Yep. It's also not a new concept. Portland has a few "coworking" buildings that seem a lot more reasonable than the WeWork model. Besides, the guy was such a jerk.
Posts: 35428 | Location: West: North and South! | Registered: 20 April 2005
“It is one thing to build a successful company that creates a lot of value and take some of that value for yourself; Neumann created a company that destroyed value at a blistering pace and nonetheless extracted a billion dollars for himself. He lit $10 billion of SoftBank’s money on fire and then went back to them and demanded a 10% commission. What an absolute legend.”
From Matt Levine’s column today.
-------------------------------- If you think looting is bad wait until I tell you about civil forfeiture.
Posts: 33811 | Location: On the Hudson | Registered: 20 April 2005
Originally posted by pianojuggler: It was a poorly run real estate concern with a drinking problem pretending to be a tech unicorn with a drinking problem.
-------------------------------- Several people have eaten my cooking and survived.
Posts: 25850 | Location: Still living at 9000 feet in the High Rockies of Colorado | Registered: 20 April 2005
By Megan McArdle ... But that’s the magnificent insanity of all this: Neumann’s predation was apparently legal. And it’s not even clear it shouldn’t be. After all, everyone who gave Neumann money was a rich, experienced investor who knowingly and voluntarily ceded managerial control to a spaced-out co-working guru. I’m not saying Neumann’s behavior was admirable, except in a roguish anti-hero kind of way. But is it the government’s job to stop venture capitalists from climbing into a start-up’s metaphorical back seat, handing over the keys and letting chief executives take them for a ride? After all, professional venture capitalists are generally going to be better able to assess the viability of a business model than judges or, for that matter, senators.
It does seem outrageous that Neumann got so much while WeWork’s employees will get to keep their jobs only if they’re lucky. But it’s not like Neumann took that more than $1 billion payout from them. SoftBank gave him voting control over the company, which allowed him to essentially take WeWork hostage and demand a ransom. With a saner governance structure, Neumann couldn’t have done this, and SoftBank could have kept the $1 billion; either way, no court was going to make them gift it to the suffering staff.
So maybe the indictment needed here should be aimed at capitalism, which enabled such an absurd and outrageous outcome. But the premise of capitalism was never that individual capitalists always make wise choices, only that when those capitalists do something egregiously stupid, markets will eventually make them stop. That’s exactly what happened as soon as WeWork filed for an IPO.
Which might be the craziest thing of all about this story: The regulated public markets worked exactly as intended, protecting ordinary retail investors from the folly of the people who were supposed to know better. I wouldn’t exactly call that a happy ending, but we probably can’t expect a better one.
