The morning following his installation as WeWork's new president, Marcelo Claure told employees in a company-wide email that they should expect layoffs as a result of the agreement reached with SoftBank.
On Tuesday, SoftBank reached an agreement to take control of WeWork, providing $ 5 billion in new financing, announcing a buyout offer of up to $ 3 billion and accelerating a $ 1.5 billion financing commitment. billion. 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 CEO.
Claure wrote in an e-mail to employees obtained by CNBC that he would need to "properly scale business" to put WeWork on the path to profitability. The layoffs will occur as a result, but Claure did not say how many would be announced.
"Yes, there will be layoffs – I don't know how many – and yes, we need to properly scale businesses to achieve positive free cash flow and profitability," Claure wrote. "But I promise that those who leave us will be treated with respect, dignity and justice. And for those who stay, we will ensure that everyone is aligned and participates in future value creation."
It's a dramatic change for WeWork, which just two months ago launched its IPO prospectus after SoftBank-led funding valued the company at $ 47 billion. Last month, WeWork withdrew its order and was forced to seek a ransom to avoid running out of money.
Claure went on to say that WeWork lacks "focus" and responsibility, but credit co-CEOs Artie Minson and Sebastian Gunningham for leading the company in these "tough times" and said it is committed to being transparent in the future of WeWork.
The Guardian He previously reported that WeWork could lay off at least 2,000 people, or 13% of its staff, and that more cuts could be underway.
To all members of the WeWork team,
Today is a turning point in the history of this great company. As you've probably read by now, SoftBank has made one of its biggest financial commitments ever with a company, doubling WeWork with a $ 9.5 billion commitment to fully fund the company's business plan. Now we can 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 will 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 reinvented our corporate headquarters in a way that totally changed the culture of a 120-year-old company and transformed our work environment to be more open and collaborative. And now WeWork will do the same at our SoftBank headquarters in Tokyo. In addition, I am committed to doing the same at all SoftBank properties worldwide, including some of our leading portfolio companies.
For the past nine years, WeWork has been on a journey to disrupt the multi-billion 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 competitor. This is why SoftBank is excited to strengthen the Company with additional capital and experienced operating support. As CEO of WeWork, I will be providing oversight and support to WeWork's leadership team as we embark on this next chapter together.
All the world's leading innovators and breakers have had their ups and downs. I would have a hard time finding a market leader like WeWork that didn't have a hard time in the early days. The last two months have been challenging and I will not minimize these challenges. We have already begun to make some of the appropriate changes to address them. But it is in these difficult times that companies are redefined.
Fortunately, we have all the ingredients we need to make this one of the most amazing comeback stories of all time and prove that our detractors are wrong. We have an amazing brand and product that our members love. We have the world's top customers, including over 38% of Global Fortune 500 companies. Owners around the world are looking forward to partnering and continuing to grow with us. We have investors of the highest quality. And most importantly, from the interactions I've had with you so far, we have one of the most dedicated workforces on the planet, which every day demonstrates unmatched resilience and persistence.
To be honest, what we lack is the focus on our core business: WeWork, along with accountability and continuous execution. The beauty is that all of this is under our control. We have a lot of work ahead. The work will not be easy. The path will not always be smooth. But we will prevail. No excuses.
I want to thank you all for staying strong throughout this crisis. Thanks to Artie, Sebastian and Miguel for stepping up in these tough times. And special thanks to our community teams around the world who fulfill our mission: to create a world where people work for a living, not just their lives.
I am fully 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 need to scale the business correctly for positive free cash flow and profitability. But I promise that those who leave us will be treated with respect, dignity and justice. And for those who stay, we will ensure that everyone is aligned and participates in future value creation.
I look forward to working with WeWork's management team and meeting many of you in the coming days and weeks. I'm organizing a company-wide meeting in just a few hours to interact with you and answer any questions you may have. Or, if you have any ideas or thoughts you would like to share with me, in the next 12 hours I will have a new WeWork email address: Marcelo@wework.com.