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Written by Connie Loizos

Adam Neumann planned for his children and grandchildren to control WeWork

WeWork cofounder Adam Neumann didn’t plan for his family’s control of WeWork to end at his death but he expected it be controlled by future generations of Neumanns, too, according to Business Insider,

The outlet reports that in a  speech Neumann gave to employees in January of this year, footage of which it says it has viewed but it has not published online, Neumann is seen saying that WeWork isn’t “just controlled — we’re generationally controlled.” He reportedly goes on to say that while the five children he shares with wife Rebekah Neumann “don’t have to run the company,” they “do have to stay the moral compass of the company.”

According to BI, Neumann even invoked his future grandchildren, telling those gathered: “It’s important that one day, maybe in 100 years, maybe in 300 years, a great-great-granddaughter of mine will walk into that room and say, ‘Hey, you don’t know me; I actually control the place. The way you’re acting is not how we built it,’” he said.

“If we do this right, over the years different CEOs will come, but we will keep an eye on these basic values and basic moral standards and not allow them to shift,” he’s quoted by BI as saying.

It may sound like yet another outlandish proclamation from Neumann, who has a flair for the dramatic. (Talking to Fast Company earlier this year, for example, he compared WeWork to a rare jewel, asking, “Do you know how long it takes a diamond to be created?”)

But before WeWork began coming apart at the seams, Neumann had every reason to believe that he could pass power down to his heirs. Though many public shareholders may not realize as much, a growing number of tech founders enjoy the kind of dual-class shares that Neumann had extracted from investors, shares that don’t merely give founders more voting power for a while after their companies go public or or even throughout their lifetimes, but whose power can be passed down to their children, too.

We wrote about this very issue as a kind of hypothetical last month, quoting SEC Commissioner Robert Jackson, a longtime legal scholar and law professor, who told an audience last year that nearly half of companies that went public with dual-class shares between 2004 and 2018, gave corporate insiders “outsized voting rights in perpetuity.”

Warned Jackson, “Those companies are asking shareholders to trust management’s business judgment — not just for five years, or 10 years, or even 50 years.” It asks them to trust that founder’s kids. And their kids’ kids. And their grandkid’s kids . . . It raises the prospect that control over our public companies, and ultimately of Main Street’s retirement savings, will be forever held by a small, elite group of corporate insiders — who will pass that power down to their heirs.”

The market spoke in WeWork’s case, but not every company has such apparent flaws, and Neumann could have made himself a lot harder to shake than he did. In fact, the broader question the video raises is whether anyone will step in to stop the broader trend, or public market investors be living the consequences down the road instead. (When Jackson delivered his talk, as tried teasingly baiting his SEC colleagues into taking action.)

Neumann wasn’t insane to imagine the scenario that he did. That doesn’t mean it’s rational. Giving founders super-voting shares for some period after transitioning onto the public market, we can understand. Giving founders so much power that their kids call the shots? That is crazy.

Bloomberg Beta, now six years old, closes its third $75 million fund

Bloomberg Beta, a San Francisco-based outfit that uses Bloomberg LP’s money to make bets on startups, has closed its third fund with $75 million, according to Roy Bahat, who’d previously run the online media company IGN and who operates the fund as an equal partnership with Karin Klein and James Chan. (Klein formerly ran Bloomberg’s new initiatives; Chan was formerly a principal with Trinity Ventures.)

We talked with Bahat briefly last night about the new vehicle to ask how its capital will be deployed. Bahat stressed that the idea is to continue on the firm’s current path, which is to write checks of between $500,000 to $1 million initially; to loosely target ownership of around 10% in the startups it backs; and to fund companies that are focused on the future of work, which has long been an area of interest for Bahat and his colleagues.

That can mean an instant messaging platform like Slack, in which Bloomberg Beta had and continues to have a small stake, following its direct offering. It also can mean backing a company like Flexport, a San Francisco-based freight forwarding and customs brokerage company that appears to be among Bloomberg Beta’s biggest bets. (According to Crunchbase, the outfit has backed Flexport — valued most recently at $3.2 billion — at its seed, Series A and Series B rounds.)

Others of Bloomberg Beta’s portfolio companies include the augmented writing platform Textio; the insurance broker Newfront Insurance; the continuous delivery platform LaunchDarkly; and Netlify, a cloud computing company that sells hosting and serverless backend services for static websites.

What it won’t back: financial tech startups. Given where its money comes from, it’s “too close to home,” says Bahat.

In late August, California Governor Gavin Newsom announced that Bahat would be part of his Future of Work Commission, which will be “tasked with making recommendations to help California leaders think through how to create inclusive, long-term economic growth and ensure workers and their families share in that success.”

As part of his role on that commission, and as an investor in some companies that cater to independent contractors, we asked Bahat what he makes of AB 5, the new California law for contract workers that aims to address inequality in the workplace but has been met with resistance from numerous industries and players. Uber, Lyft and DoorDash are even preparing to file a ballot initiative to exempt themselves from the law.

Bahat suggested he’s not sure what to think quite yet, either. “How workers get classified is one of the issues” the commission will be studying, he said.

“We haven’t figured out how to make it all work; this story is still unfolding.”

Former Oracle co-CEO Mark Hurd has passed away

Mark Hurd, who until last month, was one of two CEOs leading the database software giant Oracle, has passed away at age 62, one month after telling employees in a letter that he was taking a leave of absence owing to health reasons.

Staffers, who were notified that Hurd died earlier this morning, have been offering their condolences on Twitter.

Hurd had joined Oracle nine years ago, after spending five years with Hewlett-Packard, where he was CEO, president and, ultimately, board chairman, all roles from which he was pressured to resign in 2010 after submitting inaccurate expense reports.

The very next month, Larry Ellison, a friend of Hurd, named him the co-president of Oracle, the company Ellison had himself founded in the summer of 1977. Said then-CEO Ellison in a statement relating to the move, “Mark did a brilliant job at H-P, and I expect he’ll do even better at Oracle. There is no executive in the I.T. world with more relevant experience than Mark.”

Indeed, when Ellison stepped down as the CEO of Oracle in 2014 to become the company’s chief technology officer instead, he promoted Hurd to the role of CEO, a role he had since shared with Oracle’s former CFO, Safra Catz.

When Hurd left last month, Catz, who has been an executive with Oracle since 1999, became the sole CEO of Oracle, though Ellison has indicated that she won’t be operating the company single-handedly for long. Instead, he told analysts last month the though some people find it “weird,” Oracle plans to keep its dual-CEO structure, in part owing to situations as with Hurd where life throws an executive team a curveball.

Said Ellison at Oracles’ OpenWorld event in San Francisco last month: “I believe in a dual-CEO structure. The normal case [at Oracle] would be dual CEO here for obvious reasons. That it’s good to have capacity and good to have specialization. And then, God forbid, if something untoward should happen, you have capacity; you are not incapacitated.”

Hurd had attended Baylor University in Waco, Texas on a tennis scholarship and reportedly dabbled on the professional tennis circuit immediately after graduating, began his career at NCR Corp., where he was promoted to chief operating officer 22 years into his tenure with the company, and to the role of CEO the following year, in 2003.

Two years later, H-P brought him aboard.

This story is developing.