Things just keep getting worse for WeWork, the worldwide network of posh co-working spaces that attempted to go public late this summer. The company, which tried to file an IPO under its parent company, The We Company, has faced major criticism from investors over its spending habits and former CEO, Adam Neumann. Today, even after Neumann’s departure from the company aimed to change its public image, WeWork faces major layoffs while certain locations are having to remove the “phone booths” after toxic levels of formaldehyde were found in the soundproof spaces.
Mass Layoffs Signals Major Distress In The Company
The Guardian reported recently that WeWork plans to cut as many as 2,000 jobs in the coming weeks (a number that represents about 13% of its global workforce) as it reconfigures its spending habits. WeWork has remained hopeful that it will be able to overcome this rough patch, but those close with the matter revealed to The Guardian that the layoffs are unlikely to stop at just 2,000. Additionally, changes to the company, amenities for members, and other projects are being put on hold as thousands of workers fear for their jobs. Those that still work for the company, however, are becoming wary of its future. Workers at the company are also becoming increasingly angry toward Adam Neumann, who’s erratic spending habits were the cause of its initial spiral downhill.
Neumann, who cashed out $700 million of his own shares before leaving the company, was criticized for things like traveling excessively on a private plane purchased with company money, making erratic spending decisions for the brand, and letting his wife—Rebekah Paltrow-Neumann—make decisions for the company that ultimately impacted people’s jobs. Paltrow-Neumann was never an employee of We Work, but claims to have played a pivotal role in its growth. Together, the couple own multiple homes around New York City and in other places like San Francisco. The problems within the company were brought to light when Neumann attempted to take the company public over the summer, only to meet failure.
Inside WeWork locations around the world, the company is having to get rid of its “phone booth” areas—sound proof rooms that serve as phone call areas for the members that work within WeWork locations. Roughly 2,300 of the phone booth rooms are being removed from the offices as toxic levels of formaldehyde were found inside them, due to a manufacturer error. The phone booths play a major role in making the open-air office environment work well, but high levels of formaldehyde can cause eye and skin irritation and cancer, in some cases.
WeWork Still Doing Well, Regardless
Still, though WeWork remains one of the most popular and widely used co-working chains in the world. The company launched in New York back in 2010, and has since seen an explosive growth. Today, WeWork operates hundreds of locations around the world, in cities like Shanghai, Jakarta, London, Vancouver, and Sydney—to name just a few. Beyond that, major companies and tech powerhouses have opted to hold their office spaces within WeWork locations, as the established office environment and laundry list of amenities make the chain a desirable office space for anyone—from freelancers to established or even growing businesses.
The business model seems smart. The We Company takes up a rental space in former warehouse spaces, office buildings, department stores, and otherwise defunct brick and mortar locations, revamps them, and rents them out at a premium to dozens of different businesses at a time to use as office space. The model makes having an office more affordable, especially for startup businesses in need of an office space that may be lacking the funding needed to make it a desirable place to work. The company’s downfall, though
