Major layoffs are all but inevitable at high-flying real estate startup WeWork after Adam Neumann succumbed to pressure today to step down as CEO and take the role instead of non-executive chairman of the company he cofounded nine years ago, TechCrunch.com reported. Sources say that the scope is likely to be massive, and includes some of of its newest business divisions, which these same sources anticipate will be jettisoned to get the company’s focus back on its core business. Speculation is that over time, up to half of WeWork’s 15,000 employees — 9,000 of whom have been brought on in the last two years — could be laid off to shore up the unprofitable company’s expenses. Neumann won’t have as much say in the matter, either. As part of his departure from the role, he has agreed to further reduce the power of his supervoting shares from an original 20 votes for every one vote that a regular investor in WeWork would receive to just three. His wife, Rebekah, a cofounder who is thought by insiders to have played a heavy role in the company’s original — and highly atypical — IPO prospectus, is also leaving the business. The Japanese conglomerate SoftBank currently stands to lose billions of dollars on its investment in the company — if it doesn’t wind up writing down nearly the entire investment. Even an aggressive ratchet clause won’t do much to protect SoftBank if WeWork’s shares eventually sink on the public market.
