The morning after being installed as WeWork’s new chairman, Marcelo Claure told employees in a company-wide email that they should expect layoffs as a result of the deal reached with SoftBank.
On Tuesday, SoftBank struck an agreement to take control of WeWork, providing $5 billion in new funding, announcing a tender offer worth up to $3 billion and speeding up a $1.5 billion financing commitment. As a result, SoftBank will control approximately 80% of WeWork and Claure, SoftBank’s chief operating officer, will replace former WeWork CEO Adam Neumann as its executive chairman.
Claure wrote in an email to employees, which was obtained by CNBC, that he would need to “right-size the business” to get WeWork on track to profitability. Layoffs will occur as a result, but Claure didn’t say how many would be announced.
“Yes, there will be layoffs – I don’t know how many – and yes, we have to right-size the business to achieve positive free cash flow and profitability,” Claure wrote. “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.”
It’s a dramatic swing for WeWork, which just two months ago released its IPO prospectus following a SoftBank-led financing that valued the company at $47 billion. Last month WeWork withdrew its filing and was forced to seek a bailout to avoid running out of money.
Claure went on to say that WeWork lacks “focus” and accountability, but credited co-CEOs Artie Minson and Sebastian Gunningham for steering the company through “these difficult times” and said he’s committed to being transparent on WeWork’s future moving forward.
The Guardian previously reported that WeWork could lay off at least 2,000 people, or 13% of its staff, and that more cuts could be on the way.
To All WeWork Team Members,
Today is a defining day in the history of this great company. As you have probably read by now, SoftBank has made one of its largest financial commitments ever to a company, doubling down on WeWork with a $9.5B commitment to fully fund the company’s business plan. We can now focus on what we do best — redefining the nature of work.
We are making this commitment because of our firm belief in WeWork’s mission, what we have accomplished, and what we are going to achieve as we move forward together. I know firsthand the power of the WeWork brand and the quality of our product. First with Sprint, where WeWork reimagined our corporate headquarters in a way that totally changed the culture of a 120-year old company and transformed our working environment to be more open and collaborative. And now WeWork will be doing the same at our headquarters at SoftBank in Tokyo. Furthermore, I am committed to do the same across all SoftBank properties around the world, including some of our leading portfolio companies.
Over the past nine years, WeWork has been on a journey to disrupt the multi-trillion-dollar commercial real estate market, positioning itself at the forefront with a mix of real estate assets and global scale that are far beyond any competitors. It is because of this that SoftBank is excited to fortify the Company with additional capital and seasoned operational support. As Executive Chairman of WeWork, I will be providing oversight and support to the WeWork leadership team as we embark together on this next chapter.
All the world’s leading innovators and disruptors have had their ups and downs. I’d be hard-pressed to find a market leader like WeWork that didn’t experience a difficult period in its early days. The past two months have been challenging, and I am not going to minimize those challenges. We have already started making some of the appropriate changes to address them. But it is in these tough times that companies get redefined.
Fortunately, we have all the necessary ingredients to make this one of the most amazing comeback stories ever, and prove our detractors wrong. We have an incredible brand and a product that our members absolutely love. We have the world’s leading customers, including over 38% of the Global Fortune 500 companies. Landlords around the world are eager to partner and continue to grow with us. We have the highest quality investors. And more importantly, from the interactions I’ve had with you so far, we have one of the most dedicated workforces on the planet which everyday demonstrates unparalleled resilience and persistence.
To be candid, what we are lacking is focus on our core business: WeWork, along with accountability, and seamless execution. The beauty is that this is all within our control. We have a lot of work ahead of us. The work won’t be easy. The path won’t always be smooth. But we will prevail. No excuses.
I want to thank all of you for staying strong throughout this crisis. Thanks to Artie, Sebastian and Miguel for stepping up during these difficult times. And special thanks to our Community teams around the world who carry out our mission: to create a world where people work to make a life, not just a living.
I am totally committed to open and transparent communication with you. I will share with you the good and the bad as we embark on this journey together. Yes, there will be layoffs – I don’t know how many – and yes, we have to right-size the business to achieve positive free cash flow and profitability. 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.
I look forward to working with WeWork’s management team and getting to know many of you in the days and weeks ahead. I am hosting an all-company meeting in just a few hours to engage with you and answer any questions you may have. Or if you have any ideas or thoughts you want to share with me, within the next 12 hours I will have a new WeWork email address: Marcelo@wework.com.
Marcelo
