Morning Coffee: Sorry times for everyone who left banking for WeWork. Bankers behind Warren
The WeWork debacle is starting to shape up as one of those cautionary tales for anyone who thinks that leaving a nice steady corporate job for a start-up with beer on tap and a cultish tendency to founder-worship is a good thing. It's also a cautionary tale for anyone who thinks they're going to leave a big bank for an armful of start-up stock which will pop when there's an IPO and make them richer than Croesus. That may not happen.
There's no shortage of people in banks who are nursing big reductions in the value of their deferred stock bonuses (just ask anyone at Deutsche Bank or everyone who worked through the financial crisis), but banks these days at least pay large salaries. By comparison, a lot of the jobs at WeWork seem to pay less than $100k (as might be expected of a facilities provider). Nonetheless, bankers seem to have flocked there in their hundreds.
LinkedIn suggests there are over 200 people at WeWork today who previously worked for JPMorgan, Goldman Sachs or Morgan Stanley. Most went there directly after leaving banks' associate programs, although some took a more circuitous route via other start-ups. By way of example, Tom Elvidge, WeWork's COO in EMEA, is a former Goldman Sachs VP and joined from Uber; senior director Natalia Silvestrova came from JPMorgan, where she was an associate; Charles Saksik, WeWork's director of stratey and operations for Europe, Pacific and China, was formerly an associate at Morgan Stanley.
WeWork's lure was about more than big job titles. The Financial Times notes that plenty of people there were also given WeWork stock, but that at the time of issuance this stock was typically valued above the $19.19 at which SoftBank is now offering to buy it out. Instead of making big gains on their new employer, WeWork employees are facing big losses. They are also facing redundancy: WeWork is laying off 4,000 people as it withdraws from China, India and Latin America. Until SoftBank stepped in, WeWork didn't even have the money to make the necessary severance payments.
Needless to say, someone at WeWork has done very well for themselves out of all this. Founder Adam Neumann will walk away with around $1.2bn including a 'consulting fee' of around $185m. Bloomberg reports that this has been causing ire on internal message boards with WeWork employees describing it as an "injustice." The former bankers at Neumann's company might be wishing they stuck with finance careers instead.
Separately, not everyone on Wall Street wants a life of low taxation and government by President Trump. Vox has unearthed various Wall Streeters who support Elizabeth Warren, the Democratic candidate who says she's a capitalist but that capitalists need boundaries. “Even though, on a personal basis, Elizabeth Warren may be bad for me economically, she would be better for society, which I want my kids to grow up in,” one Citi director told Vox. “I’m fully on board with soaking the rich, 100 percent, and if that involves me paying more taxes, let’s go,” added an unnamed trader.
Some senior financiers are less convinced. The New York Times reports that Michael Bloomberg is also considering entering the race, but isn't sure he could win.
How to retire by 40: 'Found a preposterous shared office space economy, build it with no regard for its underlying economics, secure an obscene valuation from a gullible capitalist, run it into the ground, and walk away with $1bn in stock sales and a $185m consulting contract.' (FT Alphaville)
Do UBS's poor results mark the beginning of the end for Sergio Ermotti? (FiNews)
JPMorgan made Alex Watkins head of UK ECM. Watkins is a former Goldman Sachs banker who joined JPMorgan in 2014 as an executive director in corporate broking. Curiously Watkins will report to the old head of ECM, Alex Hall, who's being moved into a new role focused on private companies that want to raise money. (Financial News)
UK Chancellor and ex-Deutsche Banker Sajid Javid won't be cutting the tax bills for anyone earning more than £50k after all. (Financial Times)
Ruth Davidson, former head of the Scottish Conservative Party, is joining City PR firm Tulchan Communications and will be paid £50k for 24 days’ work a year. (Evening Standard)
Google elaborates its claim to quantum supremacy. “We’re only one creative algorithm away from valuable near-term applications.” (MIT Technology Review)
From, “I am committed to this, and I am extremely hungry," to, "It has been much harder to raise money over the last several months than I anticipated...the hedge-fund industry of 2019 is very different than the hedge-fund industry when I started in 1996.” (WSJ)
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