In the morning after being installed as the new chairman of WeWork, Marcelo Clare told e-mail employees throughout the company that they should expect layoffs as a result of the deal reached with SoftBank.
On Tuesday, SoftBank reached an agreement to accept control of WeWork, providing $ 5 billion in new financing, announcing a $ 3 billion bid and accelerating a $ 1.5 billion funding 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 CEO.
Claure wrote in an email to employees received by CNBC that he would need "the right size of business" to make WeWork move toward profitability. The layoffs will come as a result, but Claire has not said how many will be announced.
"Yes, there will be layoffs ̵
This is a dramatic move for WeWork, which just two months ago released its IPO prospectus after SoftBank-led funding, which estimated the company at $ 47 billion. Last month, WeWork withdrew its filing and was forced to seek bailout to avoid running out of money.
Claire went on to say that WeWork lacked "focus" and accountability, but credited co-CEOs Artie Minson and Sebastian Gunningham to running the company during "these difficult times" and said it was committed to being transparent about the future of WeWork forward.
The Guardian previously reported that WeWork could fire at least 2,000 people or 13% of its staff and may have more layoffs.
For all members of the WeWork team,
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 WeWork with a commitment of 9.5B to fully fund the company's business plan. We can now focus on what we do best – redefining the nature of the work.
We make this commitment because of our strong faith in WeWork's mission, what we have achieved and what we will accomplish as we move forward, I know first-hand the strength of the WeWork brand and the quality of our product. First with Sprint, where WeWork redesigned our corporate headquarters in a way that completely 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 in all SoftBank properties worldwide, including some of our leading portfolio companies.
Over the past nine years, WeWork has been on the move to disrupt the multi-million dollar commercial real estate market, positioning itself in the forefront with a combination of real estate assets and a global scale far above all competitors. That is why SoftBank is excited to strengthen the Company with additional capital and for seasonal operational support. As Executive Chairman of WeWork, I will provide oversight and support to the WeWork management team as we embark on this next chapter.
All the world's leading innovators and destroyers have had their ups and downs. It will be hard for me to find a market leader like WeWork who didn't have a difficult time in his early days. The past two months have been challenging and I will not minimize these challenges. We have already begun making some of the appropriate changes to address them. But in these difficult times, companies are redefining themselves.
Fortunately, we have all the ingredients to make this one of the most incredible comebacks ever and prove our wrongdoers wrong. We have an amazing brand and product that our members absolutely love. We have leading global clients, including over 38% of Global Fortune 500 companies. Landlords around the world are eager to partner with and continue to grow with us. We have the highest quality investors. And more importantly, of the interactions I have had with you so far, we have one of the most dedicated workforces on the planet that demonstrates incomparable sustainability and perseverance every day.
To be frank, what we lack is to focus on our core business: WeWork, along with accountability and hassle-free execution. The beauty is that all this is under our control. We have a lot of work to do. The job won't be easy. The road will not always be smooth. But we will prevail. No Excuses.
I want to thank all of you for being strong throughout the crisis. Thanks to Artie, Sebastian and Miguel for their efforts during these difficult times. And a special thank you to our Community teams around the world who fulfill our mission: to create a world where people work to create life, not just life.
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 much – and yes, we need to scale the business in order to achieve positive free cash flow and profitability. But I will promise you that we will treat those who leave us with respect, dignity and justice. And for those who remain, we will ensure that everyone is aligned and shares future value creation.
I look forward to working with the WeWork management team and getting to know many of you in the days and weeks to come. I host a company-wide meeting in just a few hours to chat with you and answer any questions you may have. Or if you have any ideas or thoughts that you want to share with me, I will have a new WeWork email address within the next 12 hours: Marcelo@wework.com.