WeWork (also known as The We Company) has laid off staff today, multiple sources have confirmed to Crunchbase News.
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A number of former WeWork employees posted on their LinkedIn profiles that they had been laid off. Those employees worked in various departments from IT to sales to operations.
When I reached out to the company, a spokesperson only told me the following:
“As WeWork continues to execute its strategic 5-year plan we are realigning certain functions and teams to reflect our business priorities.”
An individual familiar with the layoff said that “recent unforeseeable economic conditions” (presumably the fact that the COVID-19 pandemic has resulted in people working from home all over the world) had contributed to the need for a restructuring that has resulted in a smaller workforce. The total number of employees affected by the layoff is unclear at this time but, according to an employee who was laid off, who preferred not to be named, about 300 people on WeWork’s “tech and development team” were let go.
That person added: “It [the layoff] happened via Zoom, unexpected invite 2 hours before. It was very sterile. … I think we’re still lucky to get severance. WeWork won’t last another 6 months but that’s my opinion.” The individual added that employees were asked to return equipment via a prepaid package.
Another employee, who also wished to be unnamed told me: “Some newer employees were laid off in some markets, and more tenured in other markets. We were told a few weeks back that another round of layoffs was coming, but they didn’t know who would be affected at that time, just that they hoped to be finished by the end of May. We had calendar invitations pop up this morning and were told today was our last day. I was surprised that I was cut, personally. I knew they were coming but was already part of a very lean team, so it strikes me as odd to cut from an almost undermanned team.”
This story is developing, and we will continue to update it as we learn more details.
For those who have been paying attention, the past year or so has been rocky for New York-based WeWork, which provides coworking space to individuals and companies. The unprofitable company pulled plans for an IPO last year, its CEO and co-founder Adam Neumann got ousted, and investor SoftBank withdrew its $3 billion tender offer for WeWork shares. Last November, the company also laid off about 2,400 employees from its estimated 15,000 workforce.
In February, WeWork laid out a 5-year plan, including goals to be free cash flow positive by 2022 and have $1 billion of free cash flow by 2024. WeWork posted a staggering $1.37 billion operating loss in the first half of 2019. And that was before the pandemic. It lost $1.25 billion on a net basis in the third quarter of 2019 on revenue of $934 million.
WeWork had raised nearly $20 billion in venture and debt financing since its inception in 2010, according to Crunchbase data. In January 2019, it raised $2 billion at a pre-money valuation of $45 billion in a SoftBank-led Series H. Also, according to Crunchbase, Benchmark led WeWork’s $17 million Series A (ironically some may say) on April 1, 2012.
There’s been a lot of debate over the years whether WeWork is in fact a tech startup, or more of a real estate company. In a Feb. 1 announcement, the beleaguered startup said it named real estate executive Sandeep Mathrani to serve as its new CEO and board member.
Earlier this month, we reported on the fact that Neumann unloaded $361 million worth of shares when Japanese investment conglomerate SoftBank first invested in the company in 2017, according to The Telegraph.
And yesterday, CNN reported that SoftBank expects to lose about $6.6 billion on a portion of its investment in WeWork.
“As people make plans to head back into their offices, or new ones, later this year (when it’s deemed safe), there’s hardly a chance that new guidelines or people’s personal preferences will allow for them to be so tightly packed in again,” he wrote via email. “That change in norms makes coworking spaces especially susceptible, as their business is predicated on that type of density. WeWork and others will have to rethink their business model to accommodate these changing standards in the name of health and safety.”
SquareFoot, he added, has seen in recent weeks an increase in interest from prospective clients to figure out what their office spaces can and should look like, ahead of reopening.
Controlling the office environment has been one of the major appeals of choosing WeWork ahead of another space, Wasserstrum noted.
“However, now these business owners are seeking to manage and maintain control over their work environments,” he told Crunchbase News. “We won’t see coworking disappear completely, and it will remain one of many options for companies in need of new office space. But it will take some time for these popular companies to figure out their new way of doing business going forward.”
Illustration: Li-Anne Dias