SoftBank gives WeWork's ousted CEO an unbelievable golden parachute

Apparently what distinguishes their model from traditional office sub-letting is exactly the bit that makes them unprofitable. (They’re adding costs that don’t add value, it seems. In theory they have additional up-front costs on each office space that are paid off, and they’re eventually profitable given enough time, but it’s never actually happened.) Making things worse, the business consists of a bunch of office space leases they can’t get out of (or change the terms of), so the minute the economy has a downturn (any day now…), and commercial spaces get cheaper, they get totally hosed.

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Meanwhile, laid off workers are told there is no money for severance pay and you still can’t sell your devalued stock. Same as it ever was.

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one idea I heard floated was that Softbank needed to keep WeWork afloat till the IPO at which point they’ll immediately dump their shares at what they hope is a profit or a much smaller loss.

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Right, my point was if they can just excise the dumb internal rent seeking the original founder set up and run it in a sensible way this could be a profitable company.

It seems like it was originally setup like it was an old failing company bought out by some venture capital fund. The original CEO was only interesting in pumping up the stock price and sucking as much money out as possible before bailing out at the last second with an enormous golden parachute. And it went exactly according to plan.

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So that is Softbank trying to establish a value for the IPO? I think that they are a day late, WeWork is more likely to end up in bankruptcy than an IPO.

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Or if they get greedy and charge too high a rent, leaving spaces vacant. Or, as Softbank is about to put it, “WeWork 2.0”.

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WeWork just took over the top floor of my office building. I swear everyone going to the top floor now looks nervous.

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SoftBank’s buyout values the company at $8 billion, down from the $47 billion valuation it gave the company earlier this year.

Somewhere in SoftBank, a group of (presumably) intelligent men and women who have years of education and experience in the business world sat down in a room together and looked at a bunch of paper and said “yup, we agree that this office sharing business is worth 47 billion dollars.”

Then a bunch of other (presumably) intelligent men and women in a nicer room with more comfortable chairs and a bigger table looked at that decision and nodded approvingly. $47b. For a company whose business model is short-term office space leasing.

Just keep those facts in mind when the next bubble pops and a bunch of folks on the teevee are asking each other how on earth this could have happened?

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You lose money as a landlord when your business partner is an asshole.

source: my business partner was an asshole.

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Of course they won’t. The rich people learned an important lesson from the Great Depression, and even if the current generation isn’t consciously aware of it they still follow the playbook. Crashes are no longer bugs, but features of the economic system giving them money and buying opportunities from governments bending over backwards to keep the economic system afloat.

The go-go 80’s Reaganauts and 90’s dot commers were shiny too. Turns out it was just a coating of slime.

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WeWork existed long enough for some Russian mafia bosses and South American drug cartels to launder some money. Mission accomplished.

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No tangible product. No assets that aren’t rented or leased. Founders whose backgrounds are as solid as Jell-o. A “business plan” that’s 99% New Age crystal healing mumbo-jumbo and impenetrable corporate rah-rah jargon. Jesus tap dancing Christ, after the tech stock bubble in 2001, people are still stupid enough to fall for this garbage? Anyone who loses money by investing in WeWork deserves to be ruined.

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Maybe if they charge each Meetup attendee $1000 per Meetup?

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at least neumann didn’t contribute to nearly taking western civilization with him.

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@jlw

Proper credit for the image is part of a more elaborate Improve Everywhere demonstration and publicity stunt, but this may end up being reality considering the way things are going.

Since the terms are public, yeah, that’s how I read it. As diving catches go, it’s like this one:

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Meanwhile, WeWork will be moving ahead with laying off about another 4,000 workers. Now, sure, Neumann had to sell off his stock to SoftBank to head out the door, but it’s almost like he’s getting paid 4,000,000 dollars per laid off employee.

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What I don’t understand is why Softbank didn’t play hardball here.

Even if we pretend that there are non-insane reasons for doubling down on this questionable bet, Softbank was basically the only investor willing to keep WeWork supplied at the ridiculous valuation they were going for; and with WeWork’s burn rate they didn’t really have the luxury of taking their ball and going home if they didn’t like how this funding round was going.

When the counterparty is so weak; why be so generous?

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No one can say that he doesn’t value his employees.

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WeWork is the guy trying to sell you the Brooklyn Bridge. After you shoo him away, Softbank is the guy that comes along saying “I just bought the bridge from the first guy, and I can sell it to you at an even better price”. They are continuing the scam, and need to maintain that the first guy was on the up-and-up to justify it.

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