How Do You Like We Now | Hacker News Reader

How Do You Like We Now

bloomberg.com

84 pointssmacktoward38 comments

When you’ve got supermajority shares, you can basically put a gun to your own head.

Great summary of the situation from the article: “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.”

It amazes me that they didn't call his bluff. They could have said, "We'll let you keep some of your shares, so if this ever works out, you'll make some good money." Because if somebody didn't put up a lot of money, Neumann would get bupkis. His negotiating position was extraordinarily weak.

But clearly this is about preserving Masayoshi Son's ego. And reputation, of course. Why would he care if he burns another 5 billion if it helps him keep getting future $100bn investments from his LPs?

> It amazes me that they didn't call his bluff. They could have said, "We'll let you keep some of your shares, so if this ever works out, you'll make some good money."

If they had said that, Neumann would have just continued to nuke the company until SoftBank's remaining $8 billion of equity in the company went to $0. SoftBank paid him off to prevent him from further destroying the company.

Why exactly would have he done that? His shares would go to zero as well, and he'd have been more clearly associated with the failure.

Isn't there some legal fiduciary duty that would prevent the executives of the company from doing this explicitly? Just because 51% of the shareholders want to lose their money doesn't mean the executives can act without regard for the 49%?

Don't minority shareholders have some rights? If they could prove he was running the company into the ground, something could be done... right?

I expect the folks on the WallStreetBets subreddit to canonize him.

redditors talk about reddit as if its the center of the internet or something. imagine saying "I expect the folks on the /biz/ 4chan board to canonize him". its shows how much someone uses reddit.

Watching WeWork's IPO fall apart was satisfying because it felt, in part, like a small bit of justice being served.

Sadly, this outcome for Neumann is the undoing of both that sense of satisfaction and of justice.

(Note to self: don't let this jade you. Keep focusing on creating wealth by creating value.)

Steve Blank, I think in his original, self-published "Four Steps to the Epiphany", said something like, "But if another bubble comes along, ignore all this, because my advice only makes sense if creating value for customers is rewarded".

I think he was right, and I really hope WeWork is the end of the "Uber for X" wave, wherein losing gobs of money was somehow seen as a sign of success, and not a cause for great shame. It's be nice to get back to actually serving customers.

https://outline.com/V5eEFX

“[SoftBank] put into WeWork, an astounding total of more than $18.5 billion for a company it values at $8 billion.”

Wow. I think when they do end up writing that HBS case, this will also serve as a wonderful example of sunk cost fallacy.

Not really - they just bought it on a Huuuuuuge discount compared to what, a month ago?

It being the value they already tied themselves to? It's technically correct, but Neumann seems to have understood they could either buy him out now and save some of that value, or not buy him out now and lose most of it.

The penultimate slide (132/133) of the Softbank Vision Fund deck from 6/25/2010 is just the words "We (movie)". This now sounds prophetic. If you're curious, you can see the whole strange deck here: https://cdn.group.softbank/en/corp/set/data/irinfo/presentat...

Wow that slide deck, I'm thoroughly confused...who could be the intended audience for that??

Are we on pace for the CPU, Memory, and Network projections for 2040?

It has microprocessor transistors to go from 3bn to 3 quadrillion. Memory to go from 32Gb to 32Pb. And network speed to go from 1Gbps to 3Pbps.

I was under the impression that it's looking very unlikely for CPUs to transistors to keep growing exponentially, and that Moore's Law stopped a few years ago? Will we not run into similar physical (?) limitations for memory and bandwidth in the near future?

I have no idea. I meant my comment in jest— this episode is likely to end in a movie about We— since there’s no evidence MS had heard of WeWork as early as 2010.

Matt Levine is amusing as always, but I'm wondering what really happened at Softbank? How did they end up trusted with huge amounts of money?

S__D_ _R_B__

Would you like to buy a vowel?

Which makes me think, MBS may not be as amused as we are and the odds of Neumann falling in a meat grinder are non null...

If I were him I'd be more worried about being seen on the street in any city where there's a WeWork by a current/former employee who went from planning how they were going to spend their options windfall to wondering how they were going to pay the mortgage next month.

... shady Gruber? Now you say it, it makes perfect sense.

I like We even less since Neumann was handsomely rewarded for his misbehavior.

http://archive.is/SHVCO

It is pretty interesting watching Neumann get demonized in realtime. It's not like he broke into people's homes and stole a billion dollars. Softbank gave it to him, and apparently thought everything was going great until a couple months ago. That was their money to set on fire, I have no skin in this game and no reason to hate him.

The part I do agree with is the workers who are angry at him for getting rich while they're about to lose their jobs. Terrible optics, for one thing.

Yeah, I'd view Neumann a lot less negatively if it hadn't been for all the job losses. Someone getting paid a billion dollars to set ten billion dollars of Softbank's money on fire is hilarious in a vacuum, but someone getting paid a billion dollars when a thousand+ people are gonna get laid off and it's largely his fault, way less so.

It's also his fault they were hired in the first place.

Don't forget to also blame him for giving them jobs (at least for a while).

Do the math on how many seed and A rounds that could have been funded with what he burned. That certainly gets me mad, all those entrepreneurs who didn't get a shot.

The subsidized office space was making some people seed round last longer though. WeWork tenants were also winners.

I agree that putting that money into seed funds would be the most widely beneficial but the Vision Fund seems to be the opposite of that.

Fuck seed rounds. How many homeless people could be given shelter with that money? How many starving people could have been fed? How many people who died needlessly because they were unable to afford medical treatment could have lived if this money had been given to them instead? There is a tremendous moral rot at the core of American capitalism, and the story of We is exhibit A.

The wealth that was being destroyed from the perspective of society, or the starving, is the losses of WeWork day by day and year by year.

I think it's important not to confuse that with the wealth that was merely transferred from one book entry to another.

The spectacular destruction of the abstract entity ensures that the slow bleeding doesn't go on.

Like, if I have $1B, which is really just a note in a computer and you steal it from me by hacking that computer, or playing a confidence game, that's not the same as if a billion dollar factory burns down.

> you steal it from me by hacking that computer, or playing a confidence game, that's not the same as if a billion dollar factory burns down.

I honestly don't follow this logic. What is the essential difference?

The difference between kicking a stuffed toy and a live pet?

I don't see how that's an apt analogy at all. Both of the circumstances you cite appear to be the same fundamental thing to me -- they're both live pets, just of different breeds.

Money in an account is just a note that someone is entitled to actual resources at some indefinite time in the future. You don't see a difference between erasing that note and destroying the resources it quantifies? I mean, I'm not saying that what people write down can't affect the real world, but it's a fundamentally different thing from the physical world. Erasing a number could have any positive or negative consequence, maybe soon, maybe far in the future. It's very tenuous. Destroying the stuff has a specific cost, for certain, that applies to society and not just the owner. Destroying or wasting stuff in large amounts is obviously "stealing" from the needy, while numbers changing because of people having their hopes and dreams deflated is not.

When hopes and dreams die, the cost or benefit depends entirely on how it motivates humans, which is very complex and often unpredictable, but can as easily be good as bad, even if it's painful.

Perhaps I am talking to a being from another dimension, or a ghost who exists only on the internet, in which case I'm probably wasting electrons.

How about this:

Suppose you have a lottery ticket, and you think you've won $1M. But then you notice that you read a number wrong, and it's actually worthless. You may feel like you've lost $1M, but actually you just gained something extremely valuable - if you continued thinking you'd won, you might have done something destructive like quit your job before you found out you didn't. And that action in the real world, would have had negative consequences for you, your employer, your loved ones, and so on. Society in other words. For some reason, even (or maybe particularly) people who think money is evil fall into the trap of thinking it's real as...(google says "a donut").

Oh, absolutely. But even in the capitalist context, this was a giant mess.

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