WeWork to lay-off 2,000 employees; amid IPO crisis

The company is planning to lay off between 10% and 25% of its workforce.

WeWork planned to cut 2,000 jobs at the end of October 2019 after the failed IPO. WeWork — an American commercial real estate company that provides co-working space to companies and startups was founded in 2010. The company has over 800 locations worldwide today and its profits increased dramatically over nine years. The Wall Street Journal reported that the company secured a $36 billion private valuation in January this year after investment from SoftBank. Some sources even valued it as high as $47 billion.

WeWork’s IPO

It filled an IPO on August 14th, 2019. After filling its IPO, the company started facing challenges about finances and leadership. Now the target public valuation of WeWork is just $10-$12 billion. There are some reasons for it. Let’s talk about them.

Just after filling an IPO company started to suffer intense scrutiny from investors and media.

These concerns became the central point of discussion:

  • The company’s path to profitability
  • Adan Neumann (WeWork’s Cofounder and ex-CEO)
WeWork® CEO Adan Newmann with his wife Rebekah Neumann. Credits: CNBC

It has shaken up the investor’s interest, and within one month, we came across three big news about WeWork recently.

  1. The company’s valuation is as low as $10 billion from $47 billion according to Reuters.
  2. The company has delayed its initial public offering on September 17th.
  3. Adam Neumann resigned as a CEO on September 24th in the best interests of the company.
  4. According to Inc., new CEOs Artie Minson and Sebastian Gunningham are aiming to focus on WeWork’s core business after a shelved initial public offering.

Ex-CEO Neumann habits had infused corporate culture, Business Insider reported. Most importantly, it was too surprising for potential investors that Mr. Neumann had trademarked the term “We” and then forced WeWork to buy it for $5.9 million. He lost the huge share of investors by blurring the lines between his own personal finances and WeWork.

WeWork announced to cut massive layoffs

Now, the latest news coming out of the WeWork is the company announced to cut massive layoffs that are about 2,000 jobs! In the past, the company had fired hundreds of under-performing employees. However, after every cull executives announced that they might start a rehiring process to maintain the excellent performance of the company. But, no such announcement is made this time from WeWork’s executives.

WeWork® office reception in New York. Credits: Bloomberg

After the resignation of Mr. Neumann environment within the company has changed so much. It was the culture of the company to include alcohol in staff meetings. But, this meeting did not.

Additionally, the company was known for organizing outlandish corporate and big-budget events for its employees. However, as per sources, due to the severe financial crisis, these events are most likely on the chopping board now. 

Mr. Neumann’s antics resulted in the economic downturn of WeWork. No doubt, the company is passing through a tough phase. Let’sLet’s see will the new CEO, Kazuyuki Sasaki, will successfully take the company out of crisis or not.

Featured image: TIMOTHY A. CLARY/AFP/Getty Images

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