Re:WeWork’s Once Robust Cash Reserves Have Dwindled, Raising...
by nostrademons on Friday December 16, 2022 @04:23PM
(#34020621)
Note that there's a very similar dynamic at play in the corporate jobs market, and lots of ordinary upper-middle-class corporate drones take advantage of it. Company has a bullshit job (or more likely, a whole bunch of bullshit jobs) that don't really add anything to the world. People who want to actually find meaning in their work stay away from this job because it's bullshit, which prompts the company to raise the salary for the job until somebody takes it. Savvy worker-entrepreneurs see that a company is willing to pay a lot to do a little but put up with a lot of bullshit, and say "I'll take that trade." They then proceed to do just enough work to keep the job while collecting the fat salary, all at the expense of shareholders. This both exploits the bubble in production capital and hastens its end, as the company eventually implodes due to its employees not doing any real work and thus not being able to catch up to changing market dynamics.
If you actually believed that your employer had a promising business opportunity, the rational thing to do is to raise capital and compete with them, not go work for them. This is why salaried employment is a market for lemons, and a fair bit has been written about this in economic literature.
Matt Levine had a great theory on this. It basically boiled down to:
"If I wanted to short the VC market how would I do it?"...and basically point to what Adam Neumann did:
I can’t quite say that Neumann improved the allocation of capital, but there are certain parallels. Neumann too … look, here I am speculating, and I don’t mean to speak for Neumann’s subjective experience of his WeWork career, but from the outside, in hindsight, objectively, one could describe it like this: He spotted a bubble in venture-subsidized fast-growing money-losing capital-intensive low-margin tech-adjacent companies, noticed in particular that SoftBank seemed to be on the long side of that bubble, and set himself up to profit on the other side—by raising money for his own ultra-unicorn, by setting up the governance of that unicorn in a maximally self-interested way, and by selling and margining a bunch of his personal shares. 6 When investors like SoftBank were frenziedly buying unicorn stock, he was frenziedly selling it. He set himself up to profit from the collapse of the unicorn bubble, and accelerated that collapse. Lessons were learned, and he taught them. Now he’s rich.
https://www.bloomberg.com/opinion/articles/2019-10-23/how-do...