WeWork CEO Marcelo Claure told employees that layoffs would begin this week, according to an email obtained by The Washington Post. Claure said the layoffs would be "difficult," but necessary to create a "more efficient, more focused and even more customer-centric organization."
For a year of disappointing technical IPOs, WeWork stood out for its meteoric rise and fall before the company ever went public. WeWork was valued at $ 47 billion in January, according to Pitchbook. Last month, SoftBank announced a $ 9.5 billion deal to take control of WeWork .
WeWork's spectacular combustion has become a cautionary tale in a summer of underwhelming IPOs, especially when it comes to job creation and employee wealth. Uber, which was published in May and has seen the share price fall by around 36 percent since it was listed, has laid off about a thousand employees in recent months.
Technical firms have long been criticized for generating a smaller number of jobs than traditional corporate giants when firms automate multiple tasks and create technology to replace people, despite their huge revenue streams.
Still, some have been critical of WeWork's marketing of itself as a technical startup at all, instead saying it's closer to a real estate company ̵
1; and should always have been valued that way.
The company's core business converts leased buildings into collaborative spaces that offer benefits such as yoga classes and kombucha cranes. Earlier this year, it created a parent company called We Co. and expanded to renting apartments, data analytics and education. It was published for an IPO in August.
The plans to go public came to fruition after investors questioned the company's valuation and the leadership of former CEO Adam Neumann. Neumann resigned as CEO in September and was replaced by two co-CEOs: Artie Minson, formerly the company's co-president and chief financial officer; and Sebastian Gunningham, who was the deputy.
Without the supply of Softbank cash last month, WeWork would run out of money this month. Neumann became an observer of the board and received a $ 1.2 billion exit package. The company's Board of Directors gained control over its voting shares.
WeWork "probably hiring a little ahead of itself," said D.A. Davidson analyst Barry Oxford. Dismissals often follow when a company tries to slow growth and demonstrate profitability, which he said WeWork is probably trying to do.
The news of the job cut was previously reported by the New York Times, which said that WeWork's plan involved laying 2,000 to 2,500 people from the company's core business. An additional 1,000 employees would leave when the company sells or closes its other businesses, including a private school, and 1,000 building maintenance workers would be transferred to a contractor, the Times reported.
WeWork declined to comment on the number of layoffs.
19659002] Like other "unicorn" startups such as Uber, Lyft and Slack, WeWork was one of the many companies that investors and employees hoped would generate wealth in the public markets this year. The debuts were especially crucial for technicians, as shares are typically an important component of total compensation and have fewer opportunities to sell their shares.