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WeWork's CEO Makes Millions as Landlord To WeWork (wsj.com)
An anonymous reader shares a report: For more than two months after employees at IBM moved into a Manhattan building managed by office space giant WeWork, frequent elevator problems forced workers to climb the stairs of the 11-story building and prompted complaints to the company. One of the landlords behind the building was no ordinary owner: It was Adam Neumann, WeWork's chief executive, who leased the property to WeWork after buying it [Editor's note: the link may be paywalled; alternative source], according to people familiar with the situation.
Mr. Neumann has made millions of dollars by leasing multiple properties in which he has an ownership stake back to WeWork, one of the country's most valuable startups. Multiple investors of the privately held company said the arrangement concerned them as a potential conflict of interest in which the CEO could benefit on rents or other terms with the company. [...] WeWork, which was recently valued at $47 billion by investor SoftBank, signs long-term leases for office space with landlords, then subleases the space on a short-term basis to companies. Mr. Neumann, the 39-year-old executive who founded WeWork in 2010, is WeWork's largest individual shareholder and has voting control over the company.
Mr. Neumann has made millions of dollars by leasing multiple properties in which he has an ownership stake back to WeWork, one of the country's most valuable startups. Multiple investors of the privately held company said the arrangement concerned them as a potential conflict of interest in which the CEO could benefit on rents or other terms with the company. [...] WeWork, which was recently valued at $47 billion by investor SoftBank, signs long-term leases for office space with landlords, then subleases the space on a short-term basis to companies. Mr. Neumann, the 39-year-old executive who founded WeWork in 2010, is WeWork's largest individual shareholder and has voting control over the company.
That’s how you siphon off money from startups, struggling companies or even foundations into your own pocket.
If construction was anything like programming, an incorrectly fitted lock would bring down the entire building...
Very much so. Ray Croc discovered that the McDonald's brothers had created a kitchen that optimized workflow efficiency and pumped out consistent quality food. He struck a deal with the McDonald's brothers where he went around the country franchising out the McDonald's business model. However, Ray was not profiting as handsomely as he'd like from franchising. He eventually added a clause that McDonald's franchises had to be built on land leased from a second realty company that he created. After that, Ray did a hostile takeover of the McDonald's brothers, who had never been a part of the realty company. One of the stipulations of the buyout was that the McDonald's brothers were gagged about telling people that Ray Croc was not the actual found of McDonald's, and the McDonald's brothers are slowly forgotten from the franchise's history. I do not discredit the McDonald's brothers for running a good business, I simply note that Ray Croc may very well have invented the move that the WeWork CEO is using - using realty to buy out the whole the business from those that really built it.