Comment by exogeny
2 days ago
There was a great Money Stuff blurb about that w/r/t Adam Neumann. I can't find it to quote it directly, but the gist was that if you disabuse yourself of the notion that Neumann was playing a game of entrepreneurship and good-faith empire building, and instead conclude that the game he was playing was shameless capital extraction, every step and action he took suddenly makes sense.
The truly amazing thing, especially the second time around, are the supposedly sophisticated investors who fall for it. "Oh, he's learned his lesson -- he won't do it again!".
Some of those sophisticated investors are also engaged in shameless capital extraction. Their investment thesis is based on the "Greater Fool Theory": they're gambling that they can dump the inflated assets on another bag holder before it blows up.
But they might end being the bag holder themselves. And is the reputational risk worth it? I would say - no.
> And is the reputational risk worth it?
Yes! The only metric that matters is assets under management, since that’s where funds take their cut. Nothing else matters.
A16Z used to be a respected investor, then they went crazy deep into crypto scams and their AUM exploded, so they made more money than ever before.
Reputational risk is dead. All publicity is good publicity, the alternative is obscurity aka being a loser
To be fair that theory works handsomely.
> ...if you disabuse yourself of the notion that Neumann was playing a game of entrepreneurship and good-faith empire building, and instead conclude that the game he was playing was shameless capital extraction, every step and action he took suddenly makes sense.
Sort of. I get the capital extraction part, but you also need to be a good steward of capital and make a profitable business out of it. He failed badly at the later part, and his reputation is an obstacle for the former.
Not saying you are wrong, but if I am a "capital allocator" at a16z, he would be no-go.
Ironically Neumann's latest startup is funded by a16z.
IMO you're being unfair; he talked his way into getting paid half a billion dollars for wework, and he's now a billionaire. That's a massive success at capital extraction.
This is too cynical for even a turbo cynic like me.
Basically, you’re saying he mislead investors and got a bunch of money, so those investors see themselves being ripped off as a valuable skill, so they invest in him again. Wut?
I say again — why would investors trust him if his only track record is losing investor money?
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