The morning after he was installed as WeWork's new chairman, Marcelo Claure told employees in an email about the company that they should expect layoffs as a result of the agreement reached with SoftBank.
On Tuesday, SoftBank entered into an agreement to take control of WeWork, provide $ 5 billion in new financing, announce a tender offer worth up to $ 3 billion and accelerate a $ 1.5 billion financing commitment. As a result, SoftBank will control about 80% of WeWork and Claure, SoftBank's CEO, will replace former WeWork CEO Adam Neumann as CEO.
Claure wrote in an email to employees, obtained by CNBC, that he needs to "properly scale the business" to get WeWork on track for profitability. Layoffs will arise as a result, but Claure did not say how many will be announced.
"Yes, there will be layoffs ̵
It's a dramatic turnaround for WeWork, which just two months ago released the IPO prospect following a SoftBank-led funding that valued the company at $ 47 billion. Last month, WeWork withdrew the filing and was forced to apply for a bail to avoid running out of money.
Claure went on to say that WeWork lacks "focus" and accountability, but credited co-CEOs Artie Minson and Sebastian Gunningham with guiding the company through "these difficult times" and said he is committed to being transparent to WeWorks future ahead.
The Guardian previously reported that WeWork could lay off at least 2,000 people, or 13% of staff, and that more cuts could be on the way.
To all WeWork team members,
Today is a crucial day in the history of this great company. As you've probably read by now, SoftBank has made one of the largest financial commitments ever to a company, doubling down on WeWork with a $ 9.5B commitment to fully fund the company's business plan. We can now focus on what we do best – redefining the nature of work.
We make this commitment because of our firm belief in WeWork's mission, what we have achieved and what we need to achieve as we move forward together. I know first-hand the power of the WeWork brand and the quality of our product. First with Sprint, where WeWork reimagined the company's headquarters in a way that totally transformed the culture of a 120-year-old company and transformed our work environment to be more open and collaborative. And now WeWork will do the same at our headquarters in SoftBank, Tokyo. Furthermore, I am committed to doing the same across all SoftBank properties around the world, including some of our leading portfolio companies.
Over the past nine years, WeWork has been on a journey to disrupt the commercial real multi-billion dollar real estate market, positioning itself at the forefront of a mix of real estate and global scale far beyond any competitor. It is because of this that SoftBank is happy to strengthen the company with additional capital and experienced operational support. As CEO of WeWork, I will provide monitoring and support to the WeWork management team as we embark on this next chapter.
All the world's leading innovators and disruptors have had their ups and downs. I would be hard pressed to find a market leader like WeWork who did not experience a difficult period in the first few days. The last two months have been challenging and I will not minimize these challenges. We have already begun to make some of the correct changes to address them. But it is in these tough times that the companies are redefined.
Fortunately, we have all the necessary ingredients to make this one of the most amazing comeback stories ever, and prove that it is wrong for us. We have an incredible brand and a product that our members absolutely love. We have the world's leading customers, including over 38% of Global Fortune 500 companies. Landlords around the world are eager to collaborate and continue to grow with us. We have the highest quality investors. And more importantly, from the interactions I've had with you so far, we have one of the most dedicated workforces on the planet, demonstrating outstanding resilience and endurance every day.
To be honest, what we lack is the focus on our core business: WeWork, along with accountability and seamless execution. The nice thing is that all this is under our control. We have a lot of work ahead of us. The work will not be easy. The path will not always be smooth. But we will prevail. No excuses.
I want to thank all of you for keeping you strong throughout this crisis. Thanks to Artie, Sebastian and Miguel for stepping up in these difficult times. And special thanks to our community teams around the world who fulfill our mission: to create a world where people work to live a life, not just to live.
I am completely committed to open and transparent communication with you. I will share the good and the bad as we embark on this journey together. Yes, there will be layoffs – I don't know how many – and yes, we need the right size of business to achieve positive free cash flow and profitability. But I promise you that those who leave us will be treated with respect, dignity and justice. And for those who remain, we want to ensure that everyone agrees and shares in future value creation.
I look forward to working with WeWork & # 39; s management team and getting to know many of you in the days and weeks ahead. I host a meeting of all companies in just a few hours to work with you and answer any questions you may have. Or if you have any ideas or thoughts you would like to share with me, in the next 12 hours I will have a new WeWork email address: Marcelo@wework.com.