On August 14, We Company (the company formerly known as WeWork) submitted their prescribed S-1 papers to go public and it is worth reading them in full. I mean, forget the serious stuff for a moment. The thing starts with an epigram: "We dedicate this to the energy of ourselves – bigger than each of us, but in all of us."

The energy of us. I understand this from the point of view of branding – they literally call themselves The We Company – but ordinary people would simply say "our energy". I hate Silicon Valley's tech companies a lot, but New York easily suits them in the ego. Look at these children who literally submit the English language to their will!

Anyway, please join me on a commented journey through my favorite parts of the compulsory shelf.

Is The We Company a technology company?

WeWork – sorry, The We Company – is primarily a landlord for freelancers and businesses. You pay rent on your desk or whatever and you do not have to work in the place where you live. (There are also conference rooms.) And yet the word "technology" appears 110 times in the S-1. "We offer our members flexible access to beautiful spaces, a culture of inclusiveness and the energy of an inspired community, all linked by our extensive technological infrastructure," explains The We Company. But I have a hell of a lot of time to figure out what the "extensive technological infrastructure" is. Does this only mean Wi-Fi? Is it the neon light? Is it … laser?

It is true that The We Company hires many engineers, product designers and so on. But what does a big company do not do? If this is the standard for a technology company, JPMorgan Chase is one of the largest and most important technology companies in the world.

I'll just drop the chart of The We Company here, because it makes me frankly speechless:


This is the planned structure for The We Company after the IPO, as it appears in the S-1 form. I would try to explain, but I do not understand what the hell is going on.

The company We is generally interested in working groups (WeWork), private schools (WeGrow) as well as apartments and hotels (WeLive). The We Company is not a technology company, although it proves to be very successful. It is also involved in a private club called The Wing, which targets women. According to these documents, the We Company is involved with 23 percent. The remaining investments are predominantly real estate. This does not detract from the fact that there are two ways in which the company makes money: 1) People who pay fees to lease their shit, and 2) Sponsorship and ticket sales for events.

The main competitor of We Company is IWG, a real estate company that does not purport to be a technology company Re-code mention, that. "IWG had significantly more space and more customers and actually made a profit, but the market capitalization is only 8 percent of what SoftBank's recent round of financing for WeWork holds." Re-code Helpful tells us. The We Company is not just a regular real estate company. It's a real estate company that has taken a lot of money from SoftBank and other companies just by saying a lot of "tech".

Anyway, I kept going to the documents and wow. Adam Neumann, CEO of The We Company, and Rebekah Paltrow Neumann, founding partner of The We Company and first cousin of Gwyneth, have a succession planning document that does not even consider the possibility of divorce. If anything happens to Adam, Rebekah and two board members (possibly at their discretion) must select the next CEO.

If Rebekah can not – perhaps because she is dead or disabled – a trustee acting on behalf of Neumann's estate will take on the job of finding a new CEO. At this company, it seems only about the Neumanns, especially to Adam Neumann.

An important risk factor: Adam Neumann

Adam is a risk factor. Seriously, check the section Risk Factors. "Adam will have the opportunity to control the outcome of matters submitted to our shareholders for approval, including the election of our directors. As a founder-led company, we believe that this voting structure reconciles our interests in shareholder value creation. "Well, it does create value for Adam.

Adam Neumann bought buildings that he leased to WeWork, The Wall Street Journal reported in January. Adam made millions in the deals. In May, he said he would sell the properties leased by WeWork to a real estate investment unit operated by WeWork and financed by external investors. The Wall Street Journal reported.

The investment vehicle called ARK will manage Adams' interests in 10 commercial properties under the IPO form. Four of these properties are rented by WeWork.


This table from Forms S-1 describes the structure of ARK. I do not understand it either.

The S-1 Form states that Adam "currently has a credit line of up to $ 500 million with UBS AG, Stamford Branch, JPMorgan Chase Bank, NA, and Credit Suisse AG, New York Branch, of which approx $ 380 million outstanding as of July 31, 2019. "This loan is backed by a number of We Company's shares.

Adam also holds $ 97.4 million in JPMorgan Chase, "through a variety of credit products, including mortgage-backed mortgages," even though these "credit products" are not backed by We Company shares. Incidentally, JPMorgan Chase is one of the underwriters of the IPO of The We Company. (Other companies include Goldman Sachs, Bank of America, Citigroup and Barclays.) The initial public offering could be worth more than $ 122 million Bloomberg.)

Although Adam has not received any salary for his work at We Company or for Rebekah, the company granted him a $ 7 million loan in June 2016. (He will be repaid with interest.)

There are several reasons to start an IPO: One big reason is to make new investments. Initial public offerings allow insiders to earn money. Before 2019 Adam did not receive any share premiums, according to the documents. However, as The We Company grew larger, the board decided to give Adam a reason to go public, giving Adam options to buy more than 42 million shares.

The shares of Adam's compensation package are as follows:

  • 9,438,481 options become vested monthly for five years
  • 9,438,481 options are performance-based and are blocked on a monthly basis for five years
  • 7,078,861 options are also granted monthly "if we achieve a public market capitalization of $ 50 billion and thereafter exercisable for a period of years on a monthly basis".
  • 7,078,861 options "meet the performance-based vesting conditions if we achieve a public market capitalization of $ 72 billion and exercise monthly for a period of two years from this date"
  • 9,438,481 options "meet the performance-related vesting conditions if we achieve a public market capitalization of $ 90 billion and exercise it monthly over a period of two years from that date"

As a result, Adam received a $ 362.1 million loan from The We Company in April to exercise his stock options. Adam repaid the loan this month by returning the shares. "After completing this loan, Adam Company has spent the number of profit shares equal to the number of shares that Adam has made to settle the loan." I'm not sure I'm following that phrase, but it seems that way BloombergShira Ovide did that, and she describes it as follows: "Neumann has part of these options, which the company has exchanged for more than $ 360 million in a complicated transaction with the company, which sends it a message to future WeWork. Gains tied financial instrument. "

Adam also spread the financial love to his larger family. From the filing:

One of Adam's immediate family members hosted eight events related to our Creator Awards ceremonies in 2018, for which she received less than $ 200,000 in total. Another family member of Adam has been head of the company's wellness offering since 2017, earning less than $ 200,000 a year in this role.

Also, while talking about Adam-related risk factors: Interviews Adam gave business insider and Axios may violate the Securities and Exchange Commission's IPO vesting period. They are listed in the form as business risks. See, The We Company announced an IPO in December; The period of silence required by the SEC begins with the registration of a company and ends when the SEC officials declare the declaration "effective."

Overall as Shira Ovide at Bloomberg points out that there are only 10 revelations about Adam worth 10 pages.

What about Rebekka?

Rebekah, Adam's "strategic thought partner," appears much less frequently. As I said, she never received a salary. She also caused a sensation in September 2018 by making some rather strange comments on what women should do, according to CNBC: "Much of a woman's being is to help men [like Adam] manifest their vocation in life. "

This is a cloudy view of marriage: Only one partner can "manifest his vocation in life". While The We Company dropped those comments – somehow! – By adding more context, it did not help, because the context is, "The reality I see today is that there is nothing bigger that I think women can do than strengthen their partners – and they can Being a man, a woman, a girlfriend, it does not matter, but others are strengthening. "

At The We Company, Rebekah is the CEO of WeGrow, the school. She studied Business Administration and Buddhism at Cornell University. Actually, I just want to quote her biography on WeGrow: "Rebekah has traveled all over the world teaching and studying with many master disciples such as His Holiness the Dalai Lama and Mother Nature, and has set himself the goal of creating a pedagogical community, which promotes growth in the minds, bodies, and souls of the human being that enhances the collective consciousness of the world. "

She even attended the birthday party of the Dalai Lama Fast company Profile. "We have no limit at all between work and life," she said Fast company, "It's not even a blurry line, there's no line."

Since Rebekah is responsible for the branding, I assume that the S-1 makes the following sentence: "We are a joint venture committed to the maximum global impact. Our mission is to raise the consciousness of the world. "

I accuse SoftBank

OK. So we know that The We Company, strange as it is, is not a technology company. Why does it have this sky-high rating? The answer appears once in the S-1: SoftBank.

SoftBank, its Vision Fund and its CEO and founder Masayoshi Son have established themselves in the technology industry with investments in Slack, Uber and GM Cruise. "SoftBank's strategy has been to put huge sums of money – the smallest deals are about $ 100 million, the largest in billions of dollars – into the most successful tech startups in a particular category," said Sarah McBride, Selina Wang and Peter Elstrom in one Bloomberg Profile last year.

In this article, an anonymous Silicon Valley partner named SoftBank a "big stack bully," which is a poker phrase for someone who has so many chips that nobody else will bet. (If you're reading this anonymous source, please drop me a line and you'll be funny!) SoftBank's investments are vast – and often push the companies that SoftBank has invested into with regard to valuation and scope.

In January, SoftBank invested another $ 2 billion in The We Company, an estimated $ 47 billion The New York Times, SoftBank's total investment in The We Company, including that made by the Vision Fund, is approximately $ 10 billion, according to the report. The $ 100 billion Vision Fund is supported by, among others, Saudi Arabia's public investment fund Apple and the government of Abu Dhabi Bloomberg,

These $ 2 billion may seem huge, but they were not as high as those considered by SoftBank: buying up all the other investors for $ 10 billion and then adding another $ 6 billion to The We Company. The Wall Street Journal reported. "Within SoftBank, strong support for WeWork was controversial," wrote Eliot Brown. "Several executives questioned the high valuation of a company that focuses primarily on real estate."

If the company wants to continue expanding at its current pace, it has to get some money somewhere, The IPO was filed in December 2018. In early January, several newspapers reported that the SoftBank cash injection was lower than expected. And in the first half of 2019, according to documents, the CEO received his first performance incentives tied to the public market.

An increased awareness of the downside risk

This company, The We Company, formerly called WeWork, changed its name. The new name was owned Bloombergs Ellen Huet reports from We Holdings LLC – WeWork paid $ 5.9 million to acquire "we" and changed its name last month. We Holdings – You guessed it! – manages inventories and assets of … Founder of WeWork.

I tell you something that has absolutely raised my consciousness. For example, The We Company's average initial term of leases is 15 years. The company pays at least $ 47.2 billion for the leases, which it completed on June 30. And it's still trying to grow.

I do not know, friends. I just do not know. I've never seen anything like it, and I can not wait to see what the SEC has to say about lending your founder, CEO, and controlling shareholder money while paying the rent. This is not to say who was paid by the name change or any of the others. "Why should you as an investor be willing to trust this structure?" Said Charles Elson, a professor of corporate governance at the University of Delaware Bloomberg,

I love the chaos and am now very interested in The We Company. This company is highly dependent on a man, Adam, who seems to have a passion for absolute incredible Deal structures. I am very excited to find out who will pony for stocks. Whee!