Startup Unicorn WeWork confirmed on Thursday that it had cut 2,400 jobs in a round of layoffs following its failed IPO attempt. Several sources told Business Insider that layoffs had begun November 11. WeWork met with employees to announce the larger round of layoffs on Thursday at 10 a.m ET, another source familiar with the matter said.
A WeWork representative told Thailand Startup
News,"As part of our renewed focus on the core WeWork business, and as we have previously shared with employees, the company is making necessary layoffs to create a more efficient organization."
The WeWork representative said “The process began weeks ago in regions around the world and continued this week in the U.S. This workforce reduction affects approximately 2,400 employees globally, who will receive severance, continued benefits, and other forms of assistance to aid in their career transition. These are incredibly talented professionals and we are grateful for the important roles they have played in building WeWork over the last decade."
Staff who were laid off earlier this week received four months' severance pay, regardless of their tenure, according to Business Insider's sources. The layoffs comprise about 20% of WeWork's staff. In June the company said it had 12,500 employees. Previous reports expected as many as 6,000 jobs to be cut.
The Unicorn Startup w
as earlier this year privately valued at $47 billion, which made it the most valuable private startup company in America. But filings for WeWork's highly anticipated IPO revealed troubling financials and left prospective investors questioning the company's leadership and business model.
Japanese SoftBank, one of WeWork's primary investors, ultimately offered a $9.5 billion package to acquire majority ownership of WeWork, giving former WeWork CEO and cofounder Adam Neumann a $1.7 billion deal in exchange for his departure.
The Japanese owned SoftBank has installed COO Marcelo Claure as WeWork's executive chairmen, with Claure overseeing the company's attempts to right course. SoftBank will look for a permanent CEO to replace Adam Neumann. Artie Minson and Sebastian Gunningham are current acting as WeWork's co-CEOs.
As SoftBank is now controlling about an 80% stake in WeWork, the company wants to build a path to profitability. But that will come at the expense of thousands of jobs, undoing years of rapid international expansion for the office-sharing company.
Claure said WeWork's layoffs would be focused in "areas of the business that do not directly support our core business goals."
Many industrial experts that WeWork is on its way down and that there will be more bad news being expected as the new management start discovering the whole unsuitability of the business model and the amount of ‘skeletons that were in the closet.’ In the meanwhile, customers of their sites should should be careful about paying rents or fees way too much in advance.