INSUBCONTINENT EXCLUSIVE:
Major layoffs are all but inevitable at high-flying real estate startup WeWork after Adam Neumann succumbed to pressure today to step down
as CEO and take the role instead of non-executive chairman of the company he cofounded nine years ago.
Two well-placed sources tell us that
the scope is likely to be massive, and includes some of of its newest business divisions, which these same sources anticipate will be
jettisoned to get the company focus back on its core business
One of these sources speculates that over time, up to half of WeWork 15,000 employees — 9,000 of whom have been brought on in the last two
years — could be laid off to shore up the unprofitable company expenses
The sentiment echoes a new piece in The Information that reports a &group of executives from WeWork parent company and bankers& have
discussed laying off as many as 5,000 employees—a third of its workforce.
Neumann won''t have as much say in the matter, either
As part of his departure from the role, he has agreed to further reduce the power of his supervoting shares from an original 20 votes for
every one vote that a regular investor in WeWork would receive to just three, reports Bloomberg
His wife, Rebekah, a cofounder who is thought by insiders to have played a heavy role in the company original — and highly atypical —
IPO prospectus, is also leaving the business.
It rather breathtaking, the speed with which the couple was just elbowed aside
Still, some others involved in the company look poised to get a far worse deal
The Japanese conglomerate SoftBank currently stands to lose billions of dollars on its investment in the company — if it doesn''t wind up
writing down nearly the entire investment
Even an aggressive ratchet clause won''t do much to protect SoftBank if WeWork shares eventually sink on the public market.
It would seem an
extreme correction to a culture that had become, well, anything but restrained
It also far from clear that it would have the intended effect of attracting public shareholders to the company, whose wheels began to come
off when SoftBank first plugged $4.4 billion into WeWork roughly two years ago, according to our sources
(Roughly $6 billion more would follow.) As says one of these individuals, who has known Neumann for many years, &Adam already had a healthy
What the f_ck do you think is going to happen when he given billions of dollars?
