Posts tagged with "Inc."

Why did Adam Neumann buy a surfing magazine? To build a limitless lifestyle corporation. Probably.

May 23, 2024

Even when WeWork was the biggest private tenant in New York City, with SoftBank throwing untold amounts of cash at Adam Neumann‘s characteristically bare feet, the 6-foot-5 Israeli entrepreneur’s ambition was to keep his empire perpetually growing, reports Inc.

WeWork was an expansionary juggernaut that exemplified the most cautionary of tales from the era of hypergrowth. The proof is obvious enough to slap you in the face: WeWork is now a bankrupt husk of its former self that Neumann has tried (and so far failed) to rescue. Despite WeWork’s demise, Neumann is almost pathologically determined to pick up where he left off.

His most recent acquisition isn’t a typical object of desire for the techno-capitalist set, and so is unexpected for a man who religiously talked for years about founding the first “physical social network”: Last week, Business Insider reported that Neumann had purchased Whalebone Magazine, an artsy surf magazine inspired by a family-owned surf shop and clothing brand of the same name based in Montauk, New York.

Industry moguls probably aren’t betting big on niche trade magazines to make them richer, but there is a strategy at play. Whalebone will be absorbed by Flow, Neumann’s new residential real estate company, and presumably become the content side of Flow’s business, the BI report indicates. The magazine has already been rebranded to The Flow Trip, according to a company blog post.

Adding a popular surfing publication to Flow’s assets suggests Neumann is still intent on conquering the original stated mission in 2019, when WeWork briefly became the WeCompany: building an all-encompassing lifestyle corporation that finds acolytes wherever it can.

WeWork couldn’t expand its dominion beyond co-working. As his startup burned through billions, Neumann established WeLive in 2016, a network of shared living spaces for professionals who ostensibly spent their working hours hammering out spreadsheets at the nearest WeWork. And his wife, Rebekah, launched WeGrow in 2017, a for-profit private school that cost $42,000 a year, which was consumed by the wreckage of WeWork.

The WeCompany eventually reverted to WeWork in 2020, and then had a fleeting appearance on the public market during the special purpose acquisition mania of the same year. It eventually delisted in 2023. (Rebekah Neumann bought WeGrow back in 2020 in an undisclosed transaction.)

Fresh off a $350 million investment from Andreessen Horowitz, Flow is imbuing the concept of co-living with new-age spirituality and hustle culture. It’s already bought two buildings in South Florida, and insists, much like WeWork, that it is a tech company. Flow’s website invites prospective residents to join “communities designed to connect you with yourself, your neighbors, and nature,” and promises “spaces that cultivate flow,” “practices for the mind, body, and soul,” and “workflow” amenities that are ostensibly used for business.

Flow did not respond to an Inc. request for comment.

Flow has been relatively quiet since bursting onto the scene last year with a $1 billion valuation, made possible by Andreessen Horowitz’s largest-ever single investment. But the lofty ambition is no different from WeWork’s.

And though it may seem like a negligible blip of an acquisition, Flow’s purchase of Whalebone speaks to the rebirth of a dream that had all but appeared to die on the vine: a company that can provide a place to live, but also a way of life.

Research contact: @Inc

Employers can no longer muzzle departing workers

July 4, 2023

For years, U.S. companies have been able to demand that laid-off employees agree to stay quiet about the details of their employment in exchange for getting their severance. But now, they are now free to say what they want about their former employer, reports Inc.

On February 21, the National Labor Relations Board (NLRB) overturned a 2020 ruling that allowed employers to make confidentiality and non-disparagement clauses a binding part of severance agreements. Departing employees are no longer obliged to stay mum when talking to third parties about the terms of their departure, and the terms of their employment.

In the 3-1 decision, the board concluded that asking for such silence deters employees from exercising their statutory rights under the National Labor Relations Act (NLRA). The NLRB’s decision applies to substantially all private-sector employers—except for airlines, railroads, and other companies covered by the Railway Labor Act—notes Robert Nagle, co-chair of the labor management relations practice at Philadelphia-based law firm Fox Rothschild.

The ruling doesn’t apply to those with Section 7 rights (which under the NLRA allows employees the right to collectively band together to improve workplace conditions) such as independent contractors, managers, most supervisors, and public service employees.

At this time, it does not appear that the board’s decision will retroactively invalidate severance agreements entered into before its recent decision. However, it is possible that the board could deem any current attempt to enforce such provisions as constituting a violation of the NLRA.

There may be some workarounds for employers, notes Jessica Roe, labor and employment attorney at Minneapolis-based Roe Law Group. For example, an employer can include a disclaimer in its agreements regarding Section 7 rights such as “Nothing in this agreement is meant in any way to inhibit or restrict your Section 7 rights under the NLRA.” In other words, such agreements may still be possible if employees know and understand their rights prior to signing.

But a disclaimer alone, she notes, is not likely to be enough. Employers will need to ensure that their provisions on non-disparagement and confidentiality related to the agreement are narrow and use the language directed by the NLRB in this recent decision. She recommends business owners who’ve used non-disparagement agreements in the past to work with counsel to carefully craft appropriate language. 

“There should be a concerted effort to take a look at these agreements and make adjustments, at the least,” says Roe. Especially because it’s possible that the Board may still view such language as impermissible.

Multiple sources also note that it’s very likely the February 21 ruling will be appealed, and it is uncertain whether the decision can ultimately survive legal scrutiny. It is also likely that this rule on severance agreements may shift back to prior Board precedent, once again, if and when there is a Republican administration in Washington in 2024, notes Michael Schmidt, vice chair of the Labor and Employment Department at law firm Cozen O’Connor.

In addition, it does not appear that the board’s decision will retroactively invalidate severance agreements entered into before the February 21 decision, says Schmidt. However, it is possible that the Board could deem any post-February 21 attempt to enforce such provisions as constituting a violation of the NLRA.

In the meantime, if the Board determines that a particular severance agreement or larger policy with respect to a severance agreement violates the NLRA, the employer can be cited for an “unfair labor practice,” which subjects the company to certain monetary and injunctive remedies, notes Schmidt. The easiest way to avoid such citations all together, he adds, is to ditch the clauses.

Research contact: @Inc

Clif Bar’s founder just sold the company for $2.9 billion. He threw in its values for free.

June 27, 2022

Since founding his energy-bar company  after a 175-mile bicycle ride, Gary Erickson has fiercely prioritized  Clif Bar’s independence for 30 years. Until this week, reports Inc.

Mondelez International will acquire Clif Bar in a deal that will amount to at least $2.9 billion, the company announced on Monday, June 20.

It’s shocking news from a business that has turned down so many acquisition offers over its lifetime that Erickson said in 2018 he hadn’t just lost track, but was purposefully unaware how many there had been. (His staff had been instructed not to pass on messages to him from potential buyers.)

Earlier in the company’s history, he threw himself, and the entire company, into massive debt to avoid an acquisition. By 1998, Clif Bar—named after Erickson’s father, Clifford—had been growing so fast it landed at No. 152 on the Inc. 5000 list of the fastest-growing private companies in the United States.

But by 2000, his business partner Lisa Thomas decided she wanted to leave the company—and a well-timed acquisition offer would facilitate that. On the cusp of signing the $120 million deal, Erikson pulled out, plummeting himself into $60 million in debt.

After taking what he called “the gamble of the century,” Erickson led Clif Bar to become one of the country’s pioneering purpose-driven businesses, dedicated to not one bottom line, but rather five pillars of success that include sustaining people, community, the planet, the brand, and the business.

He strove to create green production facilities, pay employees well in salary and benefits—and in 2010 made them owners of the company, too, by adopting an employee stock ownership plan that pays annual dividends.

Erickson and his wife and business partner, Kit Crawford, as of a few years ago, owned 80% of Clif Bar. Despite handing over their co-CEO titles in 2013, the pair have been actively involved in every major company decision. As for the board of directors? They, alone, made up the board.

“Gary and I have always been very sure about our feelings, and our passion, and our love for the company. We wanted to be the main decision makers at all times,” Crawford told me in 2018. “I think she’s saying we are control freaks,” Erickson joked. Both declined to comment on the acquisition news this week.

Now they are giving up some of that control for good. But they may not be abandoning the “Five Aspirations” that guide it. In fact, in a release announcing the acquisition, Clif Bar’s CEO since mid-2020, Sally Grimes, said: “Our purposes and cultures are aligned and being part of a global snacking company with broad product offerings can help us accelerate our growth while staying true to our deeply ingrained Five Aspirations—sustaining our people, planet, community, business, and brands.”

Certainly, the “people” portion of it—the employees who own 20% of the company—will benefit substantially.

Crawford, Erickson, and Grimes likely made the decision not just for the upside for more than 1,200 employees, but also to continue the brand’s growth. “Business” and “community” are focuses of the acquisition too. The international snack brand Mondelez—which also owns the Oreo, Ritz, and Honey Maid brands, among many others—can use its distribution prowess to expand internationally and within the United States.

Plus, the communities where Clif Bar is made will not lose out. Mondelez said in its release on the acquisition that it would continue to operate the business from its existing headquarters in Emeryville, California, and green-manufacturing facilities in Idaho and Indiana.

Research contact: @Inc