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Comment by aeturnum | Hacker News Reader

> I don’t really see why it’s his fault investors over valued his company

> he believed in his own spin

It's his fault because he accepted the price for his business! He was in numerous conversations where people wanted to invest in WoWork and he told them that the valuations they were investing at were not just reasonable, but under the real market price - which is why venture buys into companies.

> none of those events actually materially impact the value of the business

> overnight, investors just came to their senses about what kind of value this type of business is worth

These things seem like they contradict each other. If Neumann's actions are not material, why did his removal reveal the true value of the company? Material just means it changes the value of the company. There are lots of "material" events that don't have anything to do with business fundamentals.

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I think it's unlikely that Adam would be liable for having accepted an inflated valuation. Courts typically give management pretty wide latitude to make business decisions as along as they can give some plausible explanation. It's called the "business judgment rule" in corporate law and gives the company quite a bit of deference[0]. It derives from Delaware General Corporate Law § 141(a), then gets carved out through case law.

That said, there are a few ways to overcome it. Self-dealing is one way, assuming Adam didn't disclose the transactions. Fraud would be another.

All this stuff is pretty fact-specific. We can guess, but there's a lot we won't know until it gets litigated.

[0] https://en.wikipedia.org/wiki/Business_judgment_rule

>It's his fault because he accepted the price for his business! He was in numerous conversations where people wanted to invest in WoWork and he told them that the valuations they were investing at were not just reasonable, but under the real market price - which is why venture buys into companies.

What? It's his fault that he was able to hoodwink all these amazingly smart venture capital owners into investing?

No. What happened was some venture capital owners made a bet that they could find a bigger sucker to dump their shares on. But that bet went sideways. Nothing more. There is no indication of any fraud yet. Just some people that thought an eccentric personality could help them ride the wave of funding.

I refuse to believe anyone wouldn't take 1.7 billion to walk away from a company.

Not before paying, I don't know, something like 10-20 million to have the deal and everything else made watertight and 110% legal. Other that, you cannot blame him for the 1.7 billion. For the way how he got them he can be blamed so, IMHO.

Everybody will always sell their business for as much as they can. It's unreasonable and not helpful to expect otherwise.

VC-s as a rule of thumb do due diligence before investing. They didn't throw money at him on the whim. They examined the books and everything else you could think of (or should have done so).

Unless he was cooking the books or conned some other way - you may say he is the one scumbag to rule them all if you like for walking with fuck you money squared while his employees get the shaft, but he did nothing wrong in pitching high valuations that the others side accepted.

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