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$1.7bn Paycheck For Wework Co-Founder As Thousands Fear Job Losses


10/25/2019


$1.7bn Paycheck For Wework Co-Founder As Thousands Fear Job Losses
Even as Japan’s investment conglomerate SoftBank reached a deal to takeover United States based office space sharing firm WeWork through owning a majority stake at the company, the deal has come as a boon for the beleaguered co-founder of WeWork - Adam Neumann. He is slated to part the company with a paycheck of $1.7bn payout even as its thousands of employees await the fate of their jobs.
 
Neumann quit as the chief operating officer of WeWork after intense pressure from investors following his failed adventure to take the company public last month. The company’s valuation dropped significantly to less than $10 billion from about $47 billion in January during its last funding round. 
 
WeWork was used to described as “largest physical social network in the world” by Neumann, 40, and had said that WeWork was a company that could one day even solve issues and problems for orphaned children.
 
SoftBank is taking over the company at very crucial juncture and the company is in a crisis. According to reports, without fresh investments, the company would have ended up burning all cash by the end of next month. And while the company, which was once identified as the most valued startup in the United States, struggles to survive under its new ownership and management, the only winner in this debacle seems to be Neumann. It has been reported that Neumann would sell of a majority of his stake in the company to SoftBank and would step down from the board of the company. The deal with SoftBank also gave Neumann an additional $185m “consultancy fee” as well as a $500m line of credit.
 
The investment from Softbank has further devalued the company at reportedly less than $8 billion. One of the reasons behind SoftBank taking over the company is that the performance of the company and its devaluation has significantly impacted the image of one of the largest tech investment companies of the world and SoftBank wants to turnaround WeWork’s fortunes to repair that damaged image. 
 
Reports also suggested that the new management of WeWork plans to sack about 2000 employees to cut down on costs and sell off some the property leases. The possibility of the redundancies has reportedly triggered anger among the 15,000 workforce of the at WeWork because many of them own shares of the company had had expected to make handsome money once the company went public. Now they are even unsure whether their jobs would remain with them.
 
There has been no comment from WeWork about the possible retrenchments.
 
Neumann started WeWork in 2008 as an “eco-friendly co-working space” in Brooklyn, New York after having tested his luck in a number of ventures such as a business selling women’s shoes with collapsible high heels and baby romper suits with reinforced knees.
 
“The 90s and early 2000s were the ‘I’ decade,” Neumann told The Daily News back in 2011. “The iPhone, the iPod — everything was about me. Look where that got us? In a terrible recession. The next decade is the ‘We’ decade, where collaboration is the future of innovation.”
 
But now, Neumann is no more with WeWork and this venture now is just another of his business venture on his resume.
 
(Source:www.theguardian.com)