Sixty-five employees of WeWork Israel were notified on Thursday that they were being laid off, subject to a legally mandated hearing, as the shared office-space giant moves to cut costs following a failed initial public offering and huge losses.
The 65 work in the company’s research and development unit – 35 of them as engineers and product managers. That will reduce the Israeli R&D to 150 staffers out of a worldwide tech workforce of 600 employed by WeWork’s parent, The We Company. “The only ones that will be left are those required for development and managing the existing system,” said a source close to the company.
“As part of our renewed focus on WeWork’s core business, and as we recently explained to the staff, the company must make layoffs with the goal of creating a leaner and more efficient organization. The technology team in Israel continues to be an important component of WeWork’s global operations, providing solutions to our community experience and business needs,” a WeWork spokesman said.
The layoffs come amid a worldwide payroll slash that The New York Times reported earlier this week would cut about a third of WeWork’s 12,000-strong global workforce. On Monday, WeWork’s executive chairman, Marcelo Claure, confirmed in an email to staffers that layoffs were imminent.
A week ago, WeWork Israel opened its newest facility on Schocken Street in Tel Aviv. Sources at the company said that in addition to that new site, others planned for Ramat Gan and Petah Tikva were going ahead as planned.
The threat of sweeping layoffs has hung over the company for much of the nearly two months since its failed IPO left the company cash-short and revealed the huge losses it was making.
Last week The We Company said it had a net loss of $1.25 billion in the third quarter even as it was expanding its network of shared-office facilities at a breakneck pace. In that one quarter alone, its global network of facilities grew to 625 from 528 and added 16 new cities
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In the wake of the IPO flop, WeWork’s Israeli co-founder and CEO, Adam Neumann, left the company, but has left a bad taste with employees after he was allowed to sell up to $970 million in stock back to SoftBank, a Japanese investor that took majority ownership of WeWork in exchange for pumping $5 billion into the company. Neumann was also given a $500 million loan to repay a credit line and a $185 million fee for consulting.
Last week media reports said the U.S. Securities and Exchange Commission was examining whether WeWork violated financial rules in the run-up to the IPO. Among other things it is looking into a pre-IPO deal in which Neumann earned $5.9 million for selling the rights to the name We Company. He returned the money in September after a public outcry.