We(don't)Work: Rent-a-desk outfit cuts 2,400 staff in bid to be a functioning business

Millennial daycare provider WeWork says it will lay off about one fifth of its workforce – 2,400 employees – as it tries to get its finances in order. The techie-themed office rental company says that the layoffs will come from around the globe, and are part of an ongoing effort to thin its ranks to get closer to profitability …

[Pascal Monett]

"These are incredibly talented professionals"

and yet we are throwing them to the wolves, just over 30 days before XMas.

Nice of them to say that they are going to provide transition help - I'm sure the people laid off in September are green with envy.

Ah, November, the perfect time to have massive layoffs. The XMas season has not yet started, so you don't get bad rep for depriving people of Santa's visit, and yet you have just enough time to present the 4th quarter results with a financial uptick, thus earning manglement better bonuses for a job well done.

[Imhotep]

Re: "These are incredibly talented professionals"

Got a hold of a copy of the playbook?

[baud]

Re: "These are incredibly talented professionals"

It's packaged with all PHB who've been MBA-formatted.

[Charlie Clark]

Re: "These are incredibly talented professionals"

I do feel sorry for the people affected but this was obvious and expected. Sacking people is much easier than cancelling long term property deals that they embarked on, so it's a quick win on the road to, presumably, selling the company to a competitor for its assets. I assume they hope to hold onto property as long as possible in the hope of an uptick in rentals.

[JohnFen]

Re: "These are incredibly talented professionals"

I agree.

I'm hoping that most WeWork employees had already begun job hunting back when the IPO failed and true state of the company became widely known.

[Chris G]

Another one bites the dust

Seems to me that anyone who has significant investment from Soft Bank is going to have problems.

This from the New York Times: SoftBank’s critics said its investments have poisoned the ecosystem for young companies by encouraging founders to take excessive risks with little regard for building businesses that can last through the ups and downs of the economy.

Several of the companies having financial problems reported on in the Reg in recent days are or have been in receipt of Soft money.

[Anonymous Coward]

Re: Another one bites the dust

I worry about ARM.

[macjules]

Re: Another one bites the dust

I worry about LEG, as in Neumann's "Lets take all the cash and LEG it"

[Doctor Syntax]

Re: Another one bites the dust

"I worry about ARM."

I was thinking the same thing. It doesn't seem to fit their business strategy unless it's the cash cow to finance all the other bad deals.

[Charlie Clark]

Re: Another one bites the dust

ARM is more of a poster child to show that not all the bets are complete crap: WeWork, Uber, etc. And, it's not as if Softbank, despite its debt is strapped for cash. But if all else fails, it could probably sell ARM for a tidy profit.

[IGotOut]

Re: Another one bites the dust

Apart from the fact SoftBank seem to be trying to a company hemorrhaging money to one that makes a profit.

Crazy in these times I know, trying you know, not rely on handouts by rich dumb "investors".

[John Brown (no body)]

Re: Another one bites the dust

"Apart from the fact SoftBank seem to be trying to a company hemorrhaging money to one that makes a profit."

It does seem odd that all these new, "disruptive" companies seem to think they need to go worldwide as fast as possible, burning through VC like there's no tomorrow before even trying to turn a profit. They are more like pyramid schemes where the founders and early investors are the ones to make billions out of the IPO, or at least live a very comfortable life on the way to a failed IPO.

Are ANY of them turning a profit yet?

[Aristotles slow and dimwitted horse]

Re: Another one bites the dust

On the other hand, as most VCs and corporate boards are men, they are easily deceived by a pretty blonde with tits such as in the Theranos case.

[Charlie Clark]

Re: Another one bites the dust

Possibly, but not relevant here. Basically, it doesn't matter because the rules are such that it's hard for them to lose on their bets. And even if they do, this gets offset against any tax liabilites they might have.

[Anonymous Coward]

Re: Another one bites the dust

Bet they're fake, the companies that is.

[JohnFen]

Re: Another one bites the dust

"It does seem odd that all these new, "disruptive" companies seem to think they need to go worldwide as fast as possible, burning through VC like there's no tomorrow before even trying to turn a profit."

It's not unprecedented, though. This behavior is pretty much what caused the dotcom bubble burst about 20 years ago.

[W.S.Gosset]

Eh??!!

> New York Times: SoftBank’s critics said its investments have poisoned the ecosystem for young companies by encouraging founders to take excessive risks with little regard for building businesses that can last through the ups and downs of the economy.

Has the NYT been completely unaware of tech VC's dominant culture of inanity and insanity, a pattern I've not seen materially change since the mid-to-late 90s? (apart from a brief bobble early '00s).

VC-funded tech startupry is predominantly a Ponzi Scheme. A game of hotpotato, passtheparcel, keep dancing on growth memes dazzling to dim VCs, until such time as you can cash out. Then it's their turn. Then the next's. And so on. Pull Uber's financials for a rather startling level of ponzi pisstake.

.

Excitable stupid people using other people's money to fund parasites.

[joeW]

Re: Eh??!!

And of course the biggest problem with all that - it fucking works.

[Anonymous Coward]

Re: Eh??!!.. The Three Era of VC's.. two are complete frauds

In the beginning, before 1997, VC's were just loan sharks in very expensive suits. They made money (not often) by financing a successful, profitable tech company..

Then in 1997 the SEC changed the early investor rules so that the VC's could sell all their stock as part of the IPO stock pool, not 12 t o 18 months after IPO as before. VC's became straight pump and dump boiler-room stock scams. Hence the first Dot Com bubble.

After the crash in 2000 the IPO market disappeared never to return so the VC's changed their business model to the same as hedge funds. The 2/20 model. 2% management fees and 20% of any upside. Since then 95% of VC's income is from fund management fees. The other 5% from the upside of successful investments. Almost all made by pre 1997 VC's.

Those 95% of VC's who only make money from fund management fees need to stick their cash somewhere for 5 years. Hence all those dot coms around SF etc who will never ever make a cent of profit. Ever. The VC's need to stick the cash somewhere for five years. To make it look like a legit investment vehicle. These 2'nd generation dot com companies usually only last 5 years, the length of a typical VC fund. When they are wound up or "acquired". BY some other VC's dot com shell company.

As for the unicorns valuation, pure pass the parcel ponzi scheme. Divide putative valuation by 20 or 30 and you might have a real valuation. In most case they are worth less than zero by any traditional valuation metric. The valuation inflation is used to make the VC's look like they are making "successful" rounds of investment. Its a straight up criminal conspiracy. A fraud.

And Softbank? Just another way for Japanese banks to play the Yen carry trade. Those trillions of Yens the BOJ have printed have to go somewhere. And like all previous yen carry schemes in the past this one will end with a financial debacle and massive losses for the Japanese banks. Which will be buried. Just as they always are. Same old same old.

[katrinab]

Re: Eh??!!

Or, for a whole different league of ponzi p***take, look at Andrea Rossi's Indistrial Heat & Power, backed by Woodford Capital. Über does at least have minicabs driving around with paying customers in them. Rossi's cold fusion device is never going to work.

[Anonymous Coward]

Re: Eh??!!

Just look at Woodford's performance.

[Imhotep]

Re: Eh??!!

"Excitable stupid people using other people's money to fund parasites"

Wonderful phrase that needs an acronym.

[Gordon 10]

El Reg should check their building staffing

As WeWork staff provide the fire Marshall and first Aider service in the UK. Even when they were doing well there was barely a sign of them on the floor of our West London WeWork so gawd knows what it’s like now.

On the plus side hopefully the preachy veganism has gone away with the idiot founders. I don’t have a problem with Vegans but I couldn’t eat a whole one.

[IGotOut]

Re: El Reg should check their building staffing

"I don’t have a problem with Vegans but I couldn’t eat a whole one."

I don't know, they tend to a like spare ribs, all bone, little meat.

[Yet Another Anonymous coward]

Re: El Reg should check their building staffing

Vegetarian sausage, low fat but you do have to pick the piercings out.

[Kane]

Re: El Reg should check their building staffing

Good mineral content.

[tcmonkey]

If 2400 redundancies equates to 20% of their global workforce, that would mean that there were 12000 people under the wing of this firm. What in the world does an office rental gig need 12000 people for?! How many buildings do they have to require that level of staffing?

[Mayday]

How many buildings

With 10 people to manage each then they must have 1200 buildings around the world, or about 5 per sovereign state (depending on how a state is defined and diplomatic recognition etc).

[katrinab]

Re: How many buildings

836 locations according to Google. 14 staff per location. You probably do need that sort of number of people to keep things running.

[Terry 6]

Well, either the combined admin, building managers and service/repair staff etc. were needed in that number or they weren't

If it's the second then the management were out of control or incompetent for employing them, ( but it's rather a lot to think they were employed just in case they might be needed or by overestimating the need.)

If it's the first, then they're still needed.

[Yet Another Anonymous coward]

No problem they can just hire contractors to do all those jobs.

I'm assuming contract real estate professionals in markets like NY and London are very cheap.

Then you can get the cheapest slave labor cleaners and maintenance contractors - nothing says luxury business space like having a single below minimum wage illegal immigrant per building

[John Brown (no body)]

"If it's the second then the management were out of control or incompetent for employing them, "

That depends on the level of service you are trying to provide and hence your appearance as being up market or budget. Compare the number of staff per guest at top hotel with a Premier Inn. WeWork seem to be adjusting their marketing position from Savoy to Premier Inn.

[Gordon 10]

See my note up thread about providing fire marshall and first aider services. You need bodies per floor for that.

[Doctor Syntax]

As tenants you mind find yourselves doing that.

[Cuddles]

"What in the world does an office rental gig need 12000 people for?!"

The reason becomes clear if you look at what type of company WeWork really is. In the real world, it may appear to be just an office rental business, but in the world of social media and venture capitalists it's an amazing tech unicorn disrupting the tech blockchains. What accounts for the difference between the two? Several thousand employees in the marketing department. By far the most important people to rake in those sweet VC billions for your shiny startup, but completely unnecessary for actually running a business and so first to get cut once those at the top have taken the money and run.

[Commswonk]

Oh Deep Joy*

From the article: Millennial daycare provider...

Now that just made my day better.

*With acknowledgements to Stanley Unwin

[J. Cook]

Re: Oh Deep Joy*

That made me laugh hard enough to invoke a coughing fit.

[Imhotep]

The food is crap and the portions are too small

Someone did quite the job in convincing SoftBank that an office management firm was ground breaking Tech rather than the same business as every other office management firm. Hats off to doing that and walking away with a billion plus change.

[Gordon 10]

Re: The food is crap and the portions are too small

Welcome to the latest VC bubble, brought to you by the same people who brought you the Tulip, South Sea and DotCom 2.0 bubbles.

Anything is tech if you throw enough cheaply funded VC cash at it.

[Imhotep]

Re: The food is crap and the portions are too small

I've still got my tulip bulbs. They'll be worth big money some day. In the mean time, I'm sitting on a fortune in Beanie Babies.

[Blackjack]

Think on those poor Millennial birds!

Does El Reg have a plan B if We don't work dies?

[Anonymous Coward]

Re: Think on those poor Millennial birds!

I would have a bridge I could sell them a place under...

[imanidiot]

WeWork is going to die

It's not a matter of IF, it's a matter of when. They are currently cheaper than renting your own office, but that is mainly because there is a massive real estate bubble and office space is way overpriced in most cities worldwide. Once that bubble bursts, they will suddenly have no customers and a lot of very expensive office leases on their hands.

But the founder has already jumped ship with a massive golden parachute (First warning sign of any "start-up" about to die)

[BinkyTheMagicPaperclip]

They could sell meetup.com

Instead of ruining it by trying to monetise it. The owners must have been on crack when presumably deciding that meetup organisers would leap to rent offices from wework instead of what they actually do, which is to find free function rooms in pubs etc.

[Warm Braw]

Re: They could sell meetup.com

Instead of ruining it by trying to monetise it

It's not likely to be worth very much if they can't monetise it. The world's most credulous investors own it already - though I suppose it's not entirely impossible that their collective elbows will be bidding against their collective arses to buy it twice.

[JohnFen]

Re: They could sell meetup.com

"Instead of ruining it by trying to monetise it."

MeetUp was already monetizing before them. What We did was to alter the monetization scheme to put the burden on the attendees rather than the organizers.

[Unep Eurobats]

'coffee and microbrews replaced with Folgers and Modelo'

I don't know those brands but here in London the barista coffee is still from the excellent Volcano. The beer supplier has recently changed from Meantime to Camden Brewery, which isn't a downgrade.

[katrinab]

Re: 'coffee and microbrews replaced with Folgers and Modelo'

From what I can gather, Folgers is a bit like Nescafe - it is the most popular supermarket coffee brand in the US.

Modelo is apparenly the no. 2 beer brand, and known as Corona over here.

[Anonymous Coward]

"known as Corona over here."

So, fizzy pop then. Can I have 10p if I bring the bottle back?

[Anonymous Coward]

Section 4 on youtube

Prof Galloway got a great commentary on the financials of wewtf