The WeWork Saga Continues
How critical is a founder to their company? Does WeWork need Adam Nuemann to thrive? Or will his quaint, $1 billion parting gift, prove to be a bargain to employees and WeWork’s stakeholders? Does WeWork even know the answer to this question? Well, that all looks like it will have to be decided at a later date.
If you haven’t yet heard, the Japanese Telecommunications giant SoftBank is taking control of WeWork. In doing so, it’s giving WeWork founder, Adam Neumann, the equivalent of nearly $1.7 billion to cut ties with his brainchild.
Neumann will reportedly also sell $1 billion worth of this WeWork stock to SoftBank as part of the takeover bid, on top of a $185 million “consulting fee,” and a $500 million line of credit to boot. Nice work if “we” could get it. Oh, but wait, “we” couldn’t get it because Newuman has trademarked that “we” word and until recently was lending the “we” name to the company… for a fee, of course.
WeWork Employees: Out of Luck and Underwater
We’re now hearing about how enraged WeWork employees are now that their company stock options are underwater. This is especially after they were persuaded to take options in the startup that ended up imploding. Sure, there is always risk involved while working for stock options, but nobody could have predicted WeWork’s losses of $2 billion a year, and having $40 billion of its market value diminished in just a few months.
These employees put their trust behind Neumann, and for what? The man who once promised prosperity is now skipping town with $1 billion plus in his back pocket and a cushy consulting gig. But according to Marcelo Claure, a top SoftBank official, and WeWork’s new executive chairman, some of the payout to Mr. Neumann was necessary to persuade him to give up his control over the company.
Hmm—is one individual really worth a billion dollars to keep silent? Would it have really cost WeWork more than that to have its founder and former CEO stick around? So by paying Nuemann the $1 billion, WeWork, presumably, is saying it would cost the company more than $1 billion in losses going forward to keep him around.
Basically, SoftBank is admitting that they’re now forced to hand out underwater stock options to their employees in exchange for good, hard work, while they’re paying Neumann billions to cut out his poor performance and to stop working all together! Where can all the rest of us sign up for a gig like that?
It doesn’t end there, though. Last month, WeWork published a prospectus for its failed IPO, stating that “future success depends in large part on the continued service of Adam Neumann, our Co-Founder and Chief Executive Officer, which cannot be ensured or guaranteed.”
How is it that just six weeks ago, Mr. Neumann was critical to WeWork’s success, but today, it’s worth paying $ 1 billion to trash him?
Absolutely insane. Does anybody have an answer for this?
Have You Been Harmed by WeWork?
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