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So the CEO of WeWork leases buildings he owns back to WeWork

180! Genius! For more than two months after employees at ...
provocative genital piercing
  01/16/19
(((Mr. Neumann)))
Razzle-dazzle Orchid Corner Dragon
  01/16/19
Adam Neumann (Hebrew: אדם נוימן‎; born 1979) is ...
provocative genital piercing
  01/16/19
...
wine community account pit
  01/16/19
...
Flickering step-uncle's house pocket flask
  01/16/19
...
Bonkers hideous philosopher-king liquid oxygen
  01/16/19
...
brilliant marvelous karate
  01/16/19
...
Galvanic organic girlfriend
  01/16/19
...
Green cracking hunting ground
  01/16/19
...
Mauve church building
  08/30/19
...
Flickering step-uncle's house pocket flask
  08/30/19
Just do funnel millions of idiot venture capital dollars int...
passionate very tactful public bath macaca
  01/16/19
...
provocative genital piercing
  01/16/19
sounds like a bunch of my business clients, owning the real ...
Mildly autistic personal credit line
  01/16/19
Any small biz client who has ever talked to a lawyer or acco...
Soul-stirring kitchen
  01/16/19
ONE | WEIRD | TRICK
startling appetizing house
  01/16/19
isn’t that what McDonald’s does to its franchise...
Opaque effete turdskin theater
  01/16/19
(guy who watched The Founder)
startling appetizing house
  01/16/19
...
Jade Place Of Business Sneaky Criminal
  01/16/19
obviously but I was asking for the legal distinction tha...
Opaque effete turdskin theater
  01/16/19
...
wine community account pit
  01/16/19
...
Flickering step-uncle's house pocket flask
  01/16/19
McDonalds the corporation leases the land to franchisees. So...
sienna bawdyhouse cuck
  01/16/19
Only took 53 minutes on (xo 2019)
provocative genital piercing
  01/16/19
...
wine community account pit
  01/16/19
can someone explain to me wework's business model. why don't...
Smoky property masturbator
  01/16/19
Seems like you understand it pretty well, actually.
Painfully honest brunch
  01/16/19
why do they need wework? why not just lease directly to tena...
Smoky property masturbator
  01/16/19
it's a matter of YOU not wanting short-term leases with mult...
Flickering step-uncle's house pocket flask
  01/16/19
so in seriousness, wework's only real "advantages"...
Painfully honest brunch
  01/16/19
seems like a very unstable value proposition for such a larg...
Smoky property masturbator
  01/17/19
Ljl
provocative genital piercing
  01/16/19
lmao
Canary Base Gaming Laptop
  01/16/19
...
Bat-shit-crazy Shaky Stead
  08/30/19
In general, sure. IRL, WW has a few advantages: 1. They ...
Motley gunner
  01/16/19
this doesn't really explain it but darnell explains it below
Smoky property masturbator
  01/16/19
they're trading risk. wework leases buildings with long ter...
ruby heady den
  01/16/19
This guy gets it. Particularly with venture capital floodin...
grizzly indian lodge
  01/16/19
Maybe not though. If there's a ton of uncertainty and I'm a...
Motley gunner
  01/16/19
We work pricing and layout is not economic if you have over ...
grizzly indian lodge
  01/16/19
Again, note the word "some". Corps have a bunch o...
Motley gunner
  01/16/19
Leave business to actual business people.
grizzly indian lodge
  01/16/19
I will not.
Motley gunner
  01/16/19
if demand goes down then the ability to lease out smaller pl...
Opaque effete turdskin theater
  01/16/19
Is this actually right? Seems like in a strong economy, b...
arousing institution ladyboy
  08/30/19
I’m proud he’s Jewish.
startled bright range
  01/16/19
...
floppy space toilet seat
  08/30/19
And, get this, the Goys pay YOU to work there! Crazy
irradiated volcanic crater hominid
  08/30/19


Poast new message in this thread



Reply Favorite

Date: January 16th, 2019 5:08 PM
Author: provocative genital piercing

180! Genius!

For more than two months after employees at International Business Machines Corp. moved into a Manhattan building managed by office-space giant WeWork Cos., frequent elevator problems forced workers to climb the stairs of the 11-story building and prompted complaints to the company.

One of the landlords behind the building was no ordinary owner: It was Adam Neumann, WeWork’s chief executive, who leased the property to WeWork after buying it, according to people familiar with the situation.

Mr. Neumann has made millions of dollars by leasing multiple properties in which he has an ownership stake back to WeWork, one of the country’s most valuable startups. Multiple investors of the privately held company said the arrangement concerned them as a potential conflict of interest in which the CEO could benefit on rents or other terms with the company.

WeFundraise

WeWork's valuation is soaring as it raises billions of dollars.

$50 billion

Valuation

Cumulative fundraising

40

30

20

10

0

’14

’15

’16

’17

2013

’18

’19

Source: Dow Jones VentureSource

A WeWork spokesman said all related-party deals are reviewed and approved by the board or an independent committee and disclosed to investors. Mr. Neumann declined to comment through a spokesman.

WeWork, which was recently valued at $47 billion by investor SoftBank Group Corp. , signs long-term leases for office space with landlords, then subleases the space on a short-term basis to companies. Mr. Neumann, the 39-year-old executive who founded WeWork in 2010, is WeWork’s largest individual shareholder and has voting control over the company.

In at least one instance before he secured full control over the company, Mr. Neumann wasn’t able to complete a similar deal. When WeWork was negotiating a lease on a Chicago building in 2013, he tried to buy a stake of up to 5% in the building—210-220 N. Green St.—as part of the deal, people familiar with the negotiation said. WeWork’s board raised concerns about the deal, citing a potential conflict of interest, and WeWork paid for the stake instead, one of the people said.

The next year, Mr. Neumann effectively gained control over the company. As part of an investment round for WeWork in 2014, he was granted Class B shares that gave him 10 votes per share, and now he has more than 65% of the overall share vote, according to WeWork corporate filings.

Adam Neumann, CEO of WeWork, speaks to guests at the TechCrunch Disrupt event in New York in 2017.

Adam Neumann, CEO of WeWork, speaks to guests at the TechCrunch Disrupt event in New York in 2017. PHOTO: EDUARDO MUNOZ/REUTERS

Mr. Neumann has since bought up several properties through investor groups and leased some of them to WeWork.

In a prospectus related to a debt offering last year, WeWork said it had leases with multiple properties owned in part by Mr. Neumann. It also said WeWork paid more than $12 million in rent to buildings “partially owned by officers” of WeWork between 2016 and 2017, and future payments total more than $110 million over the life of the leases. The specific properties weren’t listed.

In addition to the IBM building at 88 University Place, in which Mr. Neumann owns a 50% stake, he has invested in properties in San Jose, Calif., where WeWork is the tenant or expected to lease in the future, multiple people familiar with the deals said.

There, he is a main investor in a group that has been buying up numerous properties in the downtown over the past year-and-a-half, including a 14-story tower built for the Bank of Italy in 1925, these people said.

Mr. Neumann’s plan is for the San Jose portfolio to host an urban campus of sorts—full of WeWork offices and related properties, including a residential building called WeLive, these people said. The developments would require some new construction, and WeWork has tapped famed architect Bjarke Ingels to design a master plan, these people said.

Otto Lee, an intellectual-property lawyer who sold his offices in the Bank of Italy building to the investor group, said he wasn’t aware Mr. Neumann was one of the buyers. “They have been quite tight-lipped about exactly who the people funding it are,” he said.

Another of the San Jose properties, St. James Plaza, which the group bought for $40 million in the summer, has signed a lease with WeWork.

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Corporate governance experts say Mr. Neumann’s ownership of buildings he leases to WeWork is unusual for a large company. Corporations typically bar executives from similar arrangements, given that companies risk paying too much in rent or leasing buildings they ordinarily wouldn’t, they said.

“In a public company, that would be considered highly controversial,” said Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware. “Usually human beings tend to think of themselves over the company itself when they’re on the other side of the transaction.”

In New York, the deal at 88 University came together in 2015 after Mr. Neumann joined with fashion designer Elie Tahari to buy the building for $70 million. The pair planned a renovation that included an overhaul of at least one of the elevators, said a person involved with the deal.

The owners subleased the building to WeWork. In turn, WeWork struck a deal with IBM, which needed space quickly and moved there in spring 2017. Mr. Neumann’s interest in the building was revealed last year by real-estate publication the Real Deal.

Soon after IBM arrived, one of the two elevators was out while the other was frequently breaking, causing lengthy waits and long slogs up the building’s narrow stairs.

IBM executives, frustrated about their working conditions, complained to WeWork about the broken elevators, said people familiar with the matter. While landlords typically are responsible for elevators, WeWork had signed a so-called triple-net lease with Messrs. Tahari and Neumann, in which WeWork was responsible for fixing issues like elevators. As part of that deal, the landlord set aside funds to WeWork to pay for such renovations, a WeWork spokesman said.

An IBM spokeswoman declined to comment.

The building’s value, meanwhile, has gone up, and the owners have been able to borrow more money by refinancing the property’s debt. Late last year, Messrs. Neumann and Tahari took out a $77.5 million loan, according to loan adviser Meridian Capital Group, $7.5 million more than the prior loan to buy the building.

Mr. Neumann owes his personal wealth largely to sales of WeWork stock. It is unclear how much WeWork stock he has sold, but he has told some friends it is in the hundreds of millions of dollars.

https://www.wsj.com/articles/weworks-ceo-makes-millions-as-landlord-to-wework-11547640000?mod=hp_lead_pos6

(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#37604167)



Reply Favorite

Date: January 16th, 2019 6:41 PM
Author: Razzle-dazzle Orchid Corner Dragon

(((Mr. Neumann)))

(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#37604442)



Reply Favorite

Date: January 16th, 2019 5:10 PM
Author: provocative genital piercing

Adam Neumann (Hebrew: אדם נוימן‎; born 1979) is an Israeli–American billionaire businessman.

(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#37604175)



Reply Favorite

Date: January 16th, 2019 6:15 PM
Author: wine community account pit



(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#37604329)



Reply Favorite

Date: January 16th, 2019 6:30 PM
Author: Flickering step-uncle's house pocket flask



(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#37604376)



Reply Favorite

Date: January 16th, 2019 6:31 PM
Author: Bonkers hideous philosopher-king liquid oxygen



(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#37604382)



Reply Favorite

Date: January 16th, 2019 6:47 PM
Author: brilliant marvelous karate



(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#37604456)



Reply Favorite

Date: January 16th, 2019 9:25 PM
Author: Galvanic organic girlfriend



(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#37605354)



Reply Favorite

Date: January 16th, 2019 10:46 PM
Author: Green cracking hunting ground



(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#37605772)



Reply Favorite

Date: August 30th, 2019 9:06 AM
Author: Mauve church building



(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#38763621)



Reply Favorite

Date: August 30th, 2019 9:06 AM
Author: Flickering step-uncle's house pocket flask



(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#38763622)



Reply Favorite

Date: January 16th, 2019 5:38 PM
Author: passionate very tactful public bath macaca

Just do funnel millions of idiot venture capital dollars into your other entities that have viable business models.

(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#37604232)



Reply Favorite

Date: January 16th, 2019 5:41 PM
Author: provocative genital piercing



(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#37604240)



Reply Favorite

Date: January 16th, 2019 5:43 PM
Author: Mildly autistic personal credit line

sounds like a bunch of my business clients, owning the real estate and leasing it back to their businesses. Smart.

(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#37604247)



Reply Favorite

Date: January 16th, 2019 5:56 PM
Author: Soul-stirring kitchen

Any small biz client who has ever talked to a lawyer or accountant does what you're describing. It's not the same thing at all.

(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#37604285)



Reply Favorite

Date: January 16th, 2019 5:48 PM
Author: startling appetizing house

ONE | WEIRD | TRICK

(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#37604261)



Reply Favorite

Date: January 16th, 2019 6:01 PM
Author: Opaque effete turdskin theater

isn’t that what McDonald’s does to its franchisees?

(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#37604296)



Reply Favorite

Date: January 16th, 2019 6:01 PM
Author: startling appetizing house

(guy who watched The Founder)

(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#37604298)



Reply Favorite

Date: January 16th, 2019 6:07 PM
Author: Jade Place Of Business Sneaky Criminal



(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#37604313)



Reply Favorite

Date: January 16th, 2019 6:10 PM
Author: Opaque effete turdskin theater

obviously

but I was asking for the legal distinction that makes this bad

(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#37604319)



Reply Favorite

Date: January 16th, 2019 6:15 PM
Author: wine community account pit



(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#37604330)



Reply Favorite

Date: January 16th, 2019 6:30 PM
Author: Flickering step-uncle's house pocket flask



(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#37604378)



Reply Favorite

Date: January 16th, 2019 6:54 PM
Author: sienna bawdyhouse cuck

McDonalds the corporation leases the land to franchisees. So the corporation is enriched.

Here, the CEO owns the building personally. He personally makes money.

(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#37604490)



Reply Favorite

Date: January 16th, 2019 6:59 PM
Author: provocative genital piercing

Only took 53 minutes on (xo 2019)

(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#37604518)



Reply Favorite

Date: January 16th, 2019 9:25 PM
Author: wine community account pit



(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#37605350)



Reply Favorite

Date: January 16th, 2019 6:19 PM
Author: Smoky property masturbator

can someone explain to me wework's business model. why don't the owners of these buildings just do what wework is doing?

(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#37604340)



Reply Favorite

Date: January 16th, 2019 6:22 PM
Author: Painfully honest brunch

Seems like you understand it pretty well, actually.

(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#37604353)



Reply Favorite

Date: January 16th, 2019 6:38 PM
Author: Smoky property masturbator

why do they need wework? why not just lease directly to tenants? is it a matter of finding tenants who want to enter into shorter term leases?

(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#37604425)



Reply Favorite

Date: January 16th, 2019 6:40 PM
Author: Flickering step-uncle's house pocket flask

it's a matter of YOU not wanting short-term leases with multiple people.

(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#37604432)



Reply Favorite

Date: January 16th, 2019 10:44 PM
Author: Painfully honest brunch

so in seriousness, wework's only real "advantages" are that they've marketed themselves as cool, have a bunch of locations that they can use to create packages for people (e.g., you could have a desk at any of several locations in a city like LA or even nationally - though i don't know if they've rolled that out yet), and (this is the major one, I think) allow people to de-risk their businesses by signing very short term leases for very small increments of space.

The problem they'll face is that (as other people have noted), they have long-term leases for large spaces while they sell month-to-month leases for small spaces. They make up the inefficiencies by charging way more than they're leasing it for themselves, but as soon as the "cool" factor wears off or there's a drop in demand, they could end up with a mismatch (i.e., stuck in long term leases that they can't fill). Also, depending on what kind of work you do, you may not be able to use a wework space for security reasons.

Why don't the owners of the buildings just do this:

1) they're not in the business of operating "cool" work environments

2) more importantly, they have no interest in super-short term leases. they have very long-term liabilities and don't want to have to deal with signing up 1000 new tenants per year.

(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#37605764)



Reply Favorite

Date: January 17th, 2019 4:41 PM
Author: Smoky property masturbator

seems like a very unstable value proposition for such a large business, especially in real estate

(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#37609999)



Reply Favorite

Date: January 16th, 2019 6:39 PM
Author: provocative genital piercing

Ljl

(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#37604426)



Reply Favorite

Date: January 16th, 2019 10:32 PM
Author: Canary Base Gaming Laptop

lmao

(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#37605719)



Reply Favorite

Date: August 30th, 2019 9:09 AM
Author: Bat-shit-crazy Shaky Stead



(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#38763632)



Reply Favorite

Date: January 16th, 2019 6:41 PM
Author: Motley gunner

In general, sure. IRL, WW has a few advantages:

1. They allow you to get subscription type leasing where smaller businesses can rent spaces on an as needed basis in multiple cities; and

2. If you need to rent 10 spaces across various cities, it is easier to talk to 1 company to get that done rather than deal with 10 landlords.

(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#37604437)



Reply Favorite

Date: January 16th, 2019 6:55 PM
Author: Smoky property masturbator

this doesn't really explain it but darnell explains it below

(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#37604492)



Reply Favorite

Date: January 16th, 2019 6:44 PM
Author: ruby heady den

they're trading risk. wework leases buildings with long term leases and then sublets small parts of the building on shorter leases with more flexible terms. in a generally strong economy with continued growth in demand for commercial real estate, wework looks clever and extracts more revenue per square foot of real estate than the old school commercial leasing companies. if demand for commercial real estate plummets they should go belly up...

except, they may have grown too big to fail: https://www.nytimes.com/2018/11/13/business/dealbook/wework-office-space-real-estate.html

(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#37604448)



Reply Favorite

Date: January 16th, 2019 6:48 PM
Author: grizzly indian lodge

This guy gets it. Particularly with venture capital flooding the market at an all time high. Plenty of business need flexible leases. Risk is that capital dries up.

(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#37604459)



Reply Favorite

Date: January 16th, 2019 6:53 PM
Author: Motley gunner

Maybe not though. If there's a ton of uncertainty and I'm a mid-sized or big company, I may choose to get rid of some of my long term leases as they come up for renewal and go with short term WW leases instead. The theory being that I might end up laying off a bunch of people and don't want to be stuck paying for real estate that I won't need.

(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#37604481)



Reply Favorite

Date: January 16th, 2019 7:05 PM
Author: grizzly indian lodge

We work pricing and layout is not economic if you have over ~50 people in the same location. Otherwise everyone would sign a short term lease with them lol.

(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#37604545)



Reply Favorite

Date: January 16th, 2019 7:47 PM
Author: Motley gunner

Again, note the word "some". Corps have a bunch of small locations that they're never sure they will keep around in a shit economy.

(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#37604803)



Reply Favorite

Date: January 16th, 2019 10:25 PM
Author: grizzly indian lodge

Leave business to actual business people.

(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#37605690)



Reply Favorite

Date: January 16th, 2019 10:45 PM
Author: Motley gunner

I will not.

(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#37605767)



Reply Favorite

Date: January 16th, 2019 6:54 PM
Author: Opaque effete turdskin theater

if demand goes down then the ability to lease out smaller plots would be a huge advantage

(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#37604488)



Reply Favorite

Date: August 30th, 2019 9:05 AM
Author: arousing institution ladyboy

Is this actually right?

Seems like in a strong economy, businesses should be more willing to invest long term in their office space, and thus look for solutions that offer savings over the short term model that WeWork offers (though maybe WeWork is a profitable source of leads into what sort of businesses are ready for a more long term solution).

Conversely, in a bad economy, it seems like businesses should be risk averse to long term office space commitments, which seems like it should give WeWork's model a big advantage relative to longer term models.

(Maybe I'm wrong about this, idk, if I am, someone explaining why I'm wrong would be helpfully educational)

----------

----------

From just thinking about it off the top of my head:

It seems like WeWorks big bet, is not so much whether the economy will be good or bad, but rather related Ronald Coase's 'Nature of the Firm'

https://en.wikipedia.org/wiki/The_Nature_of_the_Firm

In a world with more larger stable firms, those firms don't have much of a need for WeWork's model.

In a world with smaller contactors of dynamic sizes providing services to each other, it seems like WeWork's model has value.

(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#38763617)



Reply Favorite

Date: January 16th, 2019 10:26 PM
Author: startled bright range

I’m proud he’s Jewish.

(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#37605701)



Reply Favorite

Date: August 30th, 2019 9:12 AM
Author: floppy space toilet seat



(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#38763643)



Reply Favorite

Date: August 30th, 2019 9:25 AM
Author: irradiated volcanic crater hominid

And, get this, the Goys pay YOU to work there! Crazy

(http://www.autoadmit.com/thread.php?thread_id=4179248&forum_id=2#38763686)