Business WeWork lays off 2,400 employees

WeWork lays off 2,400 employees

The beleaguered office-sharing start-up is laying off employees in an attempt to right-size the business.

www.cnbc.com

- The beleaguered office-sharing start-up is laying off 2,400 employees in an attempt to right-size the business.

- The layoffs come after several tumultuous months for WeWork, which were marred by a botched IPO, mounting losses and co-founder Adam Neumann’s resignation.

- WeWork recently detailed sweeping changes to its business, including divesting noncore ventures.

A pedestrian walks by a WeWork office on October 07, 2019 in San Francisco, California. Days after withdrawing its registration for an initial public offering, WeWork also warned employees that the company could be set to lay off nearly 2,000 people, about 16 percent of its workforce.

WeWork is laying off 2,400 employees as it works to cut costs and right-size the business, the company confirmed to CNBC.

In a statement, a WeWork spokesperson said the cuts were being made as part of the company’s efforts to “create a more efficient organization” and refocus on the core office-sharing business. The job reductions represent 19% of WeWork’s total workforce, which amounted to 12,500 employees as of June 30, according to an SEC filing.

“The process began weeks ago in regions around the world and continued this week in the U.S.,” the spokesperson said. “This workforce reduction affects approximately 2,400 employees globally, who will receive severance, continued benefits, and other forms of assistance to aid in their career transition. These are incredibly talented professionals and we are grateful for the important roles they have played in building WeWork over the last decade.”

Leading up to the announcement, reports of forthcoming job cuts had been circulating for weeks. The New York Times reported on Sunday that WeWork could cut at least 4,000 jobs across its core office-sharing business and some side ventures. In October, Marcelo Claure, WeWork’s new executive chairman, warned that layoffs would be on the way but didn’t say how many would be announced.

Claure said in a memo to employees earlier this week that the company will hold an all-hands meeting at 10 a.m. ET on Friday to address the changes slated for the company.

The layoffs come after several tumultuous months for WeWork. In September, the beleaguered start-up pulled its IPO filing after investors balked at its mounting losses and unusual corporate governance structure. The scrutiny forced WeWork co-founder Adam Neumann to step down from his role as CEO, with Sebastian Gunningham and Artie Minson stepping in as co-CEOs.

WeWork was poised to run out of money in a matter of weeks, but secured an 11th-hour bailout deal from SoftBank, its biggest investor. With a new owner in place, WeWork is expected to make sweeping changes to its business, including divesting noncore businesses and focusing on enterprise customers, instead of small and mid-sized clients. However, the company continues to bleed cash, reporting $1.25 billion in losses for the third quarter, widening sharply from the same period last year.

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The drama behind this company pretty much deserves its own KF thread -the CEO is pretty much a filthy rich lolcow- it'll be a case study for sure.

 

[Harvey Danger]

Essentially they were renting out office space. The idea being that they'd do short term leases, or shared workspaces particularly for the tech sector. The shared workspace/meeting place concept was always going to be low margin, and essentially was competing with Coffee houses on the low end, and managed office buildings on the high end (Office buildings offer short term leases, often you'll get additional services like receptionist etc)

In reality the whole company was pointless, because all they were do was leasing a building then subletting it. They weren't adding any real value, and their work practices were so chaotic that they weren't even manageing the buildings properly. Aall they were was an additional middleman between a tennant and the owner of the building.

In reality, you're right. In theory, there was a narrow space they could've profited from.

For example, they could beat the margins at the low end, if they rented out stores where Starbucks normally would set up. You axe the barristas and coffee overhead, replace it with a low end coffee machine and 1 "office manager" to run it, and open up more floor space to rent. Offering similar amenities to Starbucks with lower quality coffee but a guaranteed "booth" could turn a profit, in theory, but it wouldn't be very sexy.

At the higher end, they could have provided better management services, and divide the physical layouts to provide efficient, affordable spaces for smaller companies. But they didn't. They just became another middleman that was worse at the job of managing.

WeWork deserves all the failure it gets, but I wish someone had actually done their ideas properly. There was a time it could have assembled a business model that encouraged new tech company hubs, sparking growth in places outside the Silicon Valley/Seattle/NYC clusters.

 

[Some Manajerk]

I remember Scott Adams making fun of that buzzword in a Dilbert book way back in the 90s.

 

[Stoneheart]

There was a time it could have assembled a business model that encouraged new tech company hubs, sparking growth in places outside the Silicon Valley/Seattle/NYC clusters.

thats done in plenty of Locations, they normaly take some shares for the place.

 

[Fatafata]

In reality, you're right. In theory, there was a narrow space they could've profited from.

For example, they could beat the margins at the low end, if they rented out stores where Starbucks normally would set up. You axe the barristas and coffee overhead, replace it with a low end coffee machine and 1 "office manager" to run it, and open up more floor space to rent. Offering similar amenities to Starbucks with lower quality coffee but a guaranteed "booth" could turn a profit, in theory, but it wouldn't be very sexy.

At the higher end, they could have provided better management services, and divide the physical layouts to provide efficient, affordable spaces for smaller companies. But they didn't. They just became another middleman that was worse at the job of managing.

WeWork deserves all the failure it gets, but I wish someone had actually done their ideas properly. There was a time it could have assembled a business model that encouraged new tech company hubs, sparking growth in places outside the Silicon Valley/Seattle/NYC clusters.

They basically took the Regis/IWG business model, but without any fiscal discipline and substituted in wokeness

There's other companies doing stuff in a "hip" way. Justco is getting pretty big in asia

 

[Shmidty Werbenmanjenson]

I worked at a startup in a WeWork building for a bit, it's not surprising they're shitting money out of their asshole. Every floor had things like beer taps, pool tables, lounges, food, beverages, pretty much aping whatever millennial-daycare shit Google is doing in their offices. In sum, fucking faggots.

Beer taps at work? A good idea honestly. We often have problems with people rolling in after work drunk, getting in wrecks, all sorts of shit. It got to the point where the unofficial policy was, if you were gunna get thrashed up, at least do it in the work parking lot, so you could sleep it off in the sheds or carport and be gaurenteed to make it into work the next day. Frankly cots and beer would have saved time and money for who I was working for in the long run.

But I was working with basically homeless bararians, so other rules might apply.

 

[TowinKarz]

They basically took the Regis/IWG business model, but without any fiscal discipline and substituted in wokeness

I was going to ask, didn't places like Regis already corner this "fancy office timeshare" market, like, 5 years ago? There were incessant radio reads and adspots for them.

 

[PantsFreeZone]

I'm starting a publicly traded company called WeUnemployed.

Sharks, I'm asking for $400 million for 100% of my company.

 

[melty]

I just love seeing these things fail. It's very gratifying.
There's a company a lot like this that my company is looking to work with. People who have been in business for decades at my company are scratching their heads trying to figure out how the business works: they state their largest competitor is a company that's several thousand times larger than them, they don't have a strategy for making money that they can articulate, and the office is tricked out with millennial bait. There is no evidence they actually make any money (I'm quite sure they don't) and they obviously have no idea how they're going to grow. It's essentially like an indie film studio saying totally straight faced that Disney is their biggest competitor.
But they have a shitton of venture capital for some reason so they get to play pretend startup unicorn. It's very weird and I'm just waiting for it to collapse so I don't just look ignorant everytime I respond to "how do they make money?" with "they don't."

 

[Absolutego]

Looks like the second dotcom bust is coming at us. Every six months or so now one of these "venture capitalist scams disguised as a corporation" (that blossomed into existence during that wave of people getting into Tech CultureTM from 2007-2011), finally keels over in its own exhaustion. It's only a matter of time before Boomers/Xoomers investing in the latest Internet of Things they read about on Wired turn off the money tap.

 

[melty]

Here's an article that goes a little more into the company and what the spaces are like. I think it sounds awful. I want to go to work and get a paycheck and come home. I don't want to do fucking yoga with my coworkers, or do laundry while drinking beer, or do astrology readings. I think a lot of millennials don't understand these "amenities" are there to keep you at work, overworked and underpaid. None of this shit is better than money in your bank account.

How Did WeWork’s Adam Neumann Build a $47 Billion Company?

Not by sharing.

nymag.com

Lol: "In 2015, Neumann chastised a group of employees for not Googling a job applicant after finding out that WeWork had hired the Hipster Grifter, a Brooklynite who had become briefly famous several years earlier for scamming her way into jobs and cheating people out of money."

 

[Damn Near]

Beer taps at work? A good idea honestly. We often have problems with people rolling in after work drunk, getting in wrecks, all sorts of shit. It got to the point where the unofficial policy was, if you were gunna get thrashed up, at least do it in the work parking lot, so you could sleep it off in the sheds or carport and be gaurenteed to make it into work the next day. Frankly cots and beer would have saved time and money for who I was working for in the long run.

But I was working with basically homeless bararians, so other rules might apply.

It sounds cool, but there is quite a bit of an over-saturation of WeWork in Manhattan. For example, there was another one two blocks away from the building I worked at, and another one maybe 10 blocks from that, and on and on and on down the island until you hit the water. These are 10+ story, renovated pre-war buildings in Midtown and I'm assuming the others were similarly decked out in the Google office style. It's a money sink if there ever was one. To be fair, the beer they had there was A+, but again, giant waste of money. Why are you blowing money on this shit for people that are already willing to pay you to rent your space?

 

[Just Some Other Guy]

Here's an article that goes a little more into the company and what the spaces are like. I think it sounds awful. I want to go to work and get a paycheck and come home. I don't want to do fucking yoga with my coworkers, or do laundry while drinking beer, or do astrology readings. I think a lot of millennials don't understand these "amenities" are there to keep you at work, overworked and underpaid. None of this shit is better than money in your bank account.

How Did WeWork’s Adam Neumann Build a $47 Billion Company?

Not by sharing.

nymag.com

Lol: "In 2015, Neumann chastised a group of employees for not Googling a job applicant after finding out that WeWork had hired the Hipster Grifter, a Brooklynite who had become briefly famous several years earlier for scamming her way into jobs and cheating people out of money."

A-fucking-men. Why do so many people want to live at work? Fuck that noise. Go to work, get paid, go home, and don't think about it until the next day.

 

[ForgedBlades]

Great writeup about this dude in Vanity Fair. Well worth the read.

 

[IAmNotAlpharius]

WeWork always sounded like a scam and the CEO reminded me as a millennial version of that guy from Futurama.

 

[Agent of Z.O.G.]

The news piece that made me aware of WeWork was how the guy fired several people because his wife met them and felt they had bad energy.
Looks like there was more bad energy at the company than the crystals saw.

 

[Fatafata]

The news piece that made me aware of WeWork was how the guy fired several people because his wife met them and felt they had bad energy.
Looks like there was more bad energy at the company than the crystals saw.

His wife is a cousin of Gwyneth Paltrow

 

[Munchingonfish]

You know how they say CEOs are often psychopaths?

 

[Freedom Fries]

"right sizing" is now a new, positive word for "down sizing". SPREAD THE WORD.

Hmm. I'm familiar with asset-light and scaleable. Did those terms fall out of fashion? I like them better than rightsizing anyway since they actually imply some utility.

Beer taps at work? A good idea honestly. We often have problems with people rolling in after work drunk, getting in wrecks, all sorts of shit. It got to the point where the unofficial policy was, if you were gunna get thrashed up, at least do it in the work parking lot, so you could sleep it off in the sheds or carport and be gaurenteed to make it into work the next day. Frankly cots and beer would have saved time and money for who I was working for in the long run.

But I was working with basically homeless bararians, so other rules might apply.

I wouldn't recommend drinks ever be mixed with white collar office work. If you want to go to a happy hour with coworkers after and get trashed that's fine and even good sometimes, but not in the office.

 

[RodgerDodger]

Is it just me, or did WeWork facilities always seem like some form of Adult Day Care for completely useless Millennial Hipsters? And also further proof that you can't make money off of Millennial Hipsters.

 

[Honest Coyote]

What kind of jobs did people have where a setting like that even works? My job isn't the most difficult or tricky one in the world, but even then I still need to concentrate. Beer, yoga, and laundry are the opposite of focusing. Why not add an obstacle course between the cubicals as well? Was it all clickbait journos or something?