WeWork says the people it’s laying off are underperformers

Just months after signing on massive funding, the We Company has laid off roughly 3% of its employees. The cuts are not a reflection of trouble at the parent company of WeWork but instead part of an annual performance review, according to the company.

The layoffs were first reported by The Real Deal. Though a small fraction of the We Company’s 10,000 person employee base, it is the largest number of people who have been laid off from the company.  The last notable cuts came in 2016, when the company laid off 7% of staff.

The We Company expects to add 6,000 new employees to its rosters this year and plans to have hired back the number of employees lost by the end of the month.

In a statement, a company representative told me:

Over the past nine years, WeWork has grown into one of the largest global physical networks thanks to the hard work and dedication of our team. WeWork recently conducted a standard annual performance review process. Our global workforce is now more than 10,000 strong, and we remain committed to continuing to grow and scale in 2019, including hiring an additional 6,000 employees.”

The cull is not for lack of funds. The We Company recently signed a deal with investor Softbank for an additional $2 billion at a $47 billion valuation (it has raised more than $10 billion from Softbank total). WeWork’s revenue is growing, too. For the third quarter the company had doubled revenues year over year, from $241 million to $482 million, according to its most recently financial disclosure. But it’s still unprofitable.

The company is also expanding quickly. In 2018, it took on 220 contracts for its custom offices and renovation projects. The We Company is buying up property as it grows its footprint, including stakes in London’s Devonshire Square and New York’s Lord & Taylor building.

Bottom line: The We Company says that the head count reduction is part of business as usual—and for this company, business as usual is still mostly about growth.