"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, the 39-year-old executive who founded WeWork in 2010, is WeWork’s largest individual shareholder and has voting 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." This doesn't make him the owner of WeWork? He is the majority shareholder. So he's stealing from himself and from other shareholders?
No. Do the math. He gets 10 votes per share he owns and he has 65% of the vote. That means he has anywhere between 6.5% and 65% based on how many Class B vs Class A shares he has. Odds are his ownership is < 20%... and probably even closer to the 6.5%. He's raised A LOT of capital.
There are a myriad of rights that the funding members of venture rounds get as part of their class of shares that means you can own far in excess of 50% of the company and/or have far in excess of 50% of the voting shares and still not really control the company in any meaningful way. As many a founder has discovered when they're forced out by their board while they still ostensibly own 2/3 of the company.
He isn't stealing per say, he is just snaking it... He personally buys a commercial building at a good deal with money he made using other people's money, has it renovated a bit and leases it to his company which he built with other people's money. Guaranteeing investment in building and building equity, and considering the type of guy he is, he likely charges slightly higher rent then market price on the buildings he owns
Oh ok so he will just be forced out of the company if enough shareholders care. If he just owns <20%, it shouldn't be difficult.
It depends on the terms of his lease. If they're truly arms length market rate terms then he's actually concentrating his personal risk and aligning his incentives more closely with the company which is what an investor would want.
bottom line WeWorks is in the real estate business. being in the real estate business is a great business because all, yes all, western economies are inflation prone as politicians spend money they don't have. occasionally there are down moves in the r.e. market. the trick is not to be overlevered and to have the resources to buy in a down market. the genius of Weworks is that they fool large companies into renting and not buying by convincing them they are not in the r.e. business. therefore they should not own property. it looks like a good strategy for these companies in the short run. in the long run the companies are likely to be better off holding some property which appreciates over time.
Digging into WeWork's new financial metric https://www.axios.com/digging-into-...857-0233de83-9b8f-4645-b594-a4298ca8c5f4.html