WeWork says it's a year closer to profitability than previously planned thanks to 8,400 job cuts
WeWorkwill be cash-flow positive, a step toward profitability, in 2021, according to a SoftBankexecutive.
- Marcelo Claure, CEO of the Japanese investment fund, cited WeWork's massive job cuts for the accelerated timeline in an interview with the Financial Times.
- Softbank has pressured many of its money-losing portfolio companies to cut costs in recent months following WeWork's abandoned IPO and a broader economic downturn induced by the coronavirus.
WeWork is closer to profitability than it previously expected, according to its parent company's chief executive.
Marcelo Claure, the former Sprint CEO who joined SoftBank in 2018, told the Financial Times that WeWork should be cash-flow positive — a first step to turning actual profits — in 2021.
"Everybody thought WeWork was mission impossible. [That we had] zero chance," Claure said of the company's failed IPO attempt last year. "And now, a year from now, you are going to see WeWork to basically be a profitable venture with an incredible diversity of assets."
To get to this point, Claure said, the company has shrunk its headcount from 14,000 to 5,600, while also divesting other assets like major Manhattan leases and its coding bootcamp Flatiron School. It's part of a wider effort by SoftBank to recoup some of its heavy losses accrued by bets on money-losing companies like Uber, Slack, DoorDash, Lemonade, and more.
With the pandemic-induced recession causing a lull in new commercial leases, WeWork is now betting that large corporations will look for smaller leases for satellite offices near where their employees have worked from home since March.
"We have companies like Facebook, Google and Amazon who have told their employees that they can work from wherever they are," Claure said. "We have a lot of those employees who basically now come to a WeWork facility to use it one day, a week, two days a week, three days a week."
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