Taxes

WeWork Lays Off 2,400 Employees In Latest Round of Cost-Cutting

Topline: Troubled office-space startup WeWork is facing more bad news, with the company announcing today that it would lay off 2,400 employees, nearly 20% of its workforce, as it continues to cut costs in a bid to revamp its struggling business.

  • Reports of impending layoffs had been circulating for weeks prior to the announcement: The New York Times reported on Sunday that WeWork could cut up to 4,000 jobs, around a third of its workforce, as it looks to stabilize its business.
  • WeWork’s new executive chairman, Marcelo Claure from SoftBank, warned staff last month that job cuts were to be expected as the company tries to “right-size the business.”
  • “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,” a WeWork spokesperson told Forbes. “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,” the spokesperson said. “These are incredibly talented professionals and we are grateful for the important roles they have played in building WeWork over the last decade.”
  • After reporting huge losses that put WeWork on the verge of financial collapse, the company was bailed out by its largest shareholder, Japanese conglomerate SoftBank, which provided a $10 billion lifeline.
  • With a new ownership team in place, overseen by SoftBank executive Marcelo Claure, WeWork is now completely overhauling its business and cutting costs in a bid to turn the company around.

Key background: The job cuts at WeWork follow on the heels of several tumultuous months for the embattled office-sharing startup. WeWork imploded starting in September, as it canceled its highly anticipated IPO amid concerns over mounting losses and irregular corporate governance, which eventually led to the ouster of CEO and founder Adam Neumann. Since then, the company’s new leadership has been selling off non-core assets and cutting costs in an attempt to save the business.

Tangent: As SoftBank continues its efforts to turn around WeWork, the embattled office-sharing startup has reportedly held talks with T-Mobile CEO John Legere about becoming the company’s new chief executive. Like Neumann, Legere has a repuation as an unconventional executive. He is also closely linked to SoftBank’s Marcelo Claure, the former Sprint CEO who is now chairman of WeWork, from their joint efforts orchestrating Sprint’s $26 billion merger with T-Mobile.

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