WASHINGTON, Nov 22, 2019 (BSS/AFP) – Embattled office sharing firm WeWork
will lay off 2,400 employees worldwide — about a fifth of its workforce —
as it struggles to reorganize amid mounting losses, the company announced
Thursday.
The painful job cuts underscore the rapid decline of what had been one of
America’s most celebrated startups which put a mammoth footprint in the
commercial real estate of major cities around the globe but recently had to
cancel its debut on Wall Street.
The layoffs which began “weeks ago” were necessary “to create a more
efficient organization,” a WeWork spokesperson said in a statement.
The dismissed workers “will receive severance, continued benefits, and
other forms of assistance to aid in their career transition.”
The company told shareholders earlier this month it lost almost $1.3
billion in the third quarter, more than twice the losses recorded in the same
period a year earlier.
As investors and analysts questioned the company’s value, WeWork in
September scrapped plans for an initial public offering, forced out chief
executive Adam Neumann and took a bailout from Japan’s SoftBank Group, a
major investor.
– Unconventional executive –
Alex Cohen, a vice president at the real estate firm Compass in New York,
told AFP that WeWork’s payroll became bloated as it tried to keep services —
space design, engineering and construction management — in house rather than
outsourcing them.
“WeWork’s ‘growth at all costs’ ethos meant they didn’t have time or
appropriate management to put in place the processes and organizational
structures to enable their staff to efficiently service the business’s
relentless appetite for new locations,” he said in an email.
Neumann stepped down from WeWork’s board of directors with a $1.7 billion
exit package while the company’s value was slashed to $8 billion — a far cry
from its $47 billion valuation at the start of this year and just a fraction
of the sum envisioned as part of the failed IPO.
A source told AFP that Neumann will get $1 billion for his SoftBank
shares, $500 million for reimbursements of personal debts and $185 million in
consulting fees.
The unconventional entrepreneur had faced simmering questions over his
management style, loose approach to corporate governance and allegations of
self-dealing — not to mention a Wall Street Journal expose which laid out
Neumann’s drug and alcohol use and his aspiration to become the world’s first
trillionaire.
A former employee, Maria Bardhi, filed a labor a grievance in New York
accusing Neumann of pregnancy discrimination, saying he referred to her
maternity leave as “vacation” and “retirement.”
The company also allegedly paid Bardhi’s temporary replacement twice her
salary and fired her six months after her return.
The WeWork debacle contributed to woes at SoftBank, which earlier this
month announced its largest quarterly loss ever at $6.4 billion.
Masayoshi Son, SoftBank’s chief executive, expressed remorse and
acknowledged having misjudged both ride-hailing giant Uber and WeWork.
“My investment decisions were in many ways poor. I regret them deeply,” he
said.