WeWork Starts Another Round of Layoffs
By Nicholas Rizzi May 1, 2020 12:37 pm
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Struggling coworking giant WeWork started another round of layoffs yesterday, the latest in a series of staff cuts that began after its botched initial public offering last year, Business Insider reported.
The cuts affected WeWork employees in its operations, sales, physical product and IT departments around the world and further reductions are likely in the future for WeWork, according to Business Insider and Bloomberg.
A spokesman for WeWork confirmed the layoffs, but declined to say how many employees were affected. CrunchBase reported the number was around 300 people.
“As WeWork continues to execute its strategic five-year plan we are realigning certain functions and teams to reflect our business priorities,” the WeWork spokesman said in a statement.
WeWork offered employees four months of salary and benefits as a severance package, the same it gave workers when it laid off 2,400 people in November 2019, the spokesman said.
Earlier this month, WeWork CEO Sandeep Mathrani told staff at a town hall meeting that the company plans to cut more staff by the end of next month, but declined to provide exact numbers.
“I know there is much speculation about how deep the cuts will be,” Mathrani said at the meeting, according to a recording obtained by Bloomberg. “People are looking for a percentage or a number. The reality is, we’re looking at all of it.”
After the cuts in 2019, WeWork quietly laid off staff in February and another 250 last month, Bloomberg reported. The company also permanently laid off 74 workers in its San Francisco office this week, the San Francisco Business Times reported.
The flexible workspace market has been struggling as the spread of the novel coronavirus forced most companies around the world to ditch its offices and work from home. Competitors Knotel Convene, Industrious and The Wing have all laid off staff in recent weeks.
Knotel — which was crowned a unicorn last year — went one step further and is planning to give back 20 percent of its nearly 5-million-square-foot portfolio, as CO previously reported.
WeWork also saw the loss of a tender offer by majority backer SoftBank (SFTBY) Group earlier this month, which planned to buy $3 billion worth of shares in WeWork from stockholders. Canceling the deal also allows SoftBank to hold back on another $1.1 billion in financing to WeWork.
A special committee of WeWork’s board has filed a lawsuit against SoftBank arguing canceling the deal was a breach of contract. Former CEO Adam Neumann — who has a nearly $1 billion golden parachute tied to deal — also plans to file a suit, as CO previously reported.
WeWork remains SoftBank’s largest bet, but the Japanese bank said this week that it expects a loss of around $6.6 billion for the year ended in March on its WeWork investment, Reuters reported.
