WeWork Lays Off 2,400 Employees
WeWork has started to layoff 2,400 workers around the world as the struggling coworking behemoth tries to cut costs and turn the company around, a spokeswoman for WeWork confirmed today.
The startup said it started layoffs around the world in recent weeks and began giving workers the axe in the United States this week, CNBC first reported. The laid-off employees will get severance, continued benefits and “other forms of assistance to aid in their career transition,” the WeWork spokeswoman told Commercial Observer.
“As part of our renewed focus on the core WeWork business, and as we have previously shared with employees, the company is making necessary layoffs to create a more efficient organization,” the spokeswoman said in a statement. “These are incredibly talented professionals and we are grateful for the important roles they have played in building WeWork over the last decade.”
WeWork started this year as a company valued at $47 billion after it closed on a massive $2 billion funding round led by Japanese bank SoftBank (SFTBY) Group. But it has had a tumultuous couple of months after filing for an initial public offering in August, which uncovered both surging revenues and losses. From 2016 to 2018, WeWork’s revenues grew from $438 million to $1.82 billion while its net losses grew from $430 million to $1.6 billion, according to the filing.
The company’s troubles grew when a Wall Street Journal profile of co-founder and former CEO Adam Neumann uncovered some of his erratic behavior, including smuggling weed on a private jet to Israel. He was pushed out of the company in September and replaced by WeWork executives Artie Minson and Sebastian Gunningham, with the co-CEOs shelving the IPO plans less than a week after taking the helm.
WeWork was reportedly set to run out of money in a matter of weeks and, in October, SoftBank pumped $5 billion into the company in a takeover plan, installing SoftBank executive Marcelo Claure in the management team.
The company is now also facing an investigation into the run-up to its IPO from the U.S. Securities and Exchange Commission and one from the New York State Attorney General to see if Neumann enriched himself through self-dealing at the company, Bloomberg and Reuters reported.
Claure is expected to hold an all-hands meeting with the remaining staff to detail the changes to the company tomorrow, CNBC reported.