Amanda Lang: WeWork a reminder buying a new public company can be risky
WeWork said it will begin job cuts “in earnest” this week in the U.S., a bid by the struggling office-sharing startup to stabilize its business amid staggering losses.
Executive Chairman Marcelo Claure told staff in an email Monday that the process, which will involve eliminating and scaling back some functions and responsibilities, “will make us stronger and better able to generate even more opportunities over the coming months and years.”
Soon after withdrawing its registration for an initial public offering in September, WeWork told staff to brace for extensive job cuts. People familiar with the matter have said they could total about 2,000 or some 16 per cent of the global workforce. Some of those cuts have already begun.
Claure said he plans to brief staff about the company’s future on Friday, when he’s expected to tease a five-year plan for WeWork.
A WeWork spokeswoman declined to comment on the job cuts.
After the company’s valuation plummeted from US$47 billion to about US$8 billion, WeWork is seeking to cut costs and show a path to profitability in order to potentially attempt an IPO again next year. That path, as outlined by the company’s co-chief executive officers, includes selling assets and cutting jobs. The company reported a net loss of US$1.25 billion in the third quarter, eclipsing its sales and more than doubling its loss from the same period last year.
WeWork employees are accustomed to routine firings, unlike at the typical startup in growth mode. The nine-year-old company periodically trimmed the ranks, WeWork has said, to shed under-performers. It dismissed hundreds of employees in 2016 and held a staff meeting to discuss the move that concluded with a performance from a member of the hip-hop group Run-DMC. WeWork fired about 300 more this spring.
As WeWork’s employees brace for jobs cuts, they have started to organize. Two weeks ago, a group of employees presented management with a letter asking for changes such as salary transparency, more employee involvement in management decisions and an end to forced arbitration. The same group also asked for fair treatment for WeWork’s cleaning staff, whose in-house jobs are being cut and are being re-hired by an outside contracting firm.