Markets still falling like whoa

[Nice Guy Eddie 13510]

I guess Neumann negotiated well with Softbank. He already has a lot of cash (1 bn?), so Softbank probably had to pay him off. He may have had the power to reject it and tank the company thus taking down Softbank's entire investment.

WeWork will be a great b-school case over-capitalizing a start-up as well as allowing a founder to cash out based on that capitalization.

But hats off to Neumann. He went from idea to exit in less than 10 years and put himself on the Forbes richest list. On paper, he's lost some ground but he has plenty in the bank.  And while he has some stank on him for questionable practices, I haven't heard of anything approaching a crime. He will still be invited to Davos or whatever leader conference he wants to attend.

[52-80 19150]

6 minutes ago, Nice Guy Eddie said:

I guess Neumann negotiated well with Softbank. He already has a lot of cash (1 bn?), so Softbank probably had to pay him off. He may have had the power to reject it and tank the company thus taking down Softbank's entire investment.

WeWork will be a great b-school case over-capitalizing a start-up as well as allowing a founder to cash out based on that capitalization.

But hats off to Neumann. He went from idea to exit in less than 10 years and put himself on the Forbes richest list. On paper, he's lost some ground but he has plenty in the bank.  And while he has some stank on him for questionable practices, I haven't heard of anything approaching a crime. He will still be invited to Davos or whatever leader conference he wants to attend.

Would've been a lot cheaper just to put a hit on him.

 

I heard it costs like 2 bitcoins on the darkweb.

[Captainant 27653]

12 minutes ago, Nice Guy Eddie said:

I guess Neumann negotiated well with Softbank. He already has a lot of cash (1 bn?), so Softbank probably had to pay him off. He may have had the power to reject it and tank the company thus taking down Softbank's entire investment.

WeWork will be a great b-school case over-capitalizing a start-up as well as allowing a founder to cash out based on that capitalization.

But hats off to Neumann. He went from idea to exit in less than 10 years and put himself on the Forbes richest list. On paper, he's lost some ground but he has plenty in the bank.  And while he has some stank on him for questionable practices, I haven't heard of anything approaching a crime. He will still be invited to Davos or whatever leader conference he wants to attend.

see: my earlier post about market gains and improvements not going to the actual employees. This fucker is effectively stealing money from his investors to build his golden parachute which is in turn taking money away from his (former) employees, taking away their financial stability - because fuck em, he got his. 

That ethos is why the market is doing so great, but seemingly everyone is struggling. The people actually working for the company are the lowest on the totem pole - execs, then shareholders, then debtors get first dibs at the trough. Everyone else can get fucked.

[Trey3216 15346]

19 minutes ago, Nice Guy Eddie said:

I guess Neumann negotiated well with Softbank. He already has a lot of cash (1 bn?), so Softbank probably had to pay him off. He may have had the power to reject it and tank the company thus taking down Softbank's entire investment.

WeWork will be a great b-school case over-capitalizing a start-up as well as allowing a founder to cash out based on that capitalization.

But hats off to Neumann. He went from idea to exit in less than 10 years and put himself on the Forbes richest list. On paper, he's lost some ground but he has plenty in the bank.  And while he has some stank on him for questionable practices, I haven't heard of anything approaching a crime. He will still be invited to Davos or whatever leader conference he wants to attend.

No doubt that SoftBank basically had to force his hand by paying him off.  Bad business.  I wouldn't be surprised a bit if the other investors sued the hell out of Softbank, Neumann, and the company for this fiasco.  

[Nice Guy Eddie 13510]

3 minutes ago, Captainant said:

see: my earlier post about market gains and improvements not going to the actual employees. This fucker is effectively stealing money from his investors to build his golden parachute which is in turn taking money away from his (former) employees, taking away their financial stability - because fuck em, he got his. 

That ethos is why the market is doing so great, but seemingly everyone is struggling. The people actually working for the company are the lowest on the totem pole - execs, then shareholders, then debtors get first dibs at the trough. Everyone else can get fucked.

The investors/owners were dumb enough to allow this to happen. Should/could he be magnanimous and give away money? Sure but most people in his position don't.  Examples include Gates or Zuckerberg and I assume there are people in Buffet's wake that feel cheated by him. I assume most self-made billionaires have stepped on people along the way.

Any one can say they're not the type to do this, but they're probably also not the type that can create a multi-billion dollar company.

To be clear, I'm don't place Neumann on a pedestal. I think he should be a poster boy on how not to invest in a start-up. But many start-up founders would see him as someone to partially emulate.

[TwiceHorn 31449]

29 minutes ago, Nice Guy Eddie said:

I guess Neumann negotiated well with Softbank. He already has a lot of cash (1 bn?), so Softbank probably had to pay him off. He may have had the power to reject it and tank the company thus taking down Softbank's entire investment.

WeWork will be a great b-school case over-capitalizing a start-up as well as allowing a founder to cash out based on that capitalization.

But hats off to Neumann. He went from idea to exit in less than 10 years and put himself on the Forbes richest list. On paper, he's lost some ground but he has plenty in the bank.  And while he has some stank on him for questionable practices, I haven't heard of anything approaching a crime. He will still be invited to Davos or whatever leader conference he wants to attend.

Argestes, imo.

[HRSchenker 2268]

3 hours ago, Okie State said:

Why, exactly, is Twitter going crazy? Is it that hard to believe 17% of people in an age group that pushes into late 30's would have $100K saved? What am I missing here?

A large majority of the reaction is calling it bullshit. Why an article from a year and a half ago is trending now is beyond me. I should probably adopt the Mike Gundy attitude towards Twitter but I can't help but get suckered into it. 

[Rusty Shackelford 414]

2 hours ago, bernorange said:

So, anyone here see this?

Quote

JPMorgan Chase & Co. says the money-market stress that sent short-term borrowing rates surging last month is likely to get much worse despite the Federal Reserve’s attempts to inject billions of dollars into the financial system.
...
JPMorgan says it’s not convinced the Fed has resolved the issues in the funding markets, according to a note from analysts led by Joshua Younger in New York. ...
...
The overnight liquidity provided by the Fed goes directly to primary dealers, whereas those most in need of it are the non-primary dealers, the JPMorgan analysts wrote. The success of the program therefore depends on how much of the liquidity is passed along, but primary dealers are deterred from doing so by rules specifying how much capital they must hold to protect against losses.

Meanwhile, a preliminary analysis of balance sheets at the largest banks based on their third-quarter results suggests they may have to cut back on repo activity even more at year-end to avoid liquidity charges.
...
JPMorgan’s note follows similar warnings from Bank of America Merrill Lynch and Goldman Sachs Group Inc., who have also attributed September’s funding stresses to factors including post-financial crisis bank regulation. Even after the Fed’s latest moves to ease the log-jam in funding markets, “intermediation bottlenecks remain,” Goldman Sachs said.
...

https://fred.stlouisfed.org/series/EXCSRESNS

 

“Excess Reserves” are half of what they were at the end of QE3, but still at $1.3 trillion if you believe the Fed.

My guess is that one or more of the big banks are in serious trouble and the other banks know it and are unwilling to loan them money at any interest rate, so the Fed is stepping in. They need to tell us who is involved in these repo operations, it is bullshit that they keep it confidential.

 

Edited October 22, 2019 by Rusty Shackelford

[hornhorn 100]

57 minutes ago, Captainant said:

see: my earlier post about market gains and improvements not going to the actual employees. This fucker is effectively stealing money from his investors to build his golden parachute which is in turn taking money away from his (former) employees, taking away their financial stability - because fuck em, he got his. 

That ethos is why the market is doing so great, but seemingly everyone is struggling. The people actually working for the company are the lowest on the totem pole - execs, then shareholders, then debtors get first dibs at the trough. Everyone else can get fucked.

He is stealing mostly from investors, Softbank mostly. Some employees who started early and were promised stock will also lose out but that's the cost of taking risks and working in a startup. That's the next best thing you can do if you cannot come up with an idea. Just like investors lost their money, so did they. On the flip side there are many examples where employees benefited handsomely because they took risks like these. Chamath Palihapitiya is a great example of this who worked at Facebook, left it early and became a billionaire at age 30 due to some other investments as well. 

 

Now if this company goes through bankruptcy, Neumann isn't going to be able to keep this money and steal from his employees as you state. It will have to be returned in order to pay back the bond holders, investors etc. Even if it requires liquidating his holdings. 

[Captainant 27653]

3 minutes ago, hornhorn said:

He is stealing mostly from investors, Softbank mostly. Some employees who started early and were promised stock will also lose out but that's the cost of taking risks and working in a startup.

You're right that he's stealing money from investors in taking this golden parachute, but you're ignoring that it's a zero-sum game and that fat wad of cashola is going into this asshat's bank account and not into the business that he put into a critical condition. It's nothing more than modern robber baron behavior.

It's amazing that some folks think that's normal and ok and we shouldn't do anything about it, and just accept it as wAlL StReEt BeInG wAlL sTrEeT

[Aqua Buddha 14588]

I like it when people say that the government should be run like a business.

[Rusty Shackelford 414]

I like turtles

[hornhorn 100]

1 minute ago, Captainant said:

You're right that he's stealing money from investors in taking this golden parachute, but you're ignoring that it's a zero-sum game and that fat wad of cashola is going into this asshat's bank account and not into the business that he put into a critical condition. It's nothing more than modern robber baron behavior.

It's amazing that some folks think that's normal and ok and we shouldn't do anything about it, and just accept it as wAlL StReEt BeInG wAlL sTrEeT

OK, a few corrections to your post:

This isn't a zero sum game.

This isn't even wall street where retail investors are getting screwed. Its private investment.

And no I never said its OK even for private investors to lose their money and this will serve as a great business case in the future where corporate governance was absolute shit. No founder should be allowed to have that much control over a company that looks for outside investment. If they do and still invest, then the private investors kinda deserve what happened here. Don't you think? At some point you have to account for your own personal responsibility and not let your emotion of FOMO guide your investment decisions. 

 

What I disagree with you is your claim that since this will cause employees to lose their jobs IF it goes into bankruptcy he shouldn't be allowed to do it. Whatever that "it" is. 

[hornhorn 100]

I like it when people see a business where it went from zero to worth $50 billion to $8 billion in a few years and consider it a failure and government programs that go from $100 billion to zero in the same timeframe and ignore them completely. 

 

[Captainant 27653]

5 minutes ago, hornhorn said:

What I disagree with you is your claim that since this will cause employees to lose their jobs IF it goes into bankruptcy he shouldn't be allowed to do it. Whatever that "it" is. 

I think you're missing the thrust of what I'm saying here - I'm saying it's fundamentally wrong, dishonest, and arguably fraudulent to run an enterprise the way this guy did.

Fuck me for thinking it's wrong to build something, bring people in and have them stake their personal future on a business that is secretly known to be a house of cards, and then run away with a pants-on-head retarded amount of capital, further starving the business and exacerbating their problems, and really fucking over your employees.

Also, your comparison between a private enterprise and a government program is apples and oranges. The private enterprise exists to enrich individuals, and necessarily the profits/proceeds from it do not go to a common or social good. If a government program spends a hundred billion dollars, it very likely is staying within the economy and not being siphoned off into tax shelters and the further accumulation of personal wealth.

So take your supply-side jesus schtick somewhere else my dude. 

[hornhorn 100]

1 minute ago, Captainant said:

I think you're missing the thrust of what I'm saying here - I'm saying it's fundamentally wrong, dishonest, and arguably fraudulent to run an enterprise the way this guy did.

Fuck me for thinking it's wrong to build something, bring people in and have them stake their personal future on a business that is secretly known to be a house of cards, and then run away with a pants-on-head retarded amount of capital, further starving the business and exacerbating their problems, and really fucking over your employees.

Also, your comparison between a private enterprise and a government program is apples and oranges. The private enterprise exists to enrich individuals, and necessarily the profits/proceeds from it do not go to a common or social good. If a government program spends a hundred billion dollars, it very likely is staying within the economy and not being siphoned off into tax shelters and the further accumulation of personal wealth.

So take your supply-side jesus schtick somewhere else my dude. 

Ooh fraud is a strong word. Where do you think there was fraud? 

And no, I'll keep my schtick right here. Why don't you take your gross misunderstanding of Wall street vs. private market investment elsewhere? Deal? Deal!

[Aqua Buddha 14588]

13 minutes ago, hornhorn said:

I like it when people see a business where it went from zero to worth $50 billion to $8 billion in a few years and consider it a failure and government programs that go from $100 billion to zero in the same timeframe and ignore them completely. 

 

If only Medicare would be run like WeWork, Uber, or Theranos.  There is no fraud there, whereas Medicare is rampant with fraud, right?

[Nice Guy Eddie 13510]

11 minutes ago, Captainant said:

Fuck me for thinking it's wrong to build something, bring people in and have them stake their personal future on a business that is secretly known to be a house of cards, and then run away with a pants-on-head retarded amount of capital, further starving the business and exacerbating their problems, and really fucking over your employees.

 

As far as employees losing their job or a loss of potential future windfalls, that is the life of being an employee. They have no right to being a millionaire just because they're willing to show up everyday. The employee is entitled to a paycheck for a day's work.  Future options are not guaranteed.

Without a doubt it sucks if the higher-ups are able to cash out and you're not but once again the employees accepted those terms because they had zero bargaining power. In some respects, they're lucky that the company is willing to give them options.

If they or anyone want faster access to the rewards of a start-up, perhaps they should take the risk and start a company themselves.

EDIT: I can't tell if Neumann (once again, I'm not a fan) actually thought WeWork was ever in trouble until the pushback from the IPO filings that led to his ouster. Up to that point, he had many VCs throwing money his way. He had to know there was a future cash problem hence the reason for the IPO to raise cash. But why wouldn't he believe the valuation was 40-50B. Softbank gave money at that valuation.

Edited October 22, 2019 by Nice Guy Eddie

[Captainant 27653]

1 hour ago, Nice Guy Eddie said:

If they or anyone want faster access to the rewards of a start-up, perhaps they should take the risk and start a company themselves.

I guess fuck me then for thinking that if you want the faster access and rewards of a start up, perhaps you should also have to take your fucking lumps when said startup shits itself

[Aqua Buddha 14588]

1 minute ago, Captainant said:

I guess fuck me then for thinking that if you want the faster access and rewards of a start up, perhaps you should also have to take your fucking lumps when said startup shits itself

Yeah, where's the risk here on Neuman's part?

If WeWork made it big, he'd get all the rewards.  It's failing and he's getting rewarded.  I get buying out his stock but that consulting fee and the loan?  Now go tell middle class people with bills to pay why Warren's wealth tax is a bad idea.

[52-80 19150]

1 hour ago, Captainant said:

Fuck me for thinking it's wrong to build something, bring people in and have them stake their personal future on a business that is secretly known to be a house of cards, and then run away with a pants-on-head retarded amount of capital, further starving the business and exacerbating their problems, and really fucking over your employees.

Accredited investors only.  I'm not really feeling pity for Mayonnaise Son and the entities whose capital he deployed

[TwiceHorn 31449]

The problem that captainant has identified is not the one of the investors, public or private, getting fleeced.  That's one problem, and I agree that they signed up for it.

It's the fact that the money invested was intended to "trickle down" through the corporation and create/sustain jobs and pay salaries and buy insurance and fund 401ks.

Because of Neumann's malfeasance, it's not doing any of those things.

[Trey3216 15346]

5 minutes ago, TwiceHorn said:

The problem that captainant has identified is not the one of the investors, public or private, getting fleeced.  That's one problem, and I agree that they signed up for it.

It's the fact that the money invested was intended to "trickle down" through the corporation and create/sustain jobs and pay salaries and buy insurance and fund 401ks.

Because of Neumann's malfeasance, it's not doing any of those things.

And he’s personally getting bailed out to the tune of $1.7bn worth, after he already sold $750mm worth into the last round.   He ran that company like his own personal Ponzi scheme, and as I said, I wouldn’t be surprised if there is a massive shareholder lawsuit where he, the company, and SoftBank are the defendants.  

[hornhorn 100]

2 hours ago, TwiceHorn said:

The problem that captainant has identified is not the one of the investors, public or private, getting fleeced.  That's one problem, and I agree that they signed up for it.

It's the fact that the money invested was intended to "trickle down" through the corporation and create/sustain jobs and pay salaries and buy insurance and fund 401ks.

Because of Neumann's malfeasance, it's not doing any of those things.

The primary goal of the investment wasn't to create/sustain jobs and 401K and whatever else you listed up there. 

The primary goal of that investment was to buy WeWork some time and turn it into a successful enterprise. Softbank voluntarily invested in this ponzi scheme draped as business despite onerous founder control requirements. Employees voluntarily worked there and received what I'm presuming(until proven otherwise) a fair compensation for their work. 

Neither one should have any qualms at this point. If you want to feel bad, do so for these investors(however I don't). Employees can just pick up and leave today if they wanted to and they aren't out anything. They have a bone to pick if they aren't compensated when they leave. Investors, at least the late round ones cannot. 

[Captainant 27653]

53 minutes ago, hornhorn said:

Softbank voluntarily invested in this ponzi scheme draped as business

Weren't you just giving me shit a few posts ago for using the word "fraud" to describe the management of wework? Is a ponzi scheme not a classic fraud methodology? Just trying to see what your baseline is here. 

[hornhorn 100]

1 minute ago, Captainant said:

Weren't you just giving me shit a few posts ago for using the word "fraud" to describe the management of wework? Is a ponzi scheme not a classic fraud methodology? Just trying to see what your baseline is here. 

I can't prove that its a fraud. However its easy to see that it looks like a ponzi scheme draped as a business. But, fair point. 

[hornhorn 100]

Spoiler

SoftBank has struck a deal to take control of WeWork, the co-working company announced.

The Wall Street Journal reported Tuesday that SoftBank would hand former WeWork CEO Adam Neumann as much as $1.7 billion in exchange for his agreement to step down as chairman and give up his voting rights.

 

CNBC’s David Faber first reported on Monday that SoftBank would spend between $4 billion and $5 billion on new equity and existing shares in WeWork’s parent company, The We Co. The deal would value WeWork between $7.5 billion and $8 billion on a pre-funding basis, which is a fraction of the $47 billion private valuation assigned to it earlier.

Once the deal is completed, SoftBank is expected to own 70% or more of WeWork, according to people familiar with the matter. SoftBank COO Marcelo Claure will take control of WeWork in some capacity in the near term, while Neumann’s stake will be reduced to low double digits.

Co-CEOs Artie Minson and Sebastian Gunningham replaced Adam Neumann in September after he attracted scrutiny for his unusual leadership style and apparent conflicts of interest. Late last month, WeWork pulled its IPO filing amid criticism from investors, mounting losses and a dwindling IPO valuation.

Since Neumann’s departure, WeWork’s new leadership has worked to get the company back on track to growth, including exploring the sale of several businesses. The company was also expected to lay off at least 2,000 people, or 13% of its staff, and more job cuts could be on the way, according to The Guardian.

 

SoftBank to take control of WeWork

Source: https://www.cnbc.com/2019/10/23/softbank-to-take-control-of-wework.html

Edited October 23, 2019 by hornhorn

[bernorange 8359]

16 hours ago, Rusty Shackelford said:

... My guess is that one or more of the big banks are in serious trouble and the other banks know it and are unwilling to loan them money at any interest rate, so the Fed is stepping in. They need to tell us who is involved in these repo operations, it is bullshit that they keep it confidential.

I read a bit a few days ago where someone deduced that the spike in repo rates was because of JPMorgan.  That's why the Bloomberg bit I quoted above really stood out to me.

https://www.reuters.com/article/us-usa-repo-jpmorgan-analysis-idUSKBN1WG439

 

[bernorange 8359]

Maybe some truth to this...

Quote

... starting in early September, JPMorgan's government-only money-market fund started pulling money out of overnight markets, in this case by yanking short-term Bills and pushing the fund's Weighted Average Maturity sharply higher, with WAM peaking on Sept 13 just one day before all hell broke loose in Repo as overnight repo rates exploded as dealers suddenly found themselves without access to liquidity. This is shown in the following chart, courtesy of Monday Morning Macro.

...

https://www.zerohedge.com/markets/liz-warren-wants-know-if-jpmorgan-caused-repo-turmoil-force-fed-launching-qe

[Rusty Shackelford 414]

Yes, I read some more into it last night and saw the same things pointing to JPM.  Now the only question is their intent for pulling their cash out of the overnight market.  Did they do it because they needed the cash to meet the reserve requirements or did they do it to force the Fed to loosen up, or maybe they just don't want to lend to shitty banks that are in trouble?

Edited October 23, 2019 by Rusty Shackelford

[hornhorn 100]

WeWork to layoff 2000 employees.

Spoiler

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https://www.ft.com/content/7fb9ffb2-f53d-11e9-b018-3ef8794b17c6

Masayoshi Son, SoftBank’s billionaire founder, vowed on Tuesday to “double down” on its investment in WeWork as he confirmed plans for a $9.5bn rescue that will hand up to $1.7bn to Adam Neumann, the crisis-hit group’s cofounder. In a statement on Tuesday evening in New York, SoftBank said it would “accelerate” WeWork’s path to profitability and positive free cash flow after years of heavy losses that left the New York co-working company with just a few weeks worth of cash when a planned initial public offering collapsed last month.  Mr Neumann — the WeWork cofounder whose ambition of disrupting the global office market helped convince SoftBank to commit $10.65bn to the company before its aborted attempt to go public sank its valuation from $47bn to $8bn — will cede the high-voting shares that had given him control of the company.  In return, however, SoftBank is offering to buy up to $1bn of his shares, advance $500m in loans and pay him a $185m “consulting fee”. Why SoftBank's $97bn Vision Fund is under fire Although it plans to own 80 per cent of WeWork’s equity after the deal is completed, SoftBank added it would not have majority control. Mr Neumann’s voting rights will pass instead to an expanded WeWork board, helping SoftBank avoid consolidating the WeWork losses in its own accounts. The Japanese group will treat the New York-based company as an associate rather than a subsidiary, it said. Marcelo Claure, SoftBank’s chief operating officer, will become executive chairman as Mr Neumann yields the chairmanship to become a board observer. The new investment would “restore momentum” to WeWork, Mr Claure said, adding that he was committed to making it profitable. Explaining his decision, Mr Son said: “It is not unusual for the world’s leading technology disrupters to experience growth challenges as the one WeWork just faced. Since the vision remains unchanged, SoftBank has decided to double down on the company by providing a significant capital infusion and operational support.” SoftBank’s offer includes a tender for up to $3bn of stock held by other investors, including Mr Neumann, priced at $19.19 per share. The offer will be particularly painful for employees and investors who did not tender their stock in an offering in April, when SoftBank bought $1bn worth of WeWork stock at a price of $54 a share.  The Japanese group is also accelerating a previously committed $1.5bn injection at a lower price of just $11.60 per share, however, and offering the SoftBank Vision Fund shares in WeWork at that reduced valuation in exchange for the fund’s holdings in the joint ventures through which some international operations outside Japan are run. The roughly $5bn of new debt on offer consists of $1.1bn in senior secured notes, $2.2bn in unsecured notes, and a $1.75bn letter of credit facility. WeWork chose the SoftBank offer over a rival debt package put together by JPMorgan Chase, its lead banker on the aborted IPO. Recommended Lex WeWork/SoftBank: facial massage SoftBank provided no immediate details of the terms of the lending package, or of any writedown to its existing holding in WeWork. Earlier, Bernstein analysts put the company’s potential losses on its investments at $3.6bn. Artie Minson and Sebastian Gunningham, who became co-chief executives when Mr Neumann surrendered his CEO position last month, indicated that WeWork would pull back from its ambitions of building a suite of other operations from schools to communal apartments.  The two men have put some of the smaller businesses bought by Mr Neumann up for sale and are expected to begin lay-offs that could affect at least 2,000 jobs. In the statement on Tuesday they said they would “streamline” WeWork and narrow its focus to the core business of providing desks in shared offices. Employees, who had mostly been left in the dark in the hours after the board approved the SoftBank investment, were told on Tuesday night that Mr Claure would “hold a conversation around the future of WeWork” on Wednesday morning, according to an email to staff seen by the Financial Times.

 

Source: https://www.ft.com/content/7fb9ffb2-f53d-11e9-b018-3ef8794b17c6

I'm not sure how much of this is true but I found this post from one of WeWork's current employee, sort of explains their cash woes:

Spoiler

You probably missed the best two months of your life. One of the reasons WeWork was losing so much money is because of the amount of money they spent on employee culture/happiness. I left my job as an engineer at a fortune 500 company about a year ago to join WeWork and I have to say it was one of the best decisions I've made in my 20+ year career. I got to experience probably the holy grail of employment as far as perks and how companies should treat their employees. The most devastating part about the upcoming layoffs (for me) is I know I'll never find such as awesome company again. Sometimes on random week nights we would end up in unplanned parties with celebrities and all the free food/alcohol you can stomach. It was really the life. I can go on and on about the awesome experiences I had like my two month world trip I took because we had unlimited vacation days. Or if you were too wrecked to go to work after partying on a Wednesday night until 6am it was cool because we had unlimited sick days. Or how they didn't give a fuck about what time you went to work or left as long as your work was completed. Or the multiple free week long festivals with celebrities they threw for their employees all over the world at no cost to the employees. Or the......you get my point. We felt loved and what's happening now is devastating.

 

Edited October 23, 2019 by hornhorn

[TwiceHorn 31449]

16 hours ago, hornhorn said:

The primary goal of the investment wasn't to create/sustain jobs and 401K and whatever else you listed up there. 

The primary goal of that investment was to buy WeWork some time and turn it into a successful enterprise. Softbank voluntarily invested in this ponzi scheme draped as business despite onerous founder control requirements. Employees voluntarily worked there and received what I'm presuming(until proven otherwise) a fair compensation for their work. 

Neither one should have any qualms at this point. If you want to feel bad, do so for these investors(however I don't). Employees can just pick up and leave today if they wanted to and they aren't out anything. They have a bone to pick if they aren't compensated when they leave. Investors, at least the late round ones cannot. 

While that is no doubt true, one of the main reasons we tolerate this kind of bullshit from Wall Street is that it creates businesses, which employ employees and do all this stuff that benefits society as a whole, and not just Softbank or WeWork executives, if the investment "goes right."

When people say capitalism has run amok, this is what they mean.

[hornhorn 100]

8 minutes ago, TwiceHorn said:

While that is no doubt true, one of the main reasons we tolerate this kind of bullshit from Wall Street is that it creates businesses, which employ employees and do all this stuff that benefits society as a whole, and not just Softbank or WeWork executives, if the investment "goes right."

When people say capitalism has run amok, this is what they mean.

But this isn't Wall Street. It was stopped before it could hit Wall Street. Wealthy private investors funded this organization with their own private money, voluntarily. 

This is where a stupid concept created jobs where there really weren't any. So you basically had flow of money from the rich to the poor/working class because the ultra wealthy thought they could make even more money or because of their fear of missing out. I'd argue this is one of the good things about capitalism where the blind greedy herd gets culled while the working class made some money through it.

I don't understand your problem with this.

Edited October 23, 2019 by hornhorn

[Nice Guy Eddie 13510]

24 minutes ago, hornhorn said:

But this isn't Wall Street. It was stopped before it could hit Wall Street. Wealthy private investors funded this organization with their own private money, voluntarily. 

This is where a stupid concept created jobs where there really weren't any. So you basically had flow of money from the rich to the poor/working class because the ultra wealthy thought they could make even more money or because of their fear of missing out. I'd argue this is one of the good things about capitalism where the blind greedy herd gets culled while the working class made some money through it.

I don't understand your problem with this.

Yep. Wall St. actually seemed to be ones calling out that the emperor (WeWork) wasn't wearing any clothes. I don't recall too many times that an IPO was scrutinized to this level by general commentators. Usually the investment banks just use the bad IPOs as a method to earn their fees and more on. There must be more to this story why Wall St. acted so differently in this case. Or perhaps the valuation was just too high and couldn't be brushed aside.

[hornhorn 100]

1 minute ago, Nice Guy Eddie said:

Yep. Wall St. actually seemed to be ones calling out that the emperor (WeWork) wasn't wearing any clothes. I don't recall too many times that an IPO was scrutinized to this level by general commentators. Usually the investment banks just use the bad IPOs as a method to earn their fees and more on. There must be more to this story why Wall St. acted so differently in this case. Or perhaps the valuation was just too high and couldn't be brushed aside.

Startups are staying private longer and longer where all the easy money is made before it goes public. Market saw this with Uber, Lyft, Slack etc. and was already weary of these "startups".  So WeWork had to package this turd as gold which isn't even a new concept. Its basically "hipster Regus"(not my term, I stole it). And went to task, and here we are. 

[Trey3216 15346]

45 minutes ago, hornhorn said:

Startups are staying private longer and longer where all the easy money is made before it goes public. Market saw this with Uber, Lyft, Slack etc. and was already weary of these "startups".  So WeWork had to package this turd as gold which isn't even a new concept. Its basically "hipster Regus"(not my term, I stole it). And went to task, and here we are. 

Yep.  Hipster Regus is a great description.  According to the employee quoted above, it was 'Frat-Party Hipster Regus' on top of that.  I can't believe people bought into Neumann's fantasyland Ponzi front.  

[hornhorn 100]

21 hours ago, Aqua Buddha said:

Yeah, where's the risk here on Neuman's part?

If WeWork made it big, he'd get all the rewards.  It's failing and he's getting rewarded.  I get buying out his stock but that consulting fee and the loan?  Now go tell middle class people with bills to pay why Warren's wealth tax is a bad idea.

Neumann's risk ended the day he convinced Masa Son to go all in. Anyone complaining, can go convince Masa Son or multitude of other VCs out there about an idea you have and there will be no risk for you as well. 

And JFC you do not understand what's happening here. They aren't just buying out his stock, he has controlling interst even AFTER selling his stake in WeWork. That's what Softbank is buying out from him by giving him another billion and consulting fee etc.

Now why would Softbank agree to give Neumann ordinary shares AND overriding control? Go ask them. But its their money and they can do what they want with it. The investors invested in Softbank will vote with their wallets come the next fund raising round due to this. 

[HRSchenker 2268]

TSLA up $51 in after hours trading!

[Continental Op 3934]

Endless blathering about wework and capitalism in the markets thread not going away.

[Continental Op 3934]

Double post

[Tailgate 3021]

24 minutes ago, HRSchenker said:

TSLA up $51 in after hours trading!

Boom!

[hornhorn 100]

Twitter down nearly 20%. Anyone piling up?

[Rusty Shackelford 414]

Glad the VIX is staying low, I'm going to have to buy some 11/1 VXX calls

https://www.cnbc.com/2019/10/24/goldman-sachs-predicts-the-fed-will-make-two-big-changes-next-week.html

Goldman Sachs predicts the Fed will make two big changes next week

Key Points

The Fed is expected to cut interest rates next week, but that would be the last such move for a while, according to Goldman Sachs.

Fed officials are likely to say this is the end of the “mid-cycle” adjustment that Chairman Jerome Powell alluded to in July, the bank predicts.

In addition, the central bank could remove the language stating it will “act as appropriate to sustain the expansion” that has been in play since June.

[Fudge Nuggets 19190]

12 hours ago, HRSchenker said:

TSLA up $51 in after hours trading!

So Elon is pulling an Enron and cooking the books?

[TwiceHorn 31449]

21 hours ago, hornhorn said:

But this isn't Wall Street. It was stopped before it could hit Wall Street. Wealthy private investors funded this organization with their own private money, voluntarily. 

This is where a stupid concept created jobs where there really weren't any. So you basically had flow of money from the rich to the poor/working class because the ultra wealthy thought they could make even more money or because of their fear of missing out. I'd argue this is one of the good things about capitalism where the blind greedy herd gets culled while the working class made some money through it.

I don't understand your problem with this.

When I say "Wall Street," I include private equity and Japanese hedge funds and all financial mechanics.  

This may not be the greatest example of it, but financial mechanics engage in transactions all the time that have little positive (or negative in a lot of cases) effect on the capital markets.  But they do enrich those whose only seeming distinguishing characteristic is an extreme tolerance (or ignorance) of risk and the ability to accumulate capital on which to obtain a return.  And sometimes, all that risk piles up and blows everything straight to hell, see, e.g., 2001 and 2008.

[hornhorn 100]

2 minutes ago, TwiceHorn said:

When I say "Wall Street," I include private equity and Japanese hedge funds and all financial mechanics.  

This may not be the greatest example of it, but financial mechanics engage in transactions all the time that have little positive (or negative in a lot of cases) effect on the capital markets.  But they do enrich those whose only seeming distinguishing characteristic is an extreme tolerance (or ignorance) of risk and the ability to accumulate capital on which to obtain a return.  And sometimes, all that risk piles up and blows everything straight to hell, see, e.g., 2001 and 2008.

But then you're conflating two issues. One involves valuations of epic proportions(2001) or leveraged risk of epic proportions(2008, where banks borrowed 33 times their capitalization) and fraud(by borrowers who forged pay stubs and tax records, mortgage lenders and bankers when they looked the other way and ratings agencies who stamped AAA on all those loans).

This is an investment by accredited mostly international investors with high net worth where leverage multiple isn't high enough to disrupt credit markets. A lot of it cash investment, now you could argue whether this is the best use of cash but hindsight being 20/20 and all its not a valid argument.

This is a direct flow of money from the rich to the working class in the form of jobs/salaries, albeit for a short while.

[Captainant 27653]

1 hour ago, hornhorn said:

This is a direct flow of money from the rich to the working class in the form of jobs/salaries, albeit for a short while.

Aside from trickle down being a lie, the current wework Ponzi scheme collapse (to borrow your view of it) is taking money away from employees because of the buyout to the fraudulent CEO. So it's moreso that during the fraudulent growth period, it gives some economic benefit, but then claws it back later down the line because trickle down is a lie. 

[52-80 19150]

8 minutes ago, Captainant said:

Aside from trickle down being a lie, the current wework Ponzi scheme collapse (to borrow your view of it) is taking money away from employees because of the buyout to the fraudulent CEO. So it's moreso that during the fraudulent growth period, it gives some economic benefit, but then claws it back later down the line because trickle down is a lie. 

i think adam neuman trickled his balls down softbank's face

[hornhorn 100]

1 minute ago, Captainant said:

Aside from trickle down being a lie, the current wework Ponzi scheme collapse (to borrow your view of it) is taking money away from employees because of the buyout to the fraudulent CEO. So it's moreso that during the fraudulent growth period, it gives some economic benefit, but then claws it back later down the line because trickle down is a lie. 

How is he taking money away from employees? Are they not getting compensated for the work they're doing currently? 

And what do you mean fraudulent growth period? The growth was valued by investors, its getting re-looked at by investors and they've decided that it isn't worth what they thought initially. The goal of this company wasn't to provide economic benefits but to cultivate a return for those investors because they were the only ones with something at risk. Employees showed up after everything was set up and claimed and are claiming what's theirs every two weeks whether WeWork turned profit or not. It didn't and they still get to claim their wages. Investors didn't. The only people that Neumann is taking money away from are the investors, not employees.

 

[hornhorn 100]

Amazon, Intel, Gilead, Visa and Verizon all report today after close/tomorrow before open, anyone playing these stocks or their derivatives?