The reason for this is the same as why real estate is so expensive and the price of gold is so high. There is far too much capital accumulation among the ultra-wealthy, who don’t know what to do with all that money. The expertise of someone like this founder lies simply in recognizing that this is the case and that it can be monetized.

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exogeny 17 hours ago | parent [-]

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!".

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nradov 17 hours ago | parent | next [-]

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.

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game_the0ry 16 hours ago | parent [-]

But they might end being the bag holder themselves. And is the reputational risk worth it? I would say - no.

	▲	igor47 4 hours ago \| parent [-]
		Reputational risk is dead. All publicity is good publicity, the alternative is obscurity aka being a loser

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game_the0ry 17 hours ago | parent | prev [-]

> ...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.

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helpful-guy 6 hours ago | parent | next [-]

Ironically Neumann's latest startup is funded by a16z.

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anonymous_user9 8 hours ago | parent | prev [-]

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.

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game_the0ry 7 hours ago | parent [-]

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?

	▲	anonymous_user9 6 hours ago \| parent \| next [-]
		I misinterpreted you; I was arguing that he's already succeeded completely, so it doesn't matter if anyone gives him more money. But, IMO the reason they're still giving him more money is that they're stupid and greedy. They know WeWork was a disaster, but it was a huge disaster. That shows them he's good at running a con, and they want to get in on the next one. Class solidarity doesn't hurt either. Being a billionaire makes him an actual person in the eyes of other rich people. EDIT: Also, it's funny you used a16z as an example: > Not saying you are wrong, but if I am a "capital allocator" at a16z, he would be no-go. because Andreesen Horowitz are the ones investing in his new WeWork 2.0 startup Flow.
	▲	eli_gottlieb 4 hours ago \| parent \| prev [-]
		> I say again — why would investors trust him if his only track record is losing investor money? Because they look at a serial fraudster and see themselves in him.