The major cuts are all but inevitable when launching high-flying WeWork real estate after Adam Neumann was pressured today to step down as CEO and assume the role of non-executive chairman of the company got involved nine years ago.
Two well-placed sources tell us that the scope is likely to be large-scale and includes some of its newest business units, which the same sources suggest will be eliminated to restore the company's focus on its core business. One source suggests that over time, up to half of WeWork's 15,000 employees – 9,000 of whom have been recruited in the past two years – may be fired to cover the cost of the unprofitable company. Attitudes sound off a new piece in Information, which reports that a "group of CEOs at WeWork's parent company and bankers" discussed the dismissal of 5,000 employees ̵
Neumann will not say so much on the subject in any way. As part of his departure from the role, he agreed to further reduce the strength of his replacement shares from the initial 20 votes for each vote that a regular WeWork investor would receive to just three, Bloomberg reports. His wife, Rebecca, a co-founder who, according to insiders, played a heavy role in the original – and highly atypical – IPO prospectus, is also leaving the business.
Rather breathtaking, the speed at which the couple were straight elbows sideways. However, some other participants in the company seem willing to make a far worse deal. At present, the Japanese conglomerate SoftBank is losing billions of dollars in its investments in the company – if it does not finish writing off almost all the investment. Even an aggressive ratchet clause won't do much to protect SoftBank if WeWork's stock eventually sinks into the public market.
It seems to be an extreme repair of a culture that has become, but nothing but restrained. It's also far from clear that this would have the intended effect of attracting public shareholders to the company whose wheels began to emerge when SoftBank first included $ 4.4 billion in WeWork about two years ago, according to our sources. (About $ 6 billion more is coming.) As one of those people who has known Neumann for many years says, "Adam already had a healthy ego. What do you think will happen when he is given billions of dollars? “