WeWork, after SoftBank assumed full control, is back in the news with the global startup deciding to lay off around 2,400 employees in its offices across different countries. This is part of the efforts the CEO of the SoftBank Group, Masayoshi Son, is making to bring the company back on its rails after taking a huge loss on its books.
WeWork has put out a statement on the staff reduction exercise saying the 2,400 personnel being asked to leave are being paid severance pay and are being offered other support needed for them to seek alternate work. Meanwhile, the immediate objective appears to be rid the company of the many unrelated businesses that the former CEO Adam Neuman entered into. These included setting up and running schools and maintaining apartment buildings. These would not only be dismantled, but the employees linked to these ventures may be the first ones to be shown the door.
It has been reported that there is palpable tension among the employees at the New York office even as the HR department is going about calling the ones being served the notices of termination.
SoftBank has committed $9.5 billion in additional funds with the objective of turning WeWork around. It has also brought in Marcelo Claure as the new executive chairman with the mandate to clean the stables and take WeWork towards profitable ways. The search for a new CEO is also underway with an Indian name being suggested as well.
The valuation of WeWork has been sliding fast and then its IPO had to be postponed. SoftBank, the major investor in the startup then stepped in, settled with the co-founder and CEO Adam Neuman, and it is now expected that SoftBank will be owning a solid 80% of WeWork.
There is an investigation being instituted by the Attorney General of New York State on WeWork, the contours of which are still to emerge.
A section of the employees has formed what is called the ‘WeWorkers Coalition’ which is fighting for the rights of the employees being asked to leave.