WeWork is laying off thousands of employees in a bid to cut the loses.
WeWork, the popular co-working space startup which initially received great appreciation from investors and customers alike, but later faced an ugly situation in the wake of their financial instability, has decided to let go of as much as 6,000 employees to get back on their feet.
The company’s current Chairman Marcelo Claure has confirmed the layoff, albeit didn’t disclose the exact number. In a memo sent to employees on Monday, Claure has explained that most of these layoffs will come from departments that don’t belong to the core business area.
Here is a full text of the memo:
So, what exactly went wrong? WeWork wanted to put a cap on its losses after a failed attempt to float an IPO which later led to pandora box of allegations against the CEO of the company and his strategy. Their initial public offering was put on hold as their corporate values and governance took an intense grilling from their investors.
WeWork now plans to effectively immediately lay off around 2,000 to 3,000 employees who worked directly under them. Another 1000-3000 employees are being let go who have been a part of their ancillary businesses.
Soft Bank Corp, which is the leading investor in We Company (WeWork’s parent company) has recently taken over the company. The company has been constantly losing money with each passing year. In Q3 2019 alone We Company lost $1.2 billion to account the revenue of $934 million. Hence SoftBank believes that it’s high time when they need to go back to the drawing board and strategise, rather optimise, everything once again,
The repercussions of these layoffs are going to prove fatal to the employees who will now need to find new jobs amid the beginning of the recession. Whereas, on the other side, Adam Neumann, C.E.O of WeWork who had to step down under duress stands to receive almost $185 million in consulting fee and also can sell 1 billion worth of his shares to Soft Bank Corp. This further angers the employee masses who are being let go.
To battle the unjust that’s being done to the employees of WeWork, they formed a coalition called ‘WeWorkrkers Coalition’ to pressurize the company into giving severance packages to the employees that are being laid off.
Marcelo Claure who is taking charge of the whole layoff situation and in turn positioning himself as a steady leader and Chairman said in an interview ‘I will guarantee you whoever leaves, will leave with dignity.’
What is our take on this whole situation?
We believe that WeWork has been driven into this state of distress because of their lousy and ineffective management and grip over their financials. Also, C.E.O Adam Neumann is one of the primary reasons why WeWork has found itself in hot water. His apparent greed and ability to exploit a flawed system allowed him to amass extraordinary amounts of wealth for himself while he showed his investors the dream of a perfect ‘unicorn’ when it came to WeWork.
We can only hope that Marcelo Claure truly keeps the best interests of the company at heart moving forward and delivers on his promise of WeWork’s comeback on ethically stronger ground.