WeWork, the embattled workspace company that was recently taken over by Japan’s SoftBank, will get rid of 4,000 jobs in an effort to become profitable.
The Financial Times is reporting that the company will cut 30 percent of its workforce, and around 1,000 of those layoffs will be jobs like cleaning staff. WeWork reportedly wants to outsource those types of jobs.
The company wants to prioritize profit, and will be focusing its energy on three main markets: Japan, Europe and the United States. WeWork will also be stepping back from areas like India, Latin America and China.
The new strategy is to boost occupancy rates to 90 percent in its most populated areas, which would be an increase from under 80 percent in some markets where the company was trying to aggressively expand its footprint.
The new executive chairman of WeWork, Marcelo Claure, told staff that the only way for the company to be profitable was to “right size” its business, and that would include losing jobs.
“Yes, there will be lay-offs — I don’t know how many — and yes, we have to right-size the business to achieve positive free cash flow and profitability,” he wrote in a memo to staff. “But I will promise you that those that leave us will be treated with respect, dignity and fairness. And for those that stay, we will ensure everyone is aligned and shares in future value creation.”
SoftBank previously invested $10.65 billion in the space-sharing company and won control over a competing JPMorgan Chase deal.
Former CEO of WeWork, Co-Founder Adam Neumann, was reportedly offered $1.7 billion in stock, cash and credit to exit the company. Neumann will also give up his voting shares and reportedly will sell about $1 billion in shares to SoftBank. Sources said he will also get an approximate $500 million credit line from SoftBank and a $185 million consulting fee.