WeWork is an extreme case, but this kind of thing happens with tech companies all the time.

Why do you think people in Silicon Valley equate an "exit" with success? Because at that point the insiders are paid out. What else matters?

Look at companies like Uber, Coinbase or Snap. Even Tesla. Insiders have accumulated billions in compensation that dwarves the value generated by the companies themselves (as measured by earnings).

Correctly or, more likely, not - it seems the payoff was made in early 2021 at a time when valuations were soaring and there was a renewed push for an IPO. Neumann could have blocked that.

If I'm parsing a quick read of the data correctly, they backdoored an IPO in October 2021 at an $8bn valuation - and shares jumped 13% (so + $1Bn). A snapshot at that time could be used to argue they paid Neumann $x00 million to realise a multi-Billion dollar valuation and $1Bn+ growth in market cap.

Could they have forecast the rapid decline thereafter? Maybe some of those investors didn't care, as long as they got some return? If Neumann had dragged the battle out for another year, into 2022 when the markets went South, it probably would have cost WeWork a lot more on paper than whatever they paid him.

The public fund managers would be the ones guilty of not doing their due diligence.

He deserved every penny of it as far as I can see.

What’s the alternative? That his stock and voting rights went to SoftBank for free?

Weirdly I'm writing from a WeWork floor in central London that has about 3 people in a room sized for about 30. I've never seen it even half full, though I don't drop by very often.

Even the common areas have enough space to go sit in and have a meeting on demand.

The conference rooms are pretty busy however.

This is especially apparent on Tue/Wed/Thu, when previously cafes were recently less busy, due to these days commonly being in-office days for hybrid workers.

1. Free Money was the tail end of boomers investments pools 2. There will be a 12-year gap until the next investments pools increase from the new workers entering the working market. 3. Next investments pool increase from the new worker cohorts group will be smaller than the boomers.

All this indicates that the strategy of throw money at getting monopoly of market is sun setting and VCs will now have to have the slow growth strategy in their toolbox.

That also means potential founders now need to have that in their toolbox, things to look for:

1. Founders getting creative and partnering up with older experienced people in the domain they are creating their product in.

https://techcrunch.com/2022/08/16/how-a16zs-investment-into-...

1. https://fortune.com/2023/07/11/adam-neumann-new-company-flow...

- Adam Neumann's exit package $445 million

they were gullible as hell and were educated people that couldn't understand a single word of Wall Street Journal and the investment banking community's dunking and pile-ons about WeWork

they couldn't understand the tech community's dunking and pile-ons about WeWork

everyone was saying "why are investors buying shares of this company at prices as if its a tech company"

employees were like "my first tech company omg guys I love shares and family"

just collect a paycheck, its fine, but the hopium was flat out dumb. its one thing to be at a startup that never tells you its valuation or gives you a clear answer about the strike price of your options in a way for you to model an outcome, its another thing for the financials to be presented clear as day and put blinders on.

I might be wrong though?

I remember thinking it was like a bank (exposed to time risk) but with property...

I love how HN blames MBAs for everything.

This was greedy "tech people", nothing more nothing less. Maybe if a few of the characters in this saga had MBAs they would have been able to better judge the value of the business, as opposed to gut and vibes. After all, it was the MBAs who pulled the IPO, while the tech crew continued to push this garbage on the public.

Apparently not greedy nor MBA enough!

Now my business is worth €1.7 million. €3.3 million disappeared and I owe that businessman + interest.

If I sell lemonade for €3 a cup, but I'm only getting 50 customers a day with my expanded operations it will take me 60 YEARS just to pay down the principle.

Even if my product is expensive. Even if it seems like, for a lemonade stand, I'm doing well. Debt, the value of my assets, and mismanagement or corruption can vastly outweigh these factors.

It doesn't matter if its "public" or "private" it's the concentration that causes the negative effects.

Made more annoying by how difficult it is to explain that simple concept to the pseudo libertarian crowd that tends to congregate here.

Given the outright fraud prevalent in today’s tech landscape, it’s difficult to call WeWork a scam. Stupid, yes. But fraud; for that we lack evidence.

The problem for WeWork is that they chose to grow incredibly fast, positioned themselves a a very high-end premium type of service, and funded it all with lots of debt and VC (mostly SoftBank) investments, despite nearly every financial professional warning them that they were over-exposed and any small disruption to their earnings would cause huge troubles for the company.

Then COVID happened, interest rates started rising and the demand for expensive rented offices dried up. Now they have a ton of bills and not enough paying customers to cover them all.

In the past 6 months, WeWork split their buildings into 2 tiers. The All-Access pass at one tier is $149 and the other is $299. $299 also gets you access to both tiers of buildings.

I only go to the locations here in Portland and went from paying $299 a month to $149. They didn’t advertise this change to me, I had to find out from a friend who just signed up. I emailed the salesperson and asked why I wouldn’t make the change given my situation. He just replied defeatedly, “I’ll start the paperwork.”

The multiples were ridiculous for what basically is a internet connected REIT.

You mean SPACs that actually acquired a company? SPACs where the initial SPAC investors (pre-acquisition) made money? Those that have a solid company behind them, regardless of if investors made/lost money on the price movement since it announced? People who bought SPAC shares post-acquisition where the price went up?

(For pre/post acquisition investors, I assume you mean retail investors).