WSJ: WeWork: A $20 Billion Startup Fueled by Silicon Valley Pixie Dust; CEO OUSTED REMAINS CHAIRMAN
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ogc163
Superstar
https://www.washingtonpost.com/busi...exit-wework-with-billion-softbank-takes-over/
Adam Neumann, WeWork’s founder and former chief executive, s key invwill walk away from the company with $1.7 billion aestor SoftBank takes over and scrambles to save WeWork from bankruptcy, the Wall Street Journal reported Tuesday
Adam Neumann, WeWork’s founder and former chief executive, s key invwill walk away from the company with $1.7 billion aestor SoftBank takes over and scrambles to save WeWork from bankruptcy, the Wall Street Journal reported Tuesday
GnauzBookOfRhymes
Superstar
https://www.washingtonpost.com/busi...exit-wework-with-billion-softbank-takes-over/
Adam Neumann, WeWork’s founder and former chief executive, s key invwill walk away from the company with $1.7 billion aestor SoftBank takes over and scrambles to save WeWork from bankruptcy, the Wall Street Journal reported Tuesday
exactly.
they paid him to leave. billion dollar version of robbing a rapper for his chain and making him buy it back. mfer is an inspiration.
bruh won
he lost...
but he won
he lost...
but he won
$1.7 billion. He can live of $850 million for the rest of his life and just invest the remaining.
Startups are the new juug and finesses
Startups are the new juug and finesses
$1.7 billion. He can live of $850 million for the rest of his life and just invest the remaining.
Startups are the new juug and finesses
that bubble will be bursting soon if you ask me.
No doubt. GrubHub, DD, Uber etc. They’re model of “blitzscaling” isn’t working.
The question would be how exposed is the broader market to the tech sector.
ft.com
WeWork plans to axe 4,000 staff
Arash Massoudi in London and Eric Platt and Andrew Edgecliffe-Johnson in New York
3-4 minutes
WeWork is planning to cut as many as 4,000 jobs as part of an aggressive turnround plan put in place by Japan’s SoftBank after it took control of the co-working business this week.
The job cuts will amount to just under 30 per cent of WeWork’s global workforce of around 14,000 people, according to people with direct knowledge of its plans. About 1,000 of the cuts will hit employees such as cleaners, which WeWork is looking to move to an outsourcing company.
WeWork is also looking to prioritise three markets — the US, Europe and Japan — and will pull back from other regions including China, India and much of Latin America. It has already begun looking at building closures in parts of its portfolio including in China and other regions.
The news comes as WeWork employees and investors digested a $9.5bn SoftBank rescue plan that helped the company avoid bankruptcy and included terms that will hand up to $1.7bn to Adam Neumann, the crisis-hit group’s cofounder.
The SoftBank-controlled company has set a goal of boosting occupancy rates in its most important markets to about 90 per cent, the people said, compared with an occupancy that had dipped below 80 per cent as it pursued a business model more focused on global expansion.
Marcelo Claure, the SoftBank executive who has been named executive chairman of the office space provider, told WeWork staff on Wednesday that the company would have to “right-size” its business to reach profitability and that would include job cuts.
“Yes, there will be lay-offs — I don’t know how many — and yes, we have to right-size the business to achieve positive free cash flow and profitability,” he wrote in a memo seen by the Financial Times.
Mr Claure added: “But I will promise you that those that leave us will be treated with respect, dignity and fairness. And for those that stay, we will ensure everyone is aligned and shares in future value creation.”
WeWork declined to comment.
One former employee told the FT that there was “a lot of anger” inside the company, with staff venting their frustrations about the sums Mr Neumann stood to collect under the SoftBank deal, including a $185m “consulting fee”.
Many disgruntled WeWork employees hold shares in the company that were issued to them at a value above the $19.19 a share at which SoftBank is offering to buy them in a $3bn tender. The SoftBank offer values WeWork at about $8bn, far below its recent funding rounds including a SoftBank-led round that valued the company at $47bn this year.
One person who joined WeWork more than three years ago said he received a grant of stock at the time that was priced at $20 a share, while the thousands of people who joined in more recent years received stock at higher valuations.
Are investors right to run away from WeWork?
ft.com
WeWork plans to axe 4,000 staff
Arash Massoudi in London and Eric Platt and Andrew Edgecliffe-Johnson in New York
3-4 minutes
WeWork is planning to cut as many as 4,000 jobs as part of an aggressive turnround plan put in place by Japan’s SoftBank after it took control of the co-working business this week.
The job cuts will amount to just under 30 per cent of WeWork’s global workforce of around 14,000 people, according to people with direct knowledge of its plans. About 1,000 of the cuts will hit employees such as cleaners, which WeWork is looking to move to an outsourcing company.
WeWork is also looking to prioritise three markets — the US, Europe and Japan — and will pull back from other regions including China, India and much of Latin America. It has already begun looking at building closures in parts of its portfolio including in China and other regions.
The news comes as WeWork employees and investors digested a $9.5bn SoftBank rescue plan that helped the company avoid bankruptcy and included terms that will hand up to $1.7bn to Adam Neumann, the crisis-hit group’s cofounder.
The SoftBank-controlled company has set a goal of boosting occupancy rates in its most important markets to about 90 per cent, the people said, compared with an occupancy that had dipped below 80 per cent as it pursued a business model more focused on global expansion.
Marcelo Claure, the SoftBank executive who has been named executive chairman of the office space provider, told WeWork staff on Wednesday that the company would have to “right-size” its business to reach profitability and that would include job cuts.
“Yes, there will be lay-offs — I don’t know how many — and yes, we have to right-size the business to achieve positive free cash flow and profitability,” he wrote in a memo seen by the Financial Times.
Mr Claure added: “But I will promise you that those that leave us will be treated with respect, dignity and fairness. And for those that stay, we will ensure everyone is aligned and shares in future value creation.”
WeWork declined to comment.
One former employee told the FT that there was “a lot of anger” inside the company, with staff venting their frustrations about the sums Mr Neumann stood to collect under the SoftBank deal, including a $185m “consulting fee”.
Many disgruntled WeWork employees hold shares in the company that were issued to them at a value above the $19.19 a share at which SoftBank is offering to buy them in a $3bn tender. The SoftBank offer values WeWork at about $8bn, far below its recent funding rounds including a SoftBank-led round that valued the company at $47bn this year.
One person who joined WeWork more than three years ago said he received a grant of stock at the time that was priced at $20 a share, while the thousands of people who joined in more recent years received stock at higher valuations.
Are investors right to run away from WeWork?
WeWork Employee Options Underwater as Ex-CEO Reaps
WeWork Employee Options Underwater as Ex-CEO Reaps
Adam Neumann is poised to receive up to $1.7 billion as part of deal with SoftBank
The exit deal for Adam Neumann has led to frustration inside the company, according to current and former employees. PHOTO: JACKAL PAN/REUTERS
By
Eliot Brown
Oct. 23, 2019 6:33 pm ET
Adam Neumann stands to receive up to $1.7 billion as part of a deal with SoftBank Group Corp. to step away from office-space startup WeWork. The company’s employees aren’t doing so well.
Thousands of staff are slated to be laid off soon as the company rapidly tries to cut costs and steer the money-losing company toward a path to profit, according to people familiar with the strategy.
For more than 90% of current and former employees, the share price of the SoftBank deal, which values WeWork at about $8 billion, is below the grant price for stock awards and options they hold, former executives said. That means the vast majority of employees would get nothing if they sold their holdings today.
The rich exit deal for Mr. Neumann as SoftBank wrested control of the company from the former chief executive officer this week has led to frustration, current and former employees said.
The Japanese conglomerate agreed to provide a multibillion-dollar rescue financing package to ease WeWork’s cash crunch after the company decided to pull a planned initial public offering last month.
As part of the package, SoftBank will give Mr. Neumann a $185 million consulting fee, let him sell up to $970 million of his stock as part of a larger offering to investors and employees and extend a $500 million credit line to him that replaces one from a set of banks.
The deal, which removes Mr. Neumann from the board, calls for SoftBank to buy WeWork’s private shares from investors and some employees at $19.19 each, a fraction of the $110 a share price reached in January, when WeWork was valued at $47 billion.
At a meeting with employees Wednesday morning, Marcelo Claure, a top SoftBank official and WeWork’s new executive chairman, said that some of the payout to Mr. Neumann was necessary to persuade him to give up his substantial control over the company, according to a person who heard the remarks.
Mr. Claure said he understood the plight of employees and was looking at improving their financial situation but didn’t yet have specifics.
“You have my commitment to do something,” he said. “I don’t know what it is yet.”
WeWork’s Risky Business Model, Explained
The We Co.'s IPO is now postponed after the company announced it would withdraw its request to go public. Here's a look at the company's business model and why some investors were eyeing the risk. Photo: David 'Dee' Delgado/Bloomberg
Numerous employees on the company’s internal Slack messaging service expressed frustration with Mr. Neumann’s exit package, with some noting the irony of an individual benefiting so much at a company known as We.
At startups, a large share of compensation is often in the form of stock options, which allow the purchase of stock at a price set when employees are hired.
When a startup turns into a successful large company, the options can prove hugely lucrative because they allow early employees to buy stock at a cheap price and cash out at a much higher one.
But with We, the share price for options has been above $20 a share since January 2016, when the company had just 1,000 employees.
Employee options after that date wouldn’t have any value if exercised now at SoftBank’s new price of $19.19. As of June, the company had more than 12,000 employees.
Mr. Claure indicated in his remarks to staff he may reprice options, although such a move could take a while, and it is unclear if it would apply to former employees or those laid off.
Mr. Neumann’s situation differs from most of the employees because he owns most of his stock outright, as is typical of company founders.
MORE WEWORK COVERAGE
Mr. Neumann, when recruiting executives and trying to acquire companies, would emphasize his belief that stock awards would in a few years be worth many times what he was offering these people given the trajectory of the company, former employees familiar with the discussions said.
Former employees have privately expressed frustration that they exercised stock options when they left the company in the past few years, meaning they bought the stock at the grant price thinking that the stock’s value was worth much more, only to see it plummet recently.
Often executives and early employees spent tens or hundreds of thousands of dollars.
“I know employees who went out of pocket to exercise those options—so those people have the most to lose in this type of situation,” said Zach Aarons, co-founder of venture-capital firm MetaProp and a We shareholder. “They would have been better off by not buying in the first place.”
Numerous former employees and executives said they were angered by not just Mr. Neumann’s ability to sell so much stock but also his $185 million consulting fee.
That consulting agreement, which has a four-year term and prevents Mr. Neumann from working for competitors, is among the largest publicly known agreements for a departing executive and comes as investors are increasingly questioning the scale of severance and compensation arrangements.
SHARE YOUR THOUGHTS
What should WeWork employees do with their shares in the company? Join the conversation below.
At public companies, consulting agreements with outgoing CEOs aren’t the norm but aren’t unheard of, according to pay consultants.
In some cases, companies need advice or guidance from a founder or longtime CEO and might give the departing executive a vice-chairmanship or another key board role, said Robin Ferracone, CEO of compensation consulting firm Farient Advisors LLC.
In other cases, the agreement can amount to little more than a salve for the departing executive’s ego.
“It’s part of the buyout, essentially,” Ms. Ferracone said. “If it’s really hard psychologically for the CEO to give up the post, it could soften the blow compared to just having a severance agreement.”
Big severance packages and executive consulting agreements have become less common at public companies after years of criticism from investors.
“There used to be crazy departure packages in the past, and shareholders really objected,” said Nell Minow, vice chairwoman of ValueEdge Advisors, a corporate-governance consulting firm for investors. “We haven’t seen anything that bad in a while.”
—Theo Francis and Maureen Farrell contributed to this article.
Write to Eliot Brown at eliot.brown@wsj.com
WeWork Employee Options Underwater as Ex-CEO Reaps
Adam Neumann is poised to receive up to $1.7 billion as part of deal with SoftBank
The exit deal for Adam Neumann has led to frustration inside the company, according to current and former employees. PHOTO: JACKAL PAN/REUTERS
By
Eliot Brown
Oct. 23, 2019 6:33 pm ET
Adam Neumann stands to receive up to $1.7 billion as part of a deal with SoftBank Group Corp. to step away from office-space startup WeWork. The company’s employees aren’t doing so well.
Thousands of staff are slated to be laid off soon as the company rapidly tries to cut costs and steer the money-losing company toward a path to profit, according to people familiar with the strategy.
For more than 90% of current and former employees, the share price of the SoftBank deal, which values WeWork at about $8 billion, is below the grant price for stock awards and options they hold, former executives said. That means the vast majority of employees would get nothing if they sold their holdings today.
The rich exit deal for Mr. Neumann as SoftBank wrested control of the company from the former chief executive officer this week has led to frustration, current and former employees said.
The Japanese conglomerate agreed to provide a multibillion-dollar rescue financing package to ease WeWork’s cash crunch after the company decided to pull a planned initial public offering last month.
As part of the package, SoftBank will give Mr. Neumann a $185 million consulting fee, let him sell up to $970 million of his stock as part of a larger offering to investors and employees and extend a $500 million credit line to him that replaces one from a set of banks.
The deal, which removes Mr. Neumann from the board, calls for SoftBank to buy WeWork’s private shares from investors and some employees at $19.19 each, a fraction of the $110 a share price reached in January, when WeWork was valued at $47 billion.
At a meeting with employees Wednesday morning, Marcelo Claure, a top SoftBank official and WeWork’s new executive chairman, said that some of the payout to Mr. Neumann was necessary to persuade him to give up his substantial control over the company, according to a person who heard the remarks.
Mr. Claure said he understood the plight of employees and was looking at improving their financial situation but didn’t yet have specifics.
“You have my commitment to do something,” he said. “I don’t know what it is yet.”
WeWork’s Risky Business Model, Explained
The We Co.'s IPO is now postponed after the company announced it would withdraw its request to go public. Here's a look at the company's business model and why some investors were eyeing the risk. Photo: David 'Dee' Delgado/Bloomberg
Numerous employees on the company’s internal Slack messaging service expressed frustration with Mr. Neumann’s exit package, with some noting the irony of an individual benefiting so much at a company known as We.
At startups, a large share of compensation is often in the form of stock options, which allow the purchase of stock at a price set when employees are hired.
When a startup turns into a successful large company, the options can prove hugely lucrative because they allow early employees to buy stock at a cheap price and cash out at a much higher one.
But with We, the share price for options has been above $20 a share since January 2016, when the company had just 1,000 employees.
Employee options after that date wouldn’t have any value if exercised now at SoftBank’s new price of $19.19. As of June, the company had more than 12,000 employees.
Mr. Claure indicated in his remarks to staff he may reprice options, although such a move could take a while, and it is unclear if it would apply to former employees or those laid off.
Mr. Neumann’s situation differs from most of the employees because he owns most of his stock outright, as is typical of company founders.
MORE WEWORK COVERAGE
- SoftBank to Boost Stake in WeWork in Deal That Cuts Most Ties With Neumann
- Heard on the Street: What Will History Make of WeWork’s Meltdown?
- Founder Mixed Spiritual Group With Business
- WeWork Investors Turned Off by ‘Sloppy’ IPO Filings
Mr. Neumann, when recruiting executives and trying to acquire companies, would emphasize his belief that stock awards would in a few years be worth many times what he was offering these people given the trajectory of the company, former employees familiar with the discussions said.
Former employees have privately expressed frustration that they exercised stock options when they left the company in the past few years, meaning they bought the stock at the grant price thinking that the stock’s value was worth much more, only to see it plummet recently.
Often executives and early employees spent tens or hundreds of thousands of dollars.
“I know employees who went out of pocket to exercise those options—so those people have the most to lose in this type of situation,” said Zach Aarons, co-founder of venture-capital firm MetaProp and a We shareholder. “They would have been better off by not buying in the first place.”
Numerous former employees and executives said they were angered by not just Mr. Neumann’s ability to sell so much stock but also his $185 million consulting fee.
That consulting agreement, which has a four-year term and prevents Mr. Neumann from working for competitors, is among the largest publicly known agreements for a departing executive and comes as investors are increasingly questioning the scale of severance and compensation arrangements.
SHARE YOUR THOUGHTS
What should WeWork employees do with their shares in the company? Join the conversation below.
At public companies, consulting agreements with outgoing CEOs aren’t the norm but aren’t unheard of, according to pay consultants.
In some cases, companies need advice or guidance from a founder or longtime CEO and might give the departing executive a vice-chairmanship or another key board role, said Robin Ferracone, CEO of compensation consulting firm Farient Advisors LLC.
In other cases, the agreement can amount to little more than a salve for the departing executive’s ego.
“It’s part of the buyout, essentially,” Ms. Ferracone said. “If it’s really hard psychologically for the CEO to give up the post, it could soften the blow compared to just having a severance agreement.”
Big severance packages and executive consulting agreements have become less common at public companies after years of criticism from investors.
“There used to be crazy departure packages in the past, and shareholders really objected,” said Nell Minow, vice chairwoman of ValueEdge Advisors, a corporate-governance consulting firm for investors. “We haven’t seen anything that bad in a while.”
—Theo Francis and Maureen Farrell contributed to this article.
Write to Eliot Brown at eliot.brown@wsj.com
sjankis630
Pro
Amazing! Dude got more nerve than a toothache.
Isn't this the CEO who used to smoke pot on private jets and drink special tequila all day?
If he was black he would be a straight up gangster rapper touring with Migos and Gucci Mane right about now.
Isn't this the CEO who used to smoke pot on private jets and drink special tequila all day?
If he was black he would be a straight up gangster rapper touring with Migos and Gucci Mane right about now.