‘We were sold off’: WeWork’s staff face uncertain future as company collapses(theguardian.com)
theguardian.com
‘We were sold off’: WeWork’s staff face uncertain future as company collapses
https://www.theguardian.com/business/2019/nov/22/we-were-sold-off-weworks-support-staff-face-uncertain-future-as-company-collapses
94 comments
MUFG likely to turn down SoftBank loan over WeWork[1]
SoftBank Seeks $2.8 Billion in Financing From Japan Banks[2]
SoftBank wants to reduce WeWork rescue package[3]
SoftBank Execs Discuss Trimming WeWork Offer and Adam Neumann Payout [4]
[1] https://www.ft.com/content/d69e84c0-0c1b-11ea-bb52-34c8d9dc6...
[2] https://www.bloomberg.com/news/articles/2019-11-21/softbank-...
[3] https://therealdeal.com/2019/11/22/softbank-wants-to-reduce-...
[4] https://www.bloomberg.com/news/articles/2019-11-21/softbank-...
SoftBank Seeks $2.8 Billion in Financing From Japan Banks[2]
SoftBank wants to reduce WeWork rescue package[3]
SoftBank Execs Discuss Trimming WeWork Offer and Adam Neumann Payout [4]
[1] https://www.ft.com/content/d69e84c0-0c1b-11ea-bb52-34c8d9dc6...
[2] https://www.bloomberg.com/news/articles/2019-11-21/softbank-...
[3] https://therealdeal.com/2019/11/22/softbank-wants-to-reduce-...
[4] https://www.bloomberg.com/news/articles/2019-11-21/softbank-...
Ah, thank you. So it seems that the $9.5b is a total figure, and they're just short the $2.8B they need from MUFJ.
[deleted]
What dominoes might Softbank topple?
[deleted]
I'd love to hear from WeWork customers about recent events. Are customers watching this thinking "oh man, I don't know if my workplace will be the same in 6 months, better start looking for alternatives?" Is the atmosphere in their offices any different now?
I might be revealing too much here, but I work for a company that leases space from WeWork, so I go to a WeWork every day and in the evenings I read about its eventual demise. (Might explain why I'm so morbidly curious about this company)
The running joke in my dept is they're going to start cutting back on amenities (watered down mouthwash, less cut up fruit in the fruitwater, etc.) and we won't see as many maintenance people as we did six months ago.
The private phone booths are still boarded up because of the formaldehyde issue (our booths weren't "affected" but they're still closed off). There was a meeting room with a couch that had bedbugs in it, so that was closed off for a couple weeks. We refuse to use that meeting room now.
WeWork has just had its problem after problem in my time working here. We're not exactly scared (because we're a larger company and could probably just telecommute while our office is moved to another building). But we have noticed that the WeWork associates have become less chipper over time.
The running joke in my dept is they're going to start cutting back on amenities (watered down mouthwash, less cut up fruit in the fruitwater, etc.) and we won't see as many maintenance people as we did six months ago.
The private phone booths are still boarded up because of the formaldehyde issue (our booths weren't "affected" but they're still closed off). There was a meeting room with a couch that had bedbugs in it, so that was closed off for a couple weeks. We refuse to use that meeting room now.
WeWork has just had its problem after problem in my time working here. We're not exactly scared (because we're a larger company and could probably just telecommute while our office is moved to another building). But we have noticed that the WeWork associates have become less chipper over time.
Yep. I rent a private office, and the lease is coming up next month. I'm not planning to renew.
really strange person. reveling for the downfall of a company that would yield negative effects on you and your coworkers.
while I find this story interesting to see how things play out, what lessons learned, etc, I don't revel at all about what is happening even though it has no direct impact on me. I feel bad for those 2.5k+ employees that went from 'our company is going to go public and this is going to pay off nicely to me' to "I got nothing and now I'm being laid off". Its sad, sorry that happened to them.
The wework debacle is already having negative ramifications in tech where companies are over correcting from earnings growth and investment to higher bottom lines. This will also lead to lower pay and opportunity for many tech workers. I'm not reveling.
while I find this story interesting to see how things play out, what lessons learned, etc, I don't revel at all about what is happening even though it has no direct impact on me. I feel bad for those 2.5k+ employees that went from 'our company is going to go public and this is going to pay off nicely to me' to "I got nothing and now I'm being laid off". Its sad, sorry that happened to them.
The wework debacle is already having negative ramifications in tech where companies are over correcting from earnings growth and investment to higher bottom lines. This will also lead to lower pay and opportunity for many tech workers. I'm not reveling.
Yeah, I'm definitely a strange person but I want to say that me and my coworkers are largely insulated from the negative effects of the WeWork debacle. We always knew working in a WeWork was a temporary thing, maybe a max of 2 years in this space before we have our own office space to work from.
I don't revel about the 2.5k employees that lose their jobs at all. (Not that I befriended many of the WeWork employees, but they're very nice people and I would hate to be in their situation, especially this close to the holidays.)
I revel about the irrational exuberance from the upper echelons of management/banking. I revel that Neuman, Softbank, JPM, Goldman Sachs, etc. are now getting called out for trying to dress up a pig in lipstick and sell it to the public at 10x its current (perhaps, "real"?) valuation.
Your last paragraph though - it's hard to make the determination that "WeWork's meltdown is leading to corrections in earnings growth/investment from tech companies." Not necessarily true imo, earnings growth was bound to correct sometime soon, especially with economic data pointing that demand is starting to slow (which is why central banks across the world are easing rates).
I don't revel about the 2.5k employees that lose their jobs at all. (Not that I befriended many of the WeWork employees, but they're very nice people and I would hate to be in their situation, especially this close to the holidays.)
I revel about the irrational exuberance from the upper echelons of management/banking. I revel that Neuman, Softbank, JPM, Goldman Sachs, etc. are now getting called out for trying to dress up a pig in lipstick and sell it to the public at 10x its current (perhaps, "real"?) valuation.
Your last paragraph though - it's hard to make the determination that "WeWork's meltdown is leading to corrections in earnings growth/investment from tech companies." Not necessarily true imo, earnings growth was bound to correct sometime soon, especially with economic data pointing that demand is starting to slow (which is why central banks across the world are easing rates).
> I revel about the irrational exuberance from the upper echelons of management/banking. I revel that Neuman, Softbank, JPM, Goldman Sachs, etc. are now getting called out for trying to dress up a pig in lipstick and sell it to the public at 10x its current (perhaps, "real"?) valuation.
Couldn't agree with this any more. If anything, the best thing to come out of the WeWork debacle is more founders will be aware banks pump the stocks up so the bankers get rich when a firm IPOs but then generally deflates after the hype dies down and before tech workers can benefit.
Couldn't agree with this any more. If anything, the best thing to come out of the WeWork debacle is more founders will be aware banks pump the stocks up so the bankers get rich when a firm IPOs but then generally deflates after the hype dies down and before tech workers can benefit.
[deleted]
WeWork has tons of competitors in the office space rental business, including the short-term office space rental business. WeWork's customers might even experience a step up.
I work out of one. Not much has changed, but the coffee mugs are half the size (seriously) and what was regularly fruit water is now usually plain iced water. Not really important in the grand scheme of things. We still get billed monthly, and have access to our workspace.
Guardian sometimes isn't the best. Their editorial philosophy in this case wont allow them to on report good news even when it is obvious. WeWork must downscale or else they are over, so these surplus staffers would ordinarily have been let go. This is normally not avoidable as there is no option to do anything else when a company must rapidly downscale. Now they get to keep their job. I think WeWork deserves a lot of credit for this. They complain their pay is bad? It is a normal salary paid for the kind of job (cleaning) that usually has to rely on the black market or extremely temporary gigs. Although the situation is pretty bad, they have managed it well.
> It is a normal salary paid for the kind of job (cleaning) that usually has to rely on the black market or extremely temporary gigs.
Many cleaning workers are actually unionized, the SEIU is a large union of service workers with contracts for hospitals, large office complexes, prisons, schools, etc.
Many cleaning workers are actually unionized, the SEIU is a large union of service workers with contracts for hospitals, large office complexes, prisons, schools, etc.
> WeWork must downscale or else they are over
At this point, I think WeWork is over no matter what. The only question is how long the death throes will last.
At this point, I think WeWork is over no matter what. The only question is how long the death throes will last.
SoftBank and their investors deserve this. SoftBank wanted to take wework and jam it on the stock market, then pull their money out. They knew this company was trash, they are no better than Adam Neumann. Congrats to Adam for exposing and exploiting softbanks attempts to exploit the USA stock market. In the end this will stop future cases of investors trying to jam garbage companies into the public markets, essentially stealing money from retail investors who don’t know better
There are no good guys here.
Neumann, by taking money from SoftBank, was completely complicit. He knew his financials, he knew the company was a flaming dumpster, he knew he had no plan to fix it, other than buying a wave pool company and assigning his family to high-level positions.
You really think if the company had gone public, Neumann would have what, stepped up and said "see, this is why we need to add more investor protections"?
Neumann, by taking money from SoftBank, was completely complicit. He knew his financials, he knew the company was a flaming dumpster, he knew he had no plan to fix it, other than buying a wave pool company and assigning his family to high-level positions.
You really think if the company had gone public, Neumann would have what, stepped up and said "see, this is why we need to add more investor protections"?
He didn't need plans to fix it, Softbank got all the information they needed for their due diligence and invested.
There are plenty of private companies with outside capital that are not structured for a stock market debut. WeWork was one of them and the investors tried to list it on the stock markets anyway.
Neumann played the best cards available to him and cemented his consolidated ownership, with a different share class becoming a mere conduit for payment, and voter control allowing for unilateral signing off on contracts to himself and his other entities.
There are plenty of private companies with outside capital that are not structured for a stock market debut. WeWork was one of them and the investors tried to list it on the stock markets anyway.
Neumann played the best cards available to him and cemented his consolidated ownership, with a different share class becoming a mere conduit for payment, and voter control allowing for unilateral signing off on contracts to himself and his other entities.
There are no good guys among the main players, but the people who are not the main players mostly benefited. Workers got higher wages due to the infusion of cash into the demand side of the labor market from Softbank and KSA. The knowledge worker industry benefited from increased competition in the office space market. A few property owners benefited from selling their properties to a conman with virtually unlimited buying power. Now lawyers are benefiting and probably the personal security industry as well.
Sure, the people who chose to work for WeWork now have worthless equity, but that's always a risk when working for a startup, and they knew that going in.
Sure, the people who chose to work for WeWork now have worthless equity, but that's always a risk when working for a startup, and they knew that going in.
> assigning his family to high-level positions
imo this is always one of the first tells that company owners aren't good to be in business with. I've never had a good experience with family-run businesses in my entire career- have learned to completely avoid them at this point.
imo this is always one of the first tells that company owners aren't good to be in business with. I've never had a good experience with family-run businesses in my entire career- have learned to completely avoid them at this point.
The easiest person to con is a con.
WeWork still has a ton of customers and rapid growth. I think their eyes were bigger than their mouths when it came to expanding offerings into unrelated nonsense and they were being extremely undisciplined in their spending, but the business is still extremely viable. The new leadership are taking a giant ax to all the excess to get it over with and then can rebuild from what is still a very strong base. It will take at least a year to recover, but I think they'll still hit profitability in the long run.
They have customers who cost them money on an incremental basis. More customers, less money. They don't deserve to be valued any differently than like Regus, approximately 8X their annual profits or 1X their annual revenue. In this space, net margins are approximately 15%.
That values WeWork somewhere between -15.2B and 1.8B based on their 2018 performance data.
Measured against their competitors, they're still about 5X over-valued.
That values WeWork somewhere between -15.2B and 1.8B based on their 2018 performance data.
Measured against their competitors, they're still about 5X over-valued.
They have significantly higher brand value than Regus, which does merit a premium though probably not 5x.
Brand value, maybe (even after this?) but they definitely haven't proven that they can turn that brand equity into higher margins. I believe if two offices were priced the same, someone might pick WeWork, but would people pay WeWork more than Regus for a comparable office? I'd imagine not much.
If I could chime in here -
WeWork was way overvalued because they sold themselves to the public as a "tech company" that dabbled in real estate, not a real estate company that dabbled in tech. I mean, they had a lot of the same characteristics (such as crazy revenue growth while operating at a loss), but let's be clear: WeWork isn't a tech company, they're a real estate company in "tech clothes."
To circle this back to the parent comment - I still don't think they'll be profitable after drastically cutting spending. They might be able to keep the company afloat for a little bit. But their spending cuts target parts of the business that aren't under their "core competency" which is leasing office space on a short-term basis. So for example, they ax'd plans for WeLive or WeSchool (or whatever their kindergarten plans were called) as part of their turnaround plan.
WeWork has something like $17B in long-term lease liabilities across major cities in the US (and UK, I believe). They signed these long-term (10+ years I believe) leases with hopes of turning around and leasing them back to freelancers/businesses on a short-term (3-6mo) basis. If the economy slows down and demand for this variable-term space dries up, WeWork will still be on the hook for those $17B leases.
WeWork was way overvalued because they sold themselves to the public as a "tech company" that dabbled in real estate, not a real estate company that dabbled in tech. I mean, they had a lot of the same characteristics (such as crazy revenue growth while operating at a loss), but let's be clear: WeWork isn't a tech company, they're a real estate company in "tech clothes."
To circle this back to the parent comment - I still don't think they'll be profitable after drastically cutting spending. They might be able to keep the company afloat for a little bit. But their spending cuts target parts of the business that aren't under their "core competency" which is leasing office space on a short-term basis. So for example, they ax'd plans for WeLive or WeSchool (or whatever their kindergarten plans were called) as part of their turnaround plan.
WeWork has something like $17B in long-term lease liabilities across major cities in the US (and UK, I believe). They signed these long-term (10+ years I believe) leases with hopes of turning around and leasing them back to freelancers/businesses on a short-term (3-6mo) basis. If the economy slows down and demand for this variable-term space dries up, WeWork will still be on the hook for those $17B leases.
People would certainly pay a premium for WeWork offices, though it is unclear how much of WeWork’s superior offering could be retained while bringing costs under control.
I can sell dollars for $0.90 each and have a tremendous amount of customers and growth.
Ah yes. The Moviepass model.
My first and last penny stock. Never again, because $HMNY.
>In the end this will stop future cases of investors trying to jam garbage companies into the public markets, essentially stealing money from retail investors who don’t know better
History doesn't repeat itself, but it rhymes. I wish I could have hope that this wouldn't happen again in the future (banks selling an overvalued business to the public markets via IPO) But really, this has happened before and it will happen again. Human irrationality knows no bounds.
History doesn't repeat itself, but it rhymes. I wish I could have hope that this wouldn't happen again in the future (banks selling an overvalued business to the public markets via IPO) But really, this has happened before and it will happen again. Human irrationality knows no bounds.
Really I would expect it to reoccur just from neural network forgetting over time alone - let alone human irrationalities.
I suspect the only way that would maybe go away would be both greater transparency requirements and the ability for the market to parse all of the data in an informed way. So in other words technically possible but probably not going to happen.
I suspect the only way that would maybe go away would be both greater transparency requirements and the ability for the market to parse all of the data in an informed way. So in other words technically possible but probably not going to happen.
You're right about "technically possible but probably not gonna happen." The part you're missing is - although the market might have access (and be able to) parse data in an "informed" way, that doesn't mean all market participants will react to that data in the same, rational manner.
> In the end this will stop future cases of investors trying to jam garbage companies into the public markets, essentially stealing money from retail investors who don’t know better
Until the next bubble, at least.
Until the next bubble, at least.
SoftBank and their investors deserve this.
And yet - as bad as their "losses" were - precisely none of those people are actually suffer (in actual personal, physical terms) anywhere near as badly as the laid off / outsourced service workers referred to in the article.
And yet - as bad as their "losses" were - precisely none of those people are actually suffer (in actual personal, physical terms) anywhere near as badly as the laid off / outsourced service workers referred to in the article.
[deleted]
For, like, 3 years.
Related from yesterday: https://news.ycombinator.com/item?id=21595493
Anyone who stayed after the IPO fell through is an idiot. What did you expect to happen? The company is failing so apply elsewhere already
The guy is getting $1.7bn.
That is gluttonous. To put that into perspective, if you took even just $100m and divided it among the 1,000 workers laid off each one would get $100,000.
Yet they get nothing. And this one man gets $1.7bn from a company that isn't even healthy enough to survive while nickle and diming janitors who get paid $24k/year.
This is what late stage capitalism looks like.
That is gluttonous. To put that into perspective, if you took even just $100m and divided it among the 1,000 workers laid off each one would get $100,000.
Yet they get nothing. And this one man gets $1.7bn from a company that isn't even healthy enough to survive while nickle and diming janitors who get paid $24k/year.
This is what late stage capitalism looks like.
in Italy, I believe it used to be a crime to mismanage a company such that people lost their jobs. Anyway, such large job losses would trigger a criminal probe.
In Italy, I believe it used to be a crime to mismanage a company such that people lost their jobs.
On an unrelated note, Italy has never had a tech startup worth a billion dollars.
On an unrelated note, Italy has never had a tech startup worth a billion dollars.
Three tech firms make the list of Italy's top-ten export companies:
- Telecom Italia (telecommunications services): $83.6 billion, up 12.5%
- Atlantia (infrastructure, mobility networks): $48.7 billion, up 17.3%
- Leonardo (aerospace, defense): $30.1 billion, up 12.4%
http://www.worldstopexports.com/italys-top-10-major-export-c...
- Telecom Italia (telecommunications services): $83.6 billion, up 12.5%
- Atlantia (infrastructure, mobility networks): $48.7 billion, up 17.3%
- Leonardo (aerospace, defense): $30.1 billion, up 12.4%
http://www.worldstopexports.com/italys-top-10-major-export-c...
This isn't a tech startup.
You're right. But man, they tried really hard to sell it as a tech startup. From their S-1 filing (emphasis mine):
"We pioneered a “space-as-a-service” membership model that offers the benefits of a collaborative culture, the flexibility to scale workspace up and down as needed and the power of a worldwide community, all for a lower cost. Through iterative product development at scale and significant investment in technology infrastructure, we have demonstrated that we can build better solutions for less money. We are changing the way people work globally and, in the process, we have disrupted the largest asset class in the world—real estate."
Edit: I just noticed that it continues with a MUCH better statement on the next page:
"Technology is at the foundation of our global platform. Our purpose-built technology and operational expertise has allowed us to scale our core WeWork space-as-a-service offering quickly, while improving the quality of our solutions and decreasing the cost to find, build, fill and run our spaces. We have approximately 1,000 engineers, product designers and machine learning scientists that are dedicated to building, integrating and automating the complex systems we use to operate our business. As a result, we are able to deliver a premium experience to our members at a lower price relative to traditional alternatives."
So uhh, honest question. What were they trying to build with those 1,000 engineers/designers/ML scientists? The company literally leases (not buys) office space to then lease out to their customers. I never understood why this business model needs "significant investment into Tech infrastructure"
"We pioneered a “space-as-a-service” membership model that offers the benefits of a collaborative culture, the flexibility to scale workspace up and down as needed and the power of a worldwide community, all for a lower cost. Through iterative product development at scale and significant investment in technology infrastructure, we have demonstrated that we can build better solutions for less money. We are changing the way people work globally and, in the process, we have disrupted the largest asset class in the world—real estate."
Edit: I just noticed that it continues with a MUCH better statement on the next page:
"Technology is at the foundation of our global platform. Our purpose-built technology and operational expertise has allowed us to scale our core WeWork space-as-a-service offering quickly, while improving the quality of our solutions and decreasing the cost to find, build, fill and run our spaces. We have approximately 1,000 engineers, product designers and machine learning scientists that are dedicated to building, integrating and automating the complex systems we use to operate our business. As a result, we are able to deliver a premium experience to our members at a lower price relative to traditional alternatives."
So uhh, honest question. What were they trying to build with those 1,000 engineers/designers/ML scientists? The company literally leases (not buys) office space to then lease out to their customers. I never understood why this business model needs "significant investment into Tech infrastructure"
Olivetti
Wonder how that played out IRL
if the company made a bad hire and kept that person around does that count as mis-managin? What if they had to fire them to save the company?
if the company made a bad hire and kept that person around does that count as mis-managin? What if they had to fire them to save the company?
When doing business is a prison sentence, don't be surprised if the ones willing to do business are those who belong in prison.
I think there's a large difference between "doing business" and "mismanaging".
In jurisdictions where mismanagement is a thing, it means something other than people losing their jobs. For example, the Dutch High Court has dismissed all cases for mismanagement so far. It has established that the standard is that 'no reasonably thinking decision maker would have made the same decision under the circumstances'.
I am a Capitalist but I approve this message. There has to be a sense of morality somewhere even when running a company. I truly believe that a company can make great profits while taking care of its people. I also believe that it is ok for the initial risk takers like founders/CEO to make a hell lot more money BUT not by destroying other people's lives.
I don't think any private company should have any interference by the Govt. BUT every founder/owner/CEO should think about their people first. Is this even possible ? I really hope so. "Moral Capitalism" anyone ?
Disclaimer: I run a small private company of 12 of us and I struggle with this everyday.
I don't think any private company should have any interference by the Govt. BUT every founder/owner/CEO should think about their people first. Is this even possible ? I really hope so. "Moral Capitalism" anyone ?
Disclaimer: I run a small private company of 12 of us and I struggle with this everyday.
The problem is that capitalism in a vacuum has no room for morality. Your morals are just opportunities for someone with fewer scruples to swoop in and underbid you. You want to keep jobs in your company's home town, someone else just has the jobs done for slave wages overseas and puts you out of business. You take care to dispose of hazardous waste responsibly, someone else just dumps it into the nearest river and puts you out of business. You make sure your marketing materials don't make claims you can't back up, someone else just makes the flashiest claims they can think of and puts you out of business. Doing the right thing costs more than doing the wrong thing; your morals are someone else's opportunity.
It's not a problem that can be solved by individual business owners, no matter how moral they are, because at its root it's a collective action problem (https://en.wikipedia.org/wiki/Collective_action_problem). The more business owners sign on to a platform of "moral capitalism," the bigger the opportunity created for the first business owner willing to act immorally, and thus the greater the temptation there will be to do so. Eventually the temptation becomes great enough that someone breaks ranks, and then everyone else has to follow or risk being put out of business. The race always ends in a sprint towards the bottom.
This is why we have regulation; the only way to cut this knot is for some external entity to force everybody to play by the same rules. It's the only way to prevent honest businesses from getting eaten alive by the dishonest ones. It's not a perfect system, but it's the best one anyone's come up with so far.
It's not a problem that can be solved by individual business owners, no matter how moral they are, because at its root it's a collective action problem (https://en.wikipedia.org/wiki/Collective_action_problem). The more business owners sign on to a platform of "moral capitalism," the bigger the opportunity created for the first business owner willing to act immorally, and thus the greater the temptation there will be to do so. Eventually the temptation becomes great enough that someone breaks ranks, and then everyone else has to follow or risk being put out of business. The race always ends in a sprint towards the bottom.
This is why we have regulation; the only way to cut this knot is for some external entity to force everybody to play by the same rules. It's the only way to prevent honest businesses from getting eaten alive by the dishonest ones. It's not a perfect system, but it's the best one anyone's come up with so far.
> I don't think any private company should have any interference by the Govt. BUT every founder/owner/CEO should think about their people first.
This amounts to an ideological viewpoint, however it doesn't map to reality. If the government doesn't step in, the worst of the worst will sift up to the top, and the most complacent will sift to the bottom. It's how things naturally fall into place.
Exploitative people in an unchecked market have an unmatched advantage. If you believe in real market competition, then pure capitalism cannot work because it stifles competition by creating unfair disadvantages for CEOs who think about their people, discouraging them from acting benevolently.
The problem is that you see the government as this authoritarian beast who must be kept in a cage for the safety of its people, when in reality a healthy government is its people. Government regulations in a free market are a result of the consumers who participate in the market wanting protection.
In the end, you either favor consumer protection or corporate protection. Which seems more moral to you?
This amounts to an ideological viewpoint, however it doesn't map to reality. If the government doesn't step in, the worst of the worst will sift up to the top, and the most complacent will sift to the bottom. It's how things naturally fall into place.
Exploitative people in an unchecked market have an unmatched advantage. If you believe in real market competition, then pure capitalism cannot work because it stifles competition by creating unfair disadvantages for CEOs who think about their people, discouraging them from acting benevolently.
The problem is that you see the government as this authoritarian beast who must be kept in a cage for the safety of its people, when in reality a healthy government is its people. Government regulations in a free market are a result of the consumers who participate in the market wanting protection.
In the end, you either favor consumer protection or corporate protection. Which seems more moral to you?
> consumer protection or corporate protection
Pick one. Couldn't have said it better. This is what people ALWAYS have to remember. And as a reminder, the corporation will always take care of the corporation.
Pick one. Couldn't have said it better. This is what people ALWAYS have to remember. And as a reminder, the corporation will always take care of the corporation.
I think it depends on the size and nature of the corporation. For a small bootstrapped private company (I run one), I always think about taking care of employees along with making a profit. For us, customers come second because I have the freedom to decide that (no outside board/investors to answer to). So I would say it depends. Corporation is not just about taking care of the corporation. There can be a middle ground even though I agree that a corporation is not a charity and the goal is obviously to make money. I personally don't believe in "Profits over people" even though I have the freedom to believe and act accordingly. perhaps once you get VC funding and the hockey stick growth pressure, all that goes outta the window ?
I thought capitalism was all about rational self-interest. If there’s no government interference, what incentive is there to behave ethically? As far as I can tell the answer is “none” and that’s what we see playing out over and over again.
Ethics are what you do when there isn't an incentive. If you're forced to do it, it's not ethics.
One theory of ethics holds that it is in your long-term interest to behave ethically, even if you can't know for certain what the constraints are. They encode a heuristic wisdom for survival, and that's why we have ethics at all. But many will fail to follow that, and if they are punished in the end, it's only after many others suffer -- and are not made whole by your punishment.
One theory of ethics holds that it is in your long-term interest to behave ethically, even if you can't know for certain what the constraints are. They encode a heuristic wisdom for survival, and that's why we have ethics at all. But many will fail to follow that, and if they are punished in the end, it's only after many others suffer -- and are not made whole by your punishment.
I'm a socialist but I applaud anyone willing to stand up against amoral practices like this. Your position closely resembles Warren's opinions on this matter.
Completely agree. I don't know why you are getting downvoted, capitalism in its present form is clearly broken. The payout sum here is ludicrous, it is certainly not justified in terms of value created for society. This money has to come from somewhere and ultimately the common folk will be paying the price.
Obviously someone thought it was valuable
Who are we to judge what price you put on things and what you are willing to pay?
no one is being forced to do anything here
Who are we to judge what price you put on things and what you are willing to pay?
no one is being forced to do anything here
I don't think "no one is being forced to do anything here" is justification for the unprecedented inequality and the existence of billionaires.
Neumann built (or faked if you prefer) something and someone else saw it and decided they wanted him to have 1.7bn in exchange for it
I don’t see how anyone else’s net worth is at play here
I don’t see how anyone else’s net worth is at play here
As I said elsewhere, it ultimately affects our pension pots. The "someone" you mention are the executives who take risks at the shareholders expense.
Isn't the money coming - if it comes - from SoftBank? Would it be better for the common folk if they kept it?
Better for our pension funds, yes. The stock price of SoftBank has halved in value over this event. I'm expected to fund my old age using stocks.
The stock price halved because WeWork failed, regardless of his payout.
The money doesn't come from thin air. If SoftBank paid it out, the shareholders lose out even more so.
My guess is that it was a forced buyout? The terms of which are always painful for the forcers.
As far as the employees go, anyone working for a company clearly not making any money needs to move along. Whatever consequences you suffer are at your own risk.
And as far as what this might look like under socialism, the government would take money from people who have nothing to do with any of it and give it to all of the people involved in order to maintain an organization that nobody wants to do business with.
As far as the employees go, anyone working for a company clearly not making any money needs to move along. Whatever consequences you suffer are at your own risk.
And as far as what this might look like under socialism, the government would take money from people who have nothing to do with any of it and give it to all of the people involved in order to maintain an organization that nobody wants to do business with.
on the one hand, yes: folks worked for a company that lost money. So some of this is on them. However, I strongly suspect that the risk was not in any way clearly communicated to them. And you're ignoring the fact that they clearly have the resources to pay the founder another $600m or so.
> And as far as what this might look like under socialism,
“Late stage capitalism” and “socialism” is a false dilemma. We can see the known, evil effects of late-stage capitalism, and it is appropriate to pin the blame on the systems which encourage this behavior even while acknowledging the benefits of those systems and while holding accountable actors within these systems.
“Late stage capitalism” and “socialism” is a false dilemma. We can see the known, evil effects of late-stage capitalism, and it is appropriate to pin the blame on the systems which encourage this behavior even while acknowledging the benefits of those systems and while holding accountable actors within these systems.
This really has nothing to do with socialism.
"Late state capitalism" is a Marxist term.
It was coined by Werner Sombart, who was not a Marxist but rather a classical economics professor in Germany.
Werner Sombart was heavily influenced by Marx. Regardless of how you want to view him. Read his entry on Wikipedia.
"Sombart, at that time, was an important Marxian, someone who used and interpreted Karl Marx — to the point that Friedrich Engels said he was the only German professor who understood Das Kapital. Sombart called himself a "convinced Marxist,"[1] but later wrote that "It had to be admitted in the end that Marx had made mistakes on many points of importance."
"Sombart, at that time, was an important Marxian, someone who used and interpreted Karl Marx — to the point that Friedrich Engels said he was the only German professor who understood Das Kapital. Sombart called himself a "convinced Marxist,"[1] but later wrote that "It had to be admitted in the end that Marx had made mistakes on many points of importance."
Geez, even the Wikipedia article on the term states that is Marxist. I think you are substituting "Marxist" with "as written by Marx."
Turns out the neoliberal startup crowd who downvoted you doesn't want people calling out this glaring problem.
Edit: ah, here they are to come downvote me
Edit: ah, here they are to come downvote me
"Please don't comment about the voting on comments. It never does any good, and it makes boring reading."
https://news.ycombinator.com/newsguidelines.html
(Regardless of my agreement or disagreement with your points otherwise.)
https://news.ycombinator.com/newsguidelines.html
(Regardless of my agreement or disagreement with your points otherwise.)
A company that hires somebody 'at-will' has no obligation to keep them employed forever. Employees at places like WeWork, which are transparent with their unsustainable nature, should understand that and act appropriately. IMO, it's a detriment to worker's rights to believe in this sense of Big Brother Capitalist altruism.
"obligation" is an interesting word to use, though I agree that naïveté is detrimental to one's capacity to advocate for less-precarious working conditions.
Adam Neumann jacked $10B in funding from dumb, rich, foreign investors (SoftBank). Over 80% of that money was pumped into salaries and domestic real-estate deals.
Why are people mad about this? Dude is a modern Robin Hood -- a national hero. Let him keep the $1.7B change.
Why are people mad about this? Dude is a modern Robin Hood -- a national hero. Let him keep the $1.7B change.
Into domestic real estate deals that he often played on both sides of the coin.
He was in this to build an empire and a dynasty. He tried to write his family into leadership / ownership in perpetuity.
He wasn't freeing money from the "dumb, rich, foreign investors" for the good of the people, but for the good of himself. Anything that fell to the people was happenstance, and after he'd had first pickings.
He was in this to build an empire and a dynasty. He tried to write his family into leadership / ownership in perpetuity.
He wasn't freeing money from the "dumb, rich, foreign investors" for the good of the people, but for the good of himself. Anything that fell to the people was happenstance, and after he'd had first pickings.
How about the fact that thousands of peoples lives might be disrupted or ruined by financial mismangement. People probably moved to work for wework. Leases might be defaulted on. In some markets they were the largest user of commercial real estate so I am sure it will be somewhat bad for wework to implode.
> dumb, rich
They did invest in Alibaba as well as ARM and Uber and runs the SoftBank Vision Fund. They may have failed huge on this one but have been doing quite good.
They did invest in Alibaba as well as ARM and Uber and runs the SoftBank Vision Fund. They may have failed huge on this one but have been doing quite good.
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So Softbank needs funding to buy out the controlling stake in WeWork. They're reaching out to Japan's largest bank, Mitsubishi UFJ, for that $9.5B. As of last night, MUFJ refused to lend money to Softbank if they intend on using it as a rescue package for WeWork.
Now Softbank is in a conundrum. This morning, I read that they're trying to figure out a way to slash Neuman's golden parachute from that $1.7B figure.
Schadenfreude is sweet sometimes.