Co-working space startup WeWork, which has been rapidly expanding its footprint across the globe, is abruptly cutting seven percent of its staff and instating a temporary freeze on hiring, according to Bloomberg. Managers have reportedly been told to start letting employees go this week, but the pause on hiring should end as soon as next week.
On the surface, it sounds like the unfortunate and common outcome of a startup growing too big too fast in a frothy market. Although some industry watchers see something bigger going on: WeWork might be starting to suffer from a real estate bubble that it--and its competitors--helped to create.
That's not how WeWork is framing the cuts, however. The company, which as 129 offices in 29 cities worldwide, says it plans to continue adding staff. Those being let go are being released based on performance.
"WeWork's growth and expansion continues to accelerate and we expect to add hundreds of employees between now and the end of the year. 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 company said in a statement.
Here are some numbers from Bloomberg's story that show how much money WeWork has raised, how fast it has grown, and how much it expects to keep expanding. Key areas of expansion for the company right now are new co-working spaces in Asia and the addition of WeLive co-living spaces.
- 175--How many people WeWork hired last month
- 500--How many the startup expects to add by the end of the year
- 230--How many employees WeWork had at around the start of last year
- 1,000--How many employees WeWork reportedly has now
- $325 (and up) -- What WeWork charges per month per desk
- $16 billion -- WeWork's valuation as of March
- $430 million--How much the company reportedly raised about three months ago
Even if the dismissals don't necessarily signal WeWork is shrinking as a company, the change seems reflective of anxieties felt throughout the startup world. The kind of flush funding and rapid expansion seen with WeWork can turn into as much a curse as a blessing, as the focus among startups shifts from being in so-called "growth mode" to actually demonstrating profitability.
Bloomberg's Ellen Huet notes that WeWork isn't exactly short on capital, but the cuts might be a response to a general slowdown in funding as companies re-evaluate their spending. VCs have started recommending their companies cut back on spending. And, as Huet points out, Jawbone and Snapchat, are among several other unicorn startups that have downsized their teams in the past year.