The We Company, parent company to popular coworking brand WeWork, tried to go public this year, only to meet a fusillade of criticism after its filing became public. Obtuse financials, staggering losses, a messy CEO, and more led investors to pass on its shares, leading to their rapid devaluation during the IPO process.
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Rather than force its investors to take steep write-downs, WeWork’s CEO Adam Neumann stepped down, the IPO was pulled, and the company is now in retrenching mode. As it works to focus, WeWork is shedding the companies it bought (full list here), often featuring a software focus, and prepping to let some staff go.
How many people WeWork will lay off has been slightly hazy in recent weeks. Let’s examine what we know.
WeWork has executed layoffs before. How the company handled letting go of about 7 percent of its staff in 2016 became a famous anecdote after it was reported in mid-September as part a flurry of articles that helped sink the WeWork CEO’s tenure. The company also laid off about 3 percent of its workforce earlier this year, though it claimed at the time that the cuts were largely due to performance reviews.
At the time, WeWork had a boast ready regarding its workforce:
Our global workforce is now more than 10,000 strong, and we remain committed to continuing to grow and scale in 2019, including hiring an additional 6,000 employees.
The claim that the company would wind up with 16,000 employees at the end of year will prove false. But the company was perhaps on cadence to reach the number earlier this year. According to its final S-1 filing, as of June 30, WeWork “directly employed more than 12,500 employees.” So, at the mid-point of the year, the company was about halfway through the 6,000 new headcount it said it would add.
Then reality set in. In September, even before the company backed by SoftBank, the Vision Fund, Goldman Sachs, Wellington Management, T. Rowe Price, and Benchmark, considered laying off up to a third of its employees, according to The Information:
In recent days, a group of executives from WeWork’s parent company and bankers have been discussing ways to reduce costs, including laying off as many as 5,000 employees—a third of its workforce.
This anecdote also lets us know that between the company’s S-1 filing noted, June 30-dated 12,500 figure that the company kept hiring at a rapid clip.
Then the IPO was pulled, completing WeWork’s metamorphosis from a butterfly into a grub. The company’s new leaders began prepping to divest non-core purchases and cut staff. On October 3, both Bloomberg and Business Insider reported that big layoffs were coming. Bloomberg reported that “about 2,000 [workers], including [those working] jobs in business units that may be spun off” could lose employment. Business Insider noted that “between 10 and 25% of [WeWork’s] workforce” could be let go.
WeWork expects to shed about 500 of the roughly 1,500 software engineers, product managers and data scientists employed in the company’s technology division, a person familiar with the matter said, as a result of layoffs and selling businesses.
It’s notable that WeWork had so many engineers, product people, and data folks on staff at a real estate company. Though, of course, it’s hard to get a cost structure as broken as WeWork’s without spending money in lots of odd places. Still, it seems that WeWork is following Uber’s lead by cutting engineering staff.
Once viewed as essentially inviolable, engineering talent at some tech and pretend-tech companies is proving excisable. That, in and of itself, is a shift worth noting.
More as it happens, but you’re now caught up in the latest from WeWork and its work as a living cautionary tale.
Illustration: Dom Guzman