening at We Work
It depends on how you define "fraud". It was definitely run with a lax definition of truth.
Seemingly there's a lot of pump-n-dump types of situations going on that in this case SoftBank was complicit with Adam with.
This is not an isolated case, and I'm glad Wall St. called bullshit on WeWork, but likely only because even they couldn't place those bullshit IPO shares - not enough greater fool liquidity out there apparently... Sounds like a case for optimism :D
This is a feature of the current Silicon Valley model, not a bug.
It's a feature of extremely cheap capital and low interest rates, not just Silicon Valley
What’s more insane is the hundred mill he got after being forced out... such a shame
I know it's basically "go away quietly" money, but the idea of wanting him consulting on anything is kinda hilarious.
Damn what do I do to get go away money instead of jail time?
>Mr. Neumann also will receive a $185 million consulting fee
LOL, that's they type of "consulting fee" I need
Softbank ... now offically the Pets.com of 2019.
Personally, I enjoy watching the Saudi Vision Fund money go up in flames. SoftBank is deeply associated with the murderous Mohammad Bin Salman and gets the benefit of his brand.
Softbank was the Pets.com of 2000. Their market cap dropped from $200B to $2B. Masayoshi Son was "worth more" than Bill Gates for 3 days.
It's their playbook. Although they left the dotcom crash losing 99% of their value, they walked out with a stake in Alibaba now worth over $100B.
Planet money has a podcast episode on WeWork and Masayoshi: https://www.npr.org/2019/10/04/767379358/episode-943-unicorn...
Except 250 times bigger.
(Pets.com max market cap was $400 million. Softbank's Vision Fund is 100 billion.)
How much of that capital has actually been deployed yet?
What I don't understand is why Softbank didn't just buy the bonds and take control of the company during a restructuring. Would've been much cheaper, no need to pay Neumann anything.
Partly to probably save face on all of their other investments in the Vision Fund. They still have a number of other companies in their portfolio that they hope to one day take public, and compounding this disaster wouldn't be helpful to them
That would have given Neumann a few more months to run it into the ground.
I'm confused as to why this is so terrible.
He created a very valuable company, worth billions of dollars. It makes sense that he should capture some large fraction of that wealth.
Yes, some people will lose their jobs. But it's worth noting that those jobs wouldn't have existed in the first place if he hadn't started the company.
His mismanagement has cost him and Softbank billions, which is appropriate as well.
I say this completely aware of what a shitshow WeWork is.
edit: For context this was a response to https://news.ycombinator.com/item?id=21325431 but the mods detached it for... some reason?
>He created a very valuable company, worth billions of dollars
he created something that may very well lose its investors billions of dollars without ever turning a dime of profit. What the company is evaluated as on paper by people increasingly disconnected from reality isn't really meaningful.
I'm not really sure what the market function or social function is of rewarding people with billions of dollars who create money-losing machines. If anything it's an indication that some part of the system is increasingly broken.
Perhaps I'm just not seeing any real victims here.
Softbank and the Saudis wanted to roll the dice on some overpriced unicorns. They went into the deal with eyes open. And it looks like they're taking a massive haircut. Play stupid games...
I do feel sorry for some WeWork employees that will lose their jobs. But, again, many of them joined hoping to get some upside when the company went public -- which was a gamble that didn't pan out. Thankfully it's a good time to be on the job market.
Dude, come on. They have 15,000 employees. Most of them are going to lose their jobs. Those are the victims.
I agree I don’t weep for Soft Bank or the Saudis, but plenty of people took jobs not just on the promise of IPO riches. And laying off a company of WeWork and its subsidiaries size is more than just a handful of people entering the job market — a market that isn’t as good in every city, which is something to consider since We has quite a distributed workforce.
Edited: it is 15,000 people — not 12. And most of them will end up losing their jobs. That’s a lot of people.
>which is something to consider since We has quite a distributed workforce
Wouldn't a distributed workforce mean a less impactful layoff for the employees? Much better to be part of a N,000 person layoff but one of only 200 people in your town then entering a local job market with all N,000 people at once.
not to mention all the people that will be affected when they inevitably default on their real estate obligations. Contractors, security, cleaning crew, small lenders... a lot of people will get hurt through no fault of their own. this kind of stuff has consequences.
Employees who have choices on where to work.
Landlords who have choices about working with startups or not. Generally, industry partners on the fence about investing time in startups and choosing their business partners.
Competitors damaged by Son's misinvestment giving WeWork billions to light on fire.
Investors who didn't want to have to demand information rights and crawl though financials looking for rampant self dealing.
Founders like me who resent fraudsters taking the shine off our industry.
> But, again, many of them joined hoping to get some upside when the company went public -- which was a gamble that didn't pan out.
I'm sure many joined just because they wanted a job. We can't blame some random executive assistant for not knowing the ins and outs of the company's financial situation or the risk that they were taking. Their layoff will hurt.
"investors billions of dollars without ever turning a dime of profit"
Too fcking bad... You do realize that this thing almost went public and as such the lost would have shifted to the shareholders who would have bought the stock while the original investors cashed out. You think those people would have had a conscience at that point. I think not. Fck all the original investors who most likely knew this company was a joke and fraud from the beginning but were hoping the IPO happened so they could walk away with more money.
Didn't he just fool rich private investors?
I'm not shedding a tear if Softbank throws their money away.
He didn’t create a very valuable company. It’s deeply in the red (the opposite of what you are claiming).
Those people could’ve had better career paths without having to bail from WeWork. Other jobs did exist due to record unemployment numbers.
That is why it is terrible. It’s a waste of an opportunity given to a guy who is a human shaped locust.
> He didn’t create a very valuable company. It’s deeply in the red (the opposite of what you are claiming).
Unfortunately, in this day and time, sometimes company's value has very little to do with profit or even revenue.
It does until it doesn't. Capital injections don't last forever. Eventually profits and cash flow matter.
Clearly someone thinks it’s valuable given that they are paying for it.
It's not as simple as "these jobs wouldn't have existed anyway!"
People plan their lives around their projected income, including salary/benefits/equity. With WeWork going down, people aren't just losing their current income, but their future income, and the opportunity cost from working anywhere else instead of WeWork.
The man acted borderline fraudulently to investors, and the market responded once it was in the open. He was running a pump and dump scheme while skimming off the top, and now they're paying him 1.7 billion in severance while people are being laid off with worthless options, lost salary, and a black mark on their resume.
And (IMO) more than borderline fraudulently to employees.
As a startup founder, shit like this poisons the environment both for investment and for hiring employees. When people make choices about where to work, stuff like Theranos and WeWork is distinctly not helpful. It gives our industry a patina of fraud.
I don't know the details of when the news broke, but I'd be interested to know how many people at We knew that Neumann owned some of the properties they were renting and not WeWork. Because if I knew that self-dealing was going on, I definitely wouldn't work there. If I found out, I'd try and leave as soon as possible.
I can't imagine what it feels like to be at a promising startup with options and people are floating a 47-60 billion valuation at you, only to have a bunch of shady business come to light and then have that value evaporate before it was ever realized. Even if you didn't act on it, and pretended it was a lottery ticket - the emotional toll must be excruciating. I really empathize with the boots on the ground at some of these companies, they're working hard just like the rest of us.
Did he though? The IPO revealed it to be essentially a scam that failed to fool the public.
We work took more than $12 billion in funding and is now worth around $8 billion. I could create a more valuable company by taking the $12 billion in investment and putting it into a vault. Then I'd still have ~$4 billion left over for lavish parties celebrating my success.
Of the $12 billion in funding he personally took $2 billion of it.
If it’s holding real assets, the value is in the assets. Overpaying someone that cobbled them together is pretty ridiculous. I expect investor lawsuits.
What real value did he create? he created a smoke and mirrors show that seemed to imply value, which quickly evaporated once an S-1 was produced, opening up the valuation to some external scrutiny.
Maybe the people that did the work should capture some of that wealth?
He created an 8 billion dollar company from 12 billion dollars. A feat many are capable of.
So go do it if it's so easy.
The hard part is convincing someone to give you 12 billion dollars to set on fire. That part is extremely difficult and a skill which Neumann had in spades and which unfortunately I lack.
If you owe the bank $100, that's your problem. If you owe the (soft)bank $100 million, that's the bank's problem.
In the latter case you also kind of own the bank.