Marcelo Claure, CEO of WeWork, told employees that layoffs would begin this week, according to an email from the Washington Post. Claure said the layoffs are "difficult" but necessary to create a "more efficient, focused and customer centric organization".
In a year of disappointing tech IPOs, WeWork distinguished itself by its meteoric rise and decline. The company never went public. According to Pitchbook, WeWork had a value of 47 billion US dollars in January. Last month, SoftBank announced a $ 9.5 billion deal to take control of WeWork .
The spectacular burning of WeWork has become a cautionary tale in a summer of stifling IPOs, especially when it comes to job creation and employee wealth. Uber, which went public in May and recorded a price decline of around 36 percent since its IPO, has laid off around a thousand employees in recent months.
Tech companies have long been criticized for creating fewer jobs than traditional corporate giants as companies automate more tasks and develop technologies to replace people despite their huge revenue streams.
Still, some criticized WeWork's marketing as a technology start-up and instead said it was closer to becoming a real estate company ̵
1; and one should always have appreciated that.
The company's core business is turning rented buildings into common areas that offer perks such as yoga classes and kombucha faucets. Earlier this year, the company set up a parent company called We Co. and expanded into housing rental, data analysis and education. She publicly announced an IPO in August.
The plans to go public dissolved as investors questioned the company's valuation and the leadership of former CEO Adam Neumann. Neumann resigned as CEO in September and was replaced by two co-CEOs: Artie Minson, former co-president and chief financial officer of the company; and Sebastian Gunningham, who was vice chairman.
Without the infusion of Softbank cash last month, WeWork would have run out of money this month. Neumann became Board Observer and received an exit package worth $ 1.2 billion. The company's executive board took control of its voting shares.
WeWork "probably set a little before himself," said D.A. Davidson analyst Barry Oxford. Layoffs often follow when a company tries to slow its growth and demonstrate profitability, which WeWork is likely to try.
The news of the job cuts was previously reported by the New York Times from 2,000 to 2,500 people from the company's core real estate business. Another 1,000 employees would leave the company if the company sold or closed its other businesses, including a private school, and 1,000 building maintenance workers would be handed over to a contractor, the Times reported.
WeWork declined to comment on the number of layoffs.  Like other unicorn startups like Uber, Lyft and Slack, WeWork was one of the many companies investors and employees hoped would create wealth in public markets this year. The debuts were particularly crucial for technicians, for whom stocks are usually an integral part of total compensation and who have fewer opportunities to sell their stock.