CEO, threatening layoffs and devaluation make WeWork a warning – TechCrunch
Major layoffs are all but inevitable in high-flying real estate startup WeWork after Adam Neumann succumbed to pressure today to resign as CEO and assume the role of non-executive chairman of the company he instituted for nine. years ago .
Two well-placed sources tell us that the scope is likely to be large, and includes some of the latest business divisions, which the same sources expect will be imprisoned to bring the company's focus back on its core business. One of these sources speculates that, over time, up to half of WeWork's 15,000 employees – 9,000 of whom have been transferred over the past two years ̵[ads1]1; could be laid off to increase expenses for the unprofitable company. The sentiment echoes a new piece in The Information that reports that a "group of executives from WeWork's parent companies and bankers" have discussed the layoffs of as many as 5,000 employees – a third of the workforce.
Neumann won't have much to say about the matter, anyway. As part of his departure from the role, he has agreed to further reduce the power of his supervisory shares from 20 original votes for every vote a regular WeWork investor will receive to just three, Bloomberg reports. His wife, Rebekah, a co-founder who, by insiders, is believed to have played a heavy role in the company's original – and very atypical – IPO prospect, also leaves the business.
It's pretty breathtaking how fast the pair were just the elbow aside. Still, someone else involved in the company seems to be getting a far worse deal. Japanese conglomerate SoftBank will currently lose billions of dollars on its investment in the company – if it doesn't stop writing almost the entire investment. Even an aggressive lockout clause won't do much to protect SoftBank if WeWork shares eventually plummet in the public market.
It would seem like an extreme correction to a culture that had become, well, anything but restrained. It's also far from clear that it would have the intended effect of attracting public shareholders to the company, whose wheels began to fall off when SoftBank first plugged in $ 4.4 billion into WeWork about two years ago, according to our sources. (About $ 6 billion more would follow.) As one of those people, who has known Neumann for many years, says, "Adam already had a healthy ego. What do you think will happen when he gets billions of dollars? "
