WeWork Cos., the world’s largest shared-workspace startup, plans to cut about 7 percent of its staff and has instituted a temporary pause on hiring, according to e-mails obtained by Bloomberg. The cutbacks come just three months after the New York company said it raised a round of $430 million led by Chinese investors.
Managers were instructed to begin dismissals this week, said one of the e-mails. The startup, which lets members rent desks in an open office, ballooned from about 230 employees early last year to more than 1,000 today, according to research firm Mattermark.
WeWork said it hired 175 people in May and expects to add about 500 employees by the end of the year. The company said it expects to lift the pause on hiring as soon as next week.
“WeWork's growth and expansion continues to accelerate and we expect to add hundreds of employees between now and the end of the year,” a company spokeswoman wrote in an e-mail. “Recent employee actions were part of the company's talent review process to ensure that we have the right teams in place that align with the company’s priorities.”
The funding round in March valued WeWork at $16 billion with a focus on financing expansion throughout Asia, people familiar with the matter said at the time. WeWork's valuation is more than those of major landlords such as SL Green Realty Corp., which has a market value of $10.6 billion. Boston Properties Inc., the largest U.S. publicly traded office landlord, is valued at $19.6 billion.
While WeWork isn't starved for capital, a slowdown in startup investments has forced companies to re-evaluate their spending, and investors have been advising their companies to make cuts. Jawbone Inc. and Snapchat Inc., among several other unicorn startups with valuations of at least $1 billion, have reduced headcount in the last year.
WeWork, which charges $325 or more per month for a desk, has said it plans to open locations soon in Seoul, Hong Kong, and other cities. The first WeWork in Shanghai is set to open next month. The company's nascent co-living business, called WeLive, has locations in New York City and Crystal City, Va., where residents can rent a private bedroom starting at $1,700 and $1,200 per month, respectively.