The Fall of WeWork
vanityfair.com
vanityfair.com
I keep eating up these stories, as I’m sure most of us here are as they keep getting upvoted to the front page. Fascinating
An unironical hero. Taking a rich, corrupt, murderous regime for billions and providing thousands of jobs. He is taking a whole lot of flak for doing a whole lot of good in the end.
Trying to work out the leaps of logic: I guess you're assuming all WeWork employees were unemployable before starting there, and that all other potential beneficiaries of Softbank investment would invariably have been zero-employee operations...?
Laid off WeWork employees were probably employed someplace before working there and will likely work someplace else after WeWork.
All employment is temporary. They still extracted billions. Some got more then others. Most just got a job for X years. Likely well paid. How is that anything other than a benefit?
(You might say that they knew what they were getting into. Startup stock options are risky. But you can't deny all sympathy to those working stiffs.)
The second is the swamp called Silicon Valley: Theranos, Wework, etc. But I don't have a good anchoring podcast for it, I only get it piecemeal via HN and such. So recommendations appreciated!
I’m not sure what conclusions to draw from this - in my own experience, I’ve met managers, directors, and executives who can be very charming and flattering. These are people who I seemed to instantly like... in hindsight, they have some common traits (their ability to sell, 1:1s where the people just talk on and on and on about themselves, their achievements, or their vision without asking about my ideas, vision, concerns, motivations, etc)
These are the people you have to be extremely cautious of. In my experience, they are deluding themselves and others, or they are purposely giving that pitch because they see you as a useful pawn for some agenda. I’ve learned this lesson a few times now. I don’t mean to sound cynical but that’s reality.
None of this could happen without a huge source of dumb money.
I don’t mean to generalize, but there’s a aspect to Saudi culture where they look at down upon people who work - regardless of whether you’re a doctor or a rocket scientist - they look down upon folks who work for a living as if they’re lesser people.
In that micro culture, you cannot rely on your own population for economic output. You rely on foreigners or you directly invest in foreign companies and hope to find the next Amazon, Microsoft, or something like that.
Source - I married right after high school and my first husband (15 years older) worked in Saudi Arabia. I went there to live with him. We lived together there for 3 years. I eventually left him because I didn’t want to be in a cage (at least that’s what it was like to live there as a female) and wanted to go to school and have my own career and freedom.
It really comes down to easy-money policies of central bankers combined with the laziness of investors. So much money to invest and doing hard work is for suckers who don’t have the connections to get the capital to invest.
This money is ripe for investing in active funds or financial management groups. The leader of SoftBank approached the Saudis years back and, allegedly, got a $45 billion buy in from a 45 minute meeting. That's a lot of cash on hand. The amount of cash sitting around has stuffed typical investment opportunities and led to (relatively) incredibly risky investing or active management like SoftBank/WeWork. It's mostly worked out for VC funds as if group A doesn't buy in for billions, group B and C are available for a meeting next week losing Group A the opportunity. And Group A has enough cash that they could lose the investment and recover via less risky investment opportunities give say 1 in 10 investments pays out 20-50x.
It's great if you are, say, an ex WeWork CEO who can take advantage of the free money. You might even be paid in negative interest to take it on. It's a bit scary from an economics point of view but also highlights inequality given so many Americans are paycheck to paycheck or hold so much debt while there are trillions to push around in money markets and billions to fund losses at Uber and others.
https://www.washingtonpost.com/business/economy/banks-are-pa...
Because they never earned that money via ingenuity, it is rent paid by foreigners for access to natural resources. It makes sense that they never learnt to invest wisely. Contrast with the Norwegians who extract their own oil with their own skill and technology.
No shortcuts. Invest the oil money in a broad portfolio ~10k companies for the benefit of all future and current citizens.
Truly amazing.
Let's say if a dissident with US residency were to disappear on foreign soil. Diplomats have started asking some awkward questions. The way to make them go away is to point to major investments you've made in high-profile US companies, that could be impacted should such questions persist.
Otherwise we'd invest the whole economy in the Medallion Fund and go home.
None of this kind of story before his fall from grace and now here it all is. So I guess we don't get it reported if his snakeoil IPO'd for a squillion dollars? Or maybe is it exaggerated now it publically failed to IPO so putting the boot in is allowed.
It seems like there is a fair amount of reporting where those working on it are desperate to knife the subject but only occasionally allowed to be let off the leash to do the hatchet job.
Maybe it has some baring on how such an asshole as Neumann has failed upwards to become a billionaire.
Failed upwards to become a billionaire. Does he care what we think of him in any way?
What changed isn't the failure of reporters, it's the fact that suddenly the guy had actual public accountability.
> Does he care what we think of him in any way?
Is that what you're getting out of this? That the media are revelling in taking down a fraud? What I get out of this is the scale of the disconnect between academic theories around capital investment, and the bullshit upon which those decisions are actually based.
Anybody who claims MBS and Jared Kushner are going to save the world is a sociopath and a liar willing to say whatever it takes to get pen to paper on another billion dollar funding round.
What's the most exciting tech IPO of the near future? Pinterest, aka another ad-ridden hellscape that WSJ, Bloomberg and others have to talk about in glowing terms, until they too, bomb.
That means, banks made more money parking their money at the Fed, effectively removing it from circulation; than they could make holding bonds.
When a bank holds a government bond, someone else in the economy has to do something with the money they paid for the bond.
In contrast, excess reserves might as well not exist as far as the rest of the economy is concerned.
https://fred.stlouisfed.org/graph/?g=pB2X shows the absolute amount of excess reserves.
IOER explains a big part of the puzzle you found without invoking any conspiracy theories or sly remarks about 'trickle down economics'.
See https://www.cato.org/publications/working-paper/floored-how-... for a broader discussion.
A lot of people expected inflation with newly printed money (central banks poured ridiculous amount new money in economy after 2008), but it never arrived. Because that money never found a way from investment to consumer goods, so for normal people the inflation is pretty standard.
Except of prices of housing, which is also an investment asset.
Inflation in investment assets is quite larger and we consider it "economic growth".
So Minson went to the board behind Neumann's back and suggested that Neumann should be fired. Ultimately, Neumann was fired and Minson became co-CEO. The human dimension here is interesting.
It makes sense because WeWork was not a tech company, had no need of “brilliant coders”, and besides, they were not brilliant anyway and produced basically nothing beyond a website and perpetually broken wifi and printing.