Knotel Cuts Half Its Staff Amid Coronavirus Pandemic
The flex workspace provider has laid off or furloughed half of its 400 global employees
Flexible workspace provider Knotel has cut half of its 400 employees around the world as the company retools to survive the coronavirus pandemic that has sent the global economy into a tailspin, Commercial Observer has learned.
The company — which recently embarked on a restructuring because of the epidemic — laid off 30 percent of its staff around the world today (127 employees) and furloughed another 20 percent (68 employees), CEO Amol Sarva told CO. The laid-off staffers were offered six months of health insurance in lieu of a severance payment as their primary option, but they can opt to receive a severance package based on seniority instead.
“Business as usual is over,” Sarva said. “[The coronavirus crisis] isn’t short and we’ve decided that we’re going to take some sharp action ourselves on this. We’re going to prepare for the worst case.”
Sarva added that the cuts are “spread evenly across” every one of the 17 markets Knotel is in and did not focus on any one department. Some of its top markets include New York, Boston, Washington, D.C., and Amsterdam.
“It’s really hard,” he said. “It’s not a paint-by-numbers change. We redesigned our whole company for what we need to do now. Unfortunately, a lot of the roles are just not there.”
(Disclosure: Observer Capital, led by Observer Media Chairman and Publisher Joseph Meyer, is a Knotel investor.)
The novel coronavirus outbreak has forced more than 80 percent of Knotel’s customers to work remotely or stop moving in. Earlier this week, Sarva launched a complete restructuring of Knotel that would offer up the 5 million square feet it leases around the world to government agencies for emergency COVID-19 needs, called “Spaces for Cities.” Sarva said Knotel would charge governments for the space, but did not discuss specifics.
“Everything’s empty right now,” Sarva previously told CO. “But there are emergency services that are desperately looking for places to put beds, places to do screenings, places to do testing. When the National Guard is in a city, it’s going to need a place to be. We are in discussions and showing different governments what we can do for them.”
As part of the restructuring, Sarva previously said 10 people on Knotel’s management team decided to take pay cuts, with Sarva himself slashing his salary in half.
This will be the second round of layoffs for Knotel this year, as the company let go of 24 employees that focused on the New York City market in January.
The highly infectious novel coronavirus has spread to 202 countries across the world and has seen more than 500,000 confirmed cases, according to the World Health Organization’s most recent numbers. It has led to more than 23,000 deaths across the world, WHO said.
The pandemic has led to widespread layoffs around the world. Last week, flex meeting, event and office operator Convene laid off nearly 150 employees, and is planning to furlough additional workers, while coworking giant WeWork (WE) is considering laying off another 1,000 employees, as CO previously reported.
Knotel — which reached unicorn status last year when it closed on a $400 million fundraising round — expected to become profitable by the end of the year and, despite the turmoil, Sarva still thinks it will happen.
“We still expect to be profitable this year and we expect 2021 to be the start of a return to a new normal,” Sarva said. “That’s on a reduced forecast on the business. We think it’s going to be a really hard year for everybody.”