The beleaguered office-sharing start-up is laying off employees in an attempt to right-size the business.
- The beleaguered office-sharing start-up is laying off 2,400 employees in an attempt to right-size the business.
- The layoffs come after several tumultuous months for WeWork, which were marred by a botched IPO, mounting losses and co-founder Adam Neumann’s resignation.
- WeWork recently detailed sweeping changes to its business, including divesting noncore ventures.
A pedestrian walks by a WeWork office on October 07, 2019 in San Francisco, California. Days after withdrawing its registration for an initial public offering, WeWork also warned employees that the company could be set to lay off nearly 2,000 people, about 16 percent of its workforce.
WeWork is laying off 2,400 employees as it works to cut costs and right-size the business, the company confirmed to CNBC.
In a statement, a WeWork spokesperson said the cuts were being made as part of the company’s efforts to “create a more efficient organization” and refocus on the core office-sharing business. The job reductions represent 19% of WeWork’s total workforce, which amounted to 12,500 employees as of June 30, according to an SEC filing.
“The process began weeks ago in regions around the world and continued this week in the U.S.,” the spokesperson said. “This workforce reduction affects approximately 2,400 employees globally, who will receive severance, continued benefits, and other forms of assistance to aid in their career transition. These are incredibly talented professionals and we are grateful for the important roles they have played in building WeWork over the last decade.”
Leading up to the announcement, reports of forthcoming job cuts had been circulating for weeks. The New York Times reported on Sunday that WeWork could cut at least 4,000 jobs across its core office-sharing business and some side ventures. In October, Marcelo Claure, WeWork’s new executive chairman, warned that layoffs would be on the way but didn’t say how many would be announced.
Claure said in a memo to employees earlier this week that the company will hold an all-hands meeting at 10 a.m. ET on Friday to address the changes slated for the company.
The layoffs come after several tumultuous months for WeWork. In September, the beleaguered start-up pulled its IPO filing after investors balked at its mounting losses and unusual corporate governance structure. The scrutiny forced WeWork co-founder Adam Neumann to step down from his role as CEO, with Sebastian Gunningham and Artie Minson stepping in as co-CEOs.
WeWork was poised to run out of money in a matter of weeks, but secured an 11th-hour bailout deal from SoftBank, its biggest investor. With a new owner in place, WeWork is expected to make sweeping changes to its business, including divesting noncore businesses and focusing on enterprise customers, instead of small and mid-sized clients. However, the company continues to bleed cash, reporting $1.25 billion in losses for the third quarter, widening sharply from the same period last year.
The drama behind this company pretty much deserves its own KF thread -the CEO is pretty much a filthy rich lolcow- it'll be a case study for sure.