WeWork cuts nearly 20 per cent of its workforce

Company scales back the explosive growth that put its sleekly designed shared office spaces in 122 cities

NEW YORK— WeWork is slashing nearly 20 per cent of its workforce, embarking on a painful restructuring of its money-losing operation that doomed its stock market debut and left the office-sharing company on the brink of bankruptcy.

WeWork said it has laid off 2,400 of its approximately 12,500 employees to “create a more efficient organization.” The job cuts began weeks ago in regions around the world and continued this week in the U.S, the company said in a statement Thursday.

WeWork said the employees who lost their jobs “are incredibly talented professionals,” but gave no details about which roles were cut.

In an email to staff earlier this week, executive chair Marcelo Claure said jobs would be eliminated in areas that “do not directly support our core business goals,” referring to WeWork’s main office-leasing operations.

Additionally, about 1,000 cleaning and maintenance jobs in the U.S. and Canada are being outsourced to another firm that will contract the workers back to WeWork for the time being.

The New York-based company is scaling back the explosive growth that put its sleekly designed shared office spaces in 122 cities around the world while racking up massive losses that ultimately put off Wall Street investors and doomed its IPO. WeWork is shedding side business and dumping or scaling back projects started under the grandiose but scattered vision of ousted co-founder Adam Neumann, including a Manhattan elementary school and the shared residential offering WeLive.

Claure plans to lay out a fiveyear turnaround plan at a company-wide meeting Friday amid employee anger over the mismanagement of a company that until recently had been the darling of the start-up world, valued at $47 billion (U.S.) in private investment round.

WeWork was saved from financial collapse with a $9.5-billion bailout from Japanese tech conglomerate Softbank, which now owns 80 per cent. That bailout reportedly valued WeWork at around $8 billion, devastating for many employees facing a reduction in the value of their stock options. Resentment grew following a $1.7-billion payout to Neumann, whose controversial corporate governance practices contributed to skepticism in Wall Street about WeWork.

In a letter to management last month, a group of WeWork employees said the unravelling of the IPO revealed “deception, exclusion and selfishness playing out at the company’s highest levels.” The group, calling itself the WeWorkers Coalition, asked that laid off employees be fairly compensated for lost equity.