WeWork plans to layoff up to 6,000 employees—about 30% to 50% of its workforce—according to a report in the New York Times.
The real estate rental company currently employs 12,500 people in its offices throughout the United States and internationally. The downsizing will primarily adversely impact three main groups: employees in the divisions responsible for subletting office space, personnel at ancillary nonessential businesses that the company acquired and the maintenance staff. The downsizings are part of a desperate turnaround plan for WeWork to cut costs and stem the hemorrhaging of money.
This is quite a change of fortunes for the once-darling and celebrated unicorn company. Only a few months ago, WeWork planned a much-anticipated initial public offering (IPO). Former CEO and cofounder Adam Neumann was heralded as a wunderkind and was a multibillionaire on paper. The company was valued at a staggeringly high $47 billion.
After the financial crisis, real estate was cheap, unemployment was high and the gig economy had just started. There were large numbers of businesspeople looking to downsize their offices to save money and entrepreneurs starting businesses after losing their jobs or unable to find new positions.
Astute to this trend, Neumann capitalized on this movement. He took the boring and stale shared-office-space concept (which had been around for years), added a lo-fi, hip-hop music background soundtrack, free-flowing kombucha and the air of being part of a young, cool club and people clamored to set up their offices at WeWork.