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Listen, do not worry about Adam Neumann, who has just been ousted as CEO of The We Company; First, he remains the non-executive chairman of The We Company. In addition, entrepreneurs are like vampires: unless you put a stake in their heart, they will come back. (Just ask Travis Kalanick, who claims that his next act will be "bigger than Uber.") Neumann will be fine. The best question is whether we will be fine. Another good question is if SoftBank, We are the largest shareholder, it will be fine.
For those of you who are wondering what is going on, welcome! the short the version of events is that The We Company – the company formerly known as WeWork – was about to become public and put in place a large number of documents. These documents revealed, in the same place, the following: Neumann rented his own buildings from The We Company, Neumann obtained a loan from The We Company and that, to change his name, he was called The We Company. from WeWork, the company. paid for the naming rights of … Adam Neumann. It's kind of become an idea of The We Company, a noble language about "raising" one's "conscience" aside, it was just to give Adam Neumann money.
And that's before you even get to, uh, unusual behaviour. As reported by The Wall Street JournalNeumann's peccadilloes smoked grass in the United States on a private plane flight to Israel, which frightened the owner of the plane; dismissing seven per cent of his staff, then bringing in Darryl McDaniels from Run-DMC and drinking tequila with the other employees; and took senior employees to a summer camp where he decided to solve the problem of orphans and eliminate hunger in the world.
Adam Neumann, who has even given up majority control of the company, is about to get rid – his supervised shares, which once were worth 20 votes (against one vote by one people), now represent only three votes, The New York Times reports. It no longer has the power to return the entire chart. He also repaid the $ 5.9 million he invested in the brand change. And he came out as CEO. His wife and co-founder, Rebekah Paltrow Neumann (Gwyneth's first cousin), has also dropped his titles and roles, according to Bloomberg.
That's fine, I guess? Like, absolutely, congratulations to The We Company for trying to do the right thing, even late. But if Neumann's excesses were not evident for public markets until recently, We's private investors – including SoftBank and Benchmark Capital – were aware. It's literally their job! They have seats on the board in order to know these things. The part of what makes me confused is why they have been waiting so far to control Neumann.
Filling for an IPO seems like a huge job, and The We Company literally had to write the 10 pages of the Neumann disclosure to do it, you know? Absolutely no one raised their eyebrows and went hmm but the markets are going for this? Nobody? How much does the VC world think we are all stupid? Also, as elsewhere: how do JP Morgan and Goldman Sachs think we are stupid?
Listen, I know in the technology investment industry the situation has been bubbly since … actually for a while. (Do you remember Yo?) The cult of the founders, another key element of the technology sector, probably also helped some of this nonsense. SoftBank's "Big Chip Bully" investment strategy has certainly not helped. We are not a technology company. His very obviously a real estate company, but apparently just saying "technology" is a great way to make people behave as if you're selling software as a service and give you money as if you had them same benefits?
It seems that private investors have not made a harder purchase, unlike their own offers. The cult of founders and the devaluation of investors essentially mean, as BloombergMatt Levine wrote:
The company is not a joint venture between the founder (who provides the vision, the job and the name) and the investors (who provide the money); the company belongs to the founder, and the investors are hired suppliers of an input of relatively modest value (money), who can not expect an economic share to be reluctant, not to say a word in the management of the company .
Yes, well, we've all seen how it works here. Neumann's previous attempts in the business field included women's shoes with folding heels and baby clothes with kneepads with the really scary slogan: "It's not because they're telling you not that they do not hurt that they do not hurt. " and neither suggested, you know, good judgment. In a world that makes sense, investors may be cold on Neumann's leadership before try to pledge the company We on public markets.
We do not live in a world that makes sense. We do not live in a world that makes sense.
We are developing rapidly. It is also unprofitable. One of the main concerns of investors is that corporate governance is frankly hilarious. the literal economic model. For example, WeWork had sales of $ 1.8 billion last year. It sounds good until you realize that the company has lost $ 1.6 billion. In the first half of 2019, the company spent one dollar for every dollar generated. "Without new funding or reduced spending, the amount of money WeWork can spend freely could go from $ 1.9 billion to $ 400 million in March," he added. L & # 39; information wrote.
And so, the company is now planning to fire up to 5,000 employees, The New York Times and L & # 39; information say. We had employed approximately 12,500 people during its last regulatory filing. The genius money people who put us in this mess are discussing lay off 40% of the active population. In addition, they considered eliminating the company's education and housing activities and slowing the expansion of The We Company. It seems drastic.
Again, I want to be clear: WeWork's financial data is certainly not a surprise to investors such as SoftBank's founder, Masayoshi Son. They had access to them all the time! SoftBank has a seat on the board of directors! A former SoftBank board member also has a seat! In fact, SoftBank's overall agreement is to inject money into the companies until they dominate the market and the profits are cursed. In 2017, Son met Neumann and, according to New York Magazine, told him "to make WeWork" ten times bigger than your original plan "and to recognize that in a fight, being crazy is better than being smart, and that WeWork was not crazy enough.
I'm going to stop here so we can all imagine telling the guy who wants to be president of the world – the one who hides boxes of cannabis cereals in private planes that do not belong to him on his international travels – that It's not crazy enough. Keep on going. Close your eyes. Visualize it. Allow the power of Us to flow through you. Neumann is not it whole affair to have more sense now?
Things are not quite optimistic for SoftBank, even beyond the flop of We Company's IPO – several other company investments, such as Uber and Slack, underperformed the S & P 500 since their IPO, Fortune tell us. And the scandal around We now threatens SoftBank's attempt to create a second VisionFund, Bloomberg reported. It did not escape my attention only in the public statement on what we will call tactfully Leadership changes at WeWork that SoftBank was not mentioned once, despite reports that SoftBank led the coup against Neumann.
Anyway, Adam Neumann is no longer at home, and the remaining executives probably played Run-DMC's "It's tricky" in a very sad and nostalgic way before taking tequila shots. in his honour. Perhaps the "awakening of the consciousness of the world" should have waited for The We Company to elevate its business model. This task now falls to Artie Minson, Chief Financial Officer, and Sebastian Gunningham, Vice President, both of whom are Neumann's replacement.
I guess the co-CEOs are really going to bring energy from us.
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