Troubled office-space startup WeWork said it would shed around 2,400 jobs following its botched initial public offering in an effort to reduce mounting losses.
We Co., as its parent company is formally known, said Thursday that the layoffs are necessary to create a more efficient organization.
The job cuts, which represent about 17% of its workforce, began around the globe weeks ago and spread this week to employees in the U.S., the company said. The figure doesn’t include the roughly 1,000 cleaning and facilities employees who are set to be transferred to an outside vendor, or the additional 1,000 employees who work at companies that WeWork acquired and is now trying to sell. WeWork had around 14,500 employees before the layoffs began.
The job cuts were widely expected because of the financial difficulties facing the company, which lost $1.25 billion in the third quarter. The layoffs were initially delayed from taking place earlier this month because WeWork couldn’t afford the severance costs, people familiar with the matter have said.
WeWork has become the most extreme recent example of a U.S. startup that has lost billions in value amid investor concerns about their prospects. The company was valued at $47 billion in a funding round in January, making it the most valuable startup in the U.S. at the time.
We Co. had planned to raise up to $10 billion in equity and debt through its IPO, generating cash to keep expanding. But without the listing, it nearly ran out of cash amid the accelerated spending.
The company then accepted a bailout package from lead investor SoftBank Group Corp. The Japanese conglomerate committed $6.5 billion in debt and equity in exchange for a nearly 80% ownership stake.
Employees throughout the day Thursday filed into the second floor of the company’s headquarters in a low-slung building in Manhattan’s Chelsea neighborhood, company laptops in tow. There, they received quick presentations on the layoffs, with their managers and co-chief executives, Artie Minson and Sebastian Gunningham, in the room, a person familiar with the process said. The employees then dropped off their laptops and keycards and left the building.