WASHINGTON – Embattled office sharing firm WeWork will lay off 2,400 employees worldwide as it struggles to address its mounting losses, the company announced Thursday.
The painful job cuts underscore the rapid decline of what had been one of America’s most celebrated startups, which puts a mammoth footprint in the commercial real estate of major cities around the globe.
The dismissed workers “will receive severance, continued benefits, and other forms of assistance to aid in their career transition.”
The company told shareholders earlier this month it lost almost $1.3 billion in the third quarter, more than twice the losses recorded in the same period a year earlier.
As investors and analysts questioned the company’s value, WeWork in September scrapped plans for an initial public offering (IPO), forced out chief executive Adam Neumann and took a bailout from Japan’s SoftBank Group, a major investor.
Alex Cohen, a vice president at the real estate firm Compass in New York, told AFP that WeWork’s payroll became bloated as it tried to keep services – space design, engineering and construction management – in house rather than outsourcing them.
“WeWork’s ‘growth at all costs’ ethos meant they didn’t have time or appropriate management to put in place the processes and organizational structures to enable their staff to efficiently service the business’ relentless appetite for new locations,” he said in an email.
Neumann stepped down from WeWork’s board of directors with a $1.7 billion exit package while the company’s value was slashed to $8 billion – a far cry from its $47 billion valuation at the start of this year and just a fraction of the sum envisioned as part of the failed IPO. (Agence France-Presse)
