Amidst takeover, WeWork has planned to chop down over 4,000 employees as a part of its aggressive turnaround plan by Japan’s SoftBank Group, which acquired the coworking space startup on Tuesday, according to reports by Financial Times.
The job cut will affect around 30% of the global force of 14,000 employees in WeWork. The reports further highlighted its plans to layoff about 1,000 employees from their janitorial staff.
On Tuesday, SoftBank confirmed WeWork take over with $10 billion investment, giving a near $1.7 billion payoff to the startup’s co-founder Adam Neumann to renounce control.
The Japanese conglomerate also put forth a goal to achieve 90% occupancy rates in its essential markets of the US, Europe, and Japan, sources aware of the discussion told FT. Currently, WeWork’s occupancy rate dipped below 80%.
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Marcelo Claure, SoftBank CEO & executive chairman of WeWork, addressed the employees on Wednesday through a memo and said that the firm would have to “right-size the business to achieve positive free cash flow and profitability,” and that would involve job cuts. Claure added that the employees being laid off from WeWork will be treated with respect, dignity, and fairness. For the ones continuing to work for the firm, WeWork will ensure that everyone is aligned and shares in future value creation.
A former employee of WeWork told FT that there was a lot of anger and frustration inside the company. He further added that the staff was frustrated about the money Neumann got under the acquisition deal.
Earlier, WeWork released its IPO prospectus following SoftBank-led financing that valued the company at $47 billion. However, amidst the heavy skepticism faced by the company for its business model, the company valuation dropped by more than half of its previous value.
Claure said that WeWork lacked “focus” and accountability, but appreciated co-CEOs Artie Minson and Sebastian Gunningham for steering the company through the turbulent times and said that he was committed to being transparent on WeWork’s future moving ahead.