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DealBook: How Adam Neumann Is Winning Amid WeWork’s Crisis

12-15 minutos - Source: NYT

CreditCole Wilson for The New York Times

The troubled office space company agreed yesterday to accept a financial lifeline from SoftBank that will give the Japanese tech giant control of its operations — and give the WeWork co-founder Adam Neumann a potentially billion-dollar payout.
What’s in the SoftBank deal:
• It will accelerate a $1.5 billion investment into WeWork, as well as a $3 billion stock buyback from existing investors.
• The company will receive a new loan from SoftBank and other institutions of up to $5 billion.
• Marcelo Claure, one of SoftBank’s top executives, will become WeWork’s executive chairman.
SoftBank’s turnaround plan includes shutting down unprofitable divisions and laying off huge swaths of WeWork employees, as Peter Eavis, Michael de la Merced and Andrew report in the NYT. It also wants the co-working company to leave cities where there’s no path to profitability within the next three years.
This will succeed only if WeWork can go public or be sold at a valuation of at least $15 billion. Some experts think that’s possible. “The fundamental concept is there,” Bill Aulet, a professor at M.I.T.’s Sloan School of Management, told the NYT. “But it went too far too fast.”
SoftBank’s deal is good news for Mr. Neumann, who can sell about $1 billion worth of his stock to SoftBank. SoftBank will also give him a $425 million loan to cover a credit line from banks tied to his shares, and pay him $185 million to serve as a consultant for four years.
But Mr. Neumann’s payouts have drawn sharp criticism. According to Bloomberg, one employee wrote in a company Slack post, “So we’re too broke to pay employees severance, but Adam gets $200m?”
Today’s DealBook Briefing was written by Andrew Ross Sorkin, Michael J. de la Merced and Jamie Condliffe.
The airplane maker announced yesterday that it had removed Kevin McAllister, who was the head of its commercial airplanes division, David Gelles and Natalie Kitroeff of the NYT write. It’s the company’s most direct effort yet to hold a senior leader accountable for the bungled handling of its 737 Max crisis.
Mr. McAllister played a central role in managing the Max scandal. But he faced criticism inside the company for alienating important customers and for the cascading series of delays that has kept the plane grounded for more than seven months.
He will be replaced by Stanley Deal, the head of global services for Boeing and a three-decade veteran of the company.
His ouster could be a helpful talking point for Dennis Muilenburg, Boeing’s C.E.O, when he testifies before Congress about the Max situation next week.“People are calling for action,” Richard Aboulafia, vice president for analysis at the Teal Group, a consulting firm, told the NYT. “Rightly or wrongly, he can point to this as a form of action.”
Mark Zuckerberg is scheduled to testify about his company’s cryptocurrency project, Libra, at a House Financial Services Committee hearing this morning. If his written testimony is anything to go by, he’ll acknowledge that his company’s reputation could get in the way of those plans.
He will try to explain the good that Libra could bring, describing it as a democratizing financial system that will mostly benefit poor people and those who have no bank accounts or can’t afford banking fees.
“I believe this is something that needs to get built, but I understand we’re not the ideal messenger right now,” Mr. Zuckerberg says in his written testimony. “I know some people wonder whether we can be trusted to build payment services that protect consumers.”
He’ll also try to ease lawmakers’s concerns. “Even though the Libra Association is independent and we don’t control it, I want to be clear: Facebook will not be part of launching the Libra payments system anywhere in the world until U.S. regulators approve,” he plans to say.
But lawmakers have criticized Libra since the project was announced in June, and there’s no reason to think that this hearing will be any different. You can watch the hearing here at 10 a.m. Eastern.
More: Dozens of states have joined New York’s antitrust inquiry into Facebook. The company pledged $1 billion to help ease California’s housing crisis. And Sheryl Sandberg has argued that the company runs political ads, including false ones, for the good of political discourse, not for the money.
Two of the world’s biggest sportswear companies have announced new leaders.
• Nike announced that Mark Parker would step down as C.E.O. and become executive chairman. He’ll be succeeded by John Donahoe, a former C.E.O. of eBay who has been on Nike’s board for five years.
• Under Armour said that its founder, Kevin Plank, would also become executive chairman. The C.E.O. role will be taken up by Patrik Frisk, the company’s president and C.O.O.
Mr. Parker’s tenure as C.E.O. at Nike had ups and downs. The company has grown strongly under his watch, particularly in international markets like China. But it also recently had to confront a doping scandal and accusations of gender discrimination.
Mr. Plank has struggled to make Under Armour competitive with larger rivals, despite a surge of consumer interest in athleisure clothing, and the company ran losses in its last two financial years. He has also been criticized for making comments seen as praising President Trump, which he later distanced himself from.
Investor reaction was mixed. Shares in Under Armour leaped 6.8 percent yesterday, given that Mr. Frisk has been credited with steadying the company’s operations. Shares in Nike declined slightly, as analysts expect few strategic changes from Mr. Donahoe.
Venture capitalists say they like to explore new and unfamiliar markets. But when it comes to backing women or minority entrepreneurs, they remain conservative, according to a new survey by Morgan Stanley.
• Though 83 percent of V.C. respondents to the survey said it was possible to intentionally invest in diverse entrepreneurs and still maximize returns, only 42 percent said doing so was a firmwide priority.
• Sixty percent of respondents said there were too few women or minority founders in their investment portfolios.
• “Not the right fit for me” and “market-related issues” are two of the top reasons that investors cite for not backing more diverse entrepreneurs.
• According to the survey, having more diverse fund managers, partners or board members helps improve the diversity of founders that firms back. But only 11 percent of the entrepreneurs said they had interacted with venture capital firms that are diverse in terms of gender and race.
How does a streaming service generate millions of new subscribers before it even launches? Our colleague Ed Lee writes that Walt Disney may have an answer: Give it away.
Disney announced an agreement with Verizon yesterday that would offer Disney Plus for free to some customers of the telecom giant. The deal gives Disney as many as 17 million new subscribers, while Verizon gets to promote its home broadband service (and needle its rival, AT&T, whose streaming product will start early next year).
The deal means Disney Plus could have more than 17 million customers when it goes live on Nov. 12. That could help propel Disney toward its stated goal of 60 million to 90 million customers by 2024.
It appears that Disney will increasingly rely on third parties to expand its streaming business. The thinking: Companies like Verizon already have a captive customer base with a billing relationship. Disney has agreements with Roku, Apple and Google to make Disney Plus available on their devices, but the Verizon deal gives it customers immediately.
Disney isn’t really giving anything away for free, though. Verizon will foot the bill by paying a wholesale rate for the service. (The companies didn’t disclose the financial terms, but Verizon is probably paying a few dollars per account each month; Disney Plus costs $7 a month.)
The British prime minister suffered a damaging setback yesterday in his quest to take Britain out of the E.U. by Oct. 31, write Mark Landler and Stephen Castle of the NYT.
• “Lawmakers granted preliminary approval to the withdrawal deal he struck with the European Union last week,” Mr. Landler and Mr. Castle write.
• But they voted against putting legislation enacting Brexit on a fast track to passage, which means Mr. Johnson can no longer meet his deadline of leaving the E.U. by the end of this month.
• “Parliament has thrown the whole process into a legislative netherworld that could mean months of further delays,” Mr. Landler and Mr. Castle add.
What happens now will depend on the E.U., which is set to decide how long an extension to grant Britain for reaching a decision. A longer delay could mean that Mr. Johnson’s plan becomes encumbered by amendments, so he would probably call for a general election instead. But if given a shorter delay, he may continue trying to push his deal through Parliament.
Bill McDermott, who recently stepped down as chief executive of SAP, will become C.E.O. of ServiceNow. He’s replacing John Donahoe, who will lead Nike.
Rob Goldman is stepping down as Facebook’s vice president of advertising.
• The food delivery site Just Eat has rejected a hostile $6.3 billion takeover bid by Prosus, the internet investment arm of the South African conglomerate Naspers. (FT)
• A deal to rescue British Steel is in danger of collapsing because suppliers are refusing to accept price cuts. (FT)
• Cision, the parent company of the press release site PR Newswire, agreed to sell itself to Platinum Equity for $2.74 billion. (PR Week)
• Morgan Stanley has reportedly been chosen as the lead underwriter for the revived Hong Kong I.P.O. of ESR Cayman, a real estate company backed by Warburg Pincus. (Reuters)
Trump impeachment inquiry
• William Taylor, who was the top U.S. diplomat in Ukraine, told House investigators yesterday that several Trump administration officials had said President Trump was blocking military aid to the country unless it agreed to investigate his political rivals. (NYT)
• Several Republican lawmakers stopped defending Mr. Trump yesterday after he described the Democrats’ impeachment inquiry as a “lynching.” (Politico)
Politics and policy
• Prices for health care plans offered under Obamacare are expected to fall next year, despite the Trump administration’s efforts to undermine the law. (NYT)
• Imaad Zuberi, a major donor to President Trump and top Democratic politicians, pleaded guilty yesterday to violating campaign finance and lobbying laws. (NYT)
• Steve Schwarzman of Blackstone, a major donor to Mr. Trump, is expected to host a fund-raiser for Republicans including Senator Mitt Romney, an increasingly prominent critic of the president. (CNN)
• Commerce Secretary Wilbur Ross suggested that the U.S. could open negotiations with the E.U. to avoid imposing tariffs on European car imports. (FT)
• Defense Secretary Mark Esper has recused himself from the decision of awarding the Pentagon’s $10 billion cloud computing contract because his son worked for a bidder. (NYT)
• How McDonald’s is trying to use A.I. to predict what customers will order. (NYT)
• Jeff Bezos’s rocket company, Blue Origin, along with three other companies, plans to design a new moon lander that it will submit to NASA. (NYT)
• China isn’t pumping out tech unicorns as quickly as it used to. (FT)
Best of the rest
• Washington and Wall Street titans will return to Saudi Arabia’s Future Investment Initiative gathering in Riyadh next week, a year after shunning the event in the wake of the killing of Jamal Khashoggi. (NYT)
• The mining giant Rio Tinto has found a potentially large source of lithium for electric car batteries in piles of rock in California. (FT)
• Former partners of the scandal-tainted public relations firm Bell Pottinger are being forced to repay profits they received from the business. (FT)
• Federal prosecutors have charged a pair of former investment bankers with running a global insider trading ring. (WSJ)
• The Fed injected $99.9 billion in temporary liquidity and $7.5 billion in permanent reserves into financial markets yesterday. (WSJ)


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