WeWork has announced that will lay off 2,400 employees as it scrambles to get control of its finances following the collapse of its plans to float on the stock market in September.
The office-rental start-up confirmed on Thursday that it would cut 19pc of its workforce from its core business, though did not say whether further layoffs will be made any of its spin-offs and acquisitions.
Once a symbol for the gravity-defying powers of heavily-hyped private companies, WeWork was forced last month to take a bailout deal from its largest backer, SoftBank, in order to avoid running out of cash.
WeWork's new managers will explain their "five year plan" to its remaining employees on Friday, having previously signalled that they would now focus on profit instead of rapid expansion.
A spokesman for WeWork said: "As part of our renewed focus on the core WeWork business, and as we have previously shared with employees, the company is making necessary layoffs to create a more efficient organization. The process began weeks ago in regions around the world and continued this week in the US.
"This workforce reduction affects approximately 2,400 employees globally, who will receive severance, continued benefits, and other forms of assistance to aid in their career transition. These are incredibly talented professionals and we are grateful for the important roles they have played in building WeWork over the last decade."
That number is lower than the 4,000 suggested by early news reports, but the spokesman added that it does not include WeWork's many side ventures. On Monday one of those companies, the event-organising app Meetup, laid off about 50 employees, constituting 25pc of its workforce. WeWork has already moved to outsource its cleaning staff to the real estate services firm JLL, which will offer them new jobs "for the time being".
A coalition of WeWork employees seeking to gain representation at the company's top level protested that the new cleaning contracts would strip employees of nearly a full year of pension contributions, refuse them any severance pay if they refuse to accept the switch, and potentially freeze wages until 2021.
In an open letter to managers, the WeWorker's Coalition said: "[We] believe that the company is not following through on its promise to treat employees with “dignity and respect” during this restructuring process. Our hard-working colleagues deserve better than this."
WeWork was forced to pull its plans for a public float after investors raised concerns about the unusual business practices of its chief executive, Adam Neumann, as well as the risks of its hugely loss-making business model, which critics argue is highly vulnerable to another financial crisis.
Mr Neumann was ousted in October, but allowed to depart with a $185m (£143m) consulting fee, $1bn in payment for his stock and $500m in credit to pay off his existing loans. If that payoff was divided among the employees being fired, each one would get just over $700,000.