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The up-in-arms office-sharing startup WeWork announced on Thursday the layoff of 2,400 people after an unsuccessful try at an IPO. Various sources have contacted Business Insider, stating that these job cuts started on November 11. WeWork contacted the employees to make public that more layoffs will have to be done at 10 am ET Thursday, according to another inside source.
One WeWork representative told Business Insider that the WeWork company wants to pay particular attention to what constitutes the heart of WeWork so that the layoffs are required to help streamline the startup.
According to this source, the refocus started a few weeks back in various places throughout the world and now reached the USA. The 2,400 people around the world who have been subject to the workforce reduction will be helped transition to new careers, with a severance package that includes benefits and the help they need. The source stated that the laid-off employees are talented and that WeWork recognises their contribution at helping the startup grow.
The news of the layoffs first appeared on CNBC.
Sources of Business Insider claim that the employees whose contracts were terminated were granted severance pay for the next four months, irrespective of the length of their time in office. The total job cuts reach a little above 19% of the overall workforce at WeWork, considering that the startup declared in June a total of 12,500 employees. According to prior suppositions, the circulated number of layoffs was a maximum of 6,000.
WeWork’s private value reached $47 billion at the beginning of 2019, making it among the most important private startups in the US. However, the IPO everyone was looking forward to demonstrated that WeWork’s financial situation was worrisome so that potential investors were disheartened by the startup’s management and business design.
As a result, one of the main investors in the company, SoftBank, came up with a $9.5 billion rescue agreement which made it the majority owner of WeWork. Adam Neumann, the former CEO and co-founder of this startup, received $1.7 billion to renounce his job.
The new executive chairman at WeWork is COO Marcelo Claure, who will steer this company to a more profitable direction. While SoftBank searches for a long-term CEO for Neumann’s position, the role is fulfilled by the joint efforts of Artie Minson and Sebastian Gunningham.
Considering that SoftBank owns 80% of the WeWork stakes, it is probable that thousands of other employees will be laid off, and the company will lose its fast-paced worldwide development.
The people at WeWork received a memo from Claure at the beginning of the week, stating that these layoffs will regard positions unrelated to the business’s main objectives.
At the beginning of November, The New York Times posted a letter from the WeWork Coalition that comprises over 150 employees, requesting correct treatment during the job cuts.