Embattled office-sharing startup WeWork confirmed on Thursday that it had cut 2,400 jobs in a round of layoffs following its failed IPO attempt. Several sources told Business Insider that layoffs had begun November 11. WeWork met with employees to announce the larger round of layoffs on Thursday at 10 a.m ET, another source familiar with the matter said.
"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 representative told Business Insider.
"The process began weeks ago in regions around the world and continued this week in the U.S.," the statement went on. "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. These are incredibly talented professionals and we are grateful for the important roles they have played in building WeWork over the last decade."
CNBC first reported the news.
Employees who were laid off earlier this week received four months' severance pay, regardless of their tenure, according to Business Insider's sources. The layoffs comprise about 20% of WeWork's staff. In June the company said it had 12,500 employees. Previous reports expected as many as 6,000 jobs to be cut.
Earlier this year WeWork was privately valued at $47 billion, which made it the most valuable private startup company in America. But filings for WeWork's highly anticipated IPO revealed troubling financials and left prospective investors questioning the company's leadership and business model.
SoftBank, one of WeWork's primary investors, ultimately offered a $9.5 billion package to acquire majority ownership of WeWork, giving former WeWork CEO and cofounder Adam Neumann a $1.7 billion deal in exchange for his departure.
SoftBank has installed COO Marcelo Claure as WeWork's executive chairmen, with Claure overseeing the company's attempts to right course. SoftBank will look for a permanent CEO to replace Adam Neumann. Artie Minson and Sebastian Gunningham are current acting as WeWork's co-CEOs.
With SoftBank now controlling about an 80% stake in WeWork, the company wants to build a path to profitability. But that will come at the expense of thousands of jobs, undoing years of rapid international expansion for the office-sharing company.
In a memo sent to employees on Monday, Claure said WeWork's layoffs would be focused in "areas of the business that do not directly support our core business goals."
Earlier this month The New York Times published a letter that more than 150 WeWork employees sent to company management. The group, calling themselves the WeWork Coalition, asked for fair treatment during the layoff process.
"We are not the Adam Neumanns of this world — we are a diverse work force with rents to pay, households to support and children to raise," the letter read.
- Now read:
- One chart shows just how dire WeWork's revenue situation is
- Adam Neumann personally invested tens of millions in startups while he ran WeWork. Founders who took his money reveal what it was like.
- Read the email from WeWork's new chairman where he confirms layoffs and says: 'What we are lacking is focus' and 'accountability'
- WeWork plans to outsource cleaning and maintenance in first step of big staff cuts, leaked email shows
