Tech CEOs have investors right where they want them

Tech trader
Tech trader
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Tech CEOs have investors right where they want them

WeWork’s initial public offering shows how power has shifted between investors and entrepreneurs.
August 20, 2019

There were many weird things on display in WeWork’s initial public offering, but one of the most eyebrow-raising disclosures reveals something about how the relationship is changing between tech CEOs and their investors: WeWork founder Adam Neumann charged his own company $5 million so that it could acquire the trademark he held on “We.” 

Matt Levine writes in Bloomberg that we should think of it this way: Mark Zuckerberg also named the company that he founded but he – like most CEOs – does not charge Facebook extra each time he comes up with an idea. That’s not how things work at WeWork.

The eccentricities of the company, as revealed by the IPO, highlight how the balance of power has shifted between investors and entrepreneurs. In the old days – as in 2018 and before – the idea was that investors who poured in lots and lots of money to a company would receive voting power within that company in exchange. But Neumann, like Zuckerberg and other tech entrepreneurs, is going to keep control of the company despite the IPO. 

It seems that in 2019, investors are simply content to make some money, even while the likes of Neumann not only reap rewards based on the investments of others – but do so without sacrificing the power they have over the companies they founded. Add to this phenomenon the spreading idea that shareholder value is no longer the raison d’etre for corporate CEOs and it becomes even harder to refute that the times are a-changin’ for corporate investors – in tech and beyond.

For the rest of today's tech news, head over to First Read Tech.

Zach Williams
is a staff reporter at City & State and its sister publication, New York Nonprofit Media.
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