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WeWork Will Shift to Profit Over Growth, Executives Tell Staff

Ellen Huet and Gillian Tan

(Bloomberg) -- WeWork will spend the next month putting together a plan that will prioritize profit over growth, executives said in a meeting with employees Wednesday.

Marcelo Claure, the new chairman who joined from SoftBank Group Corp., and Miguel McKelvey, the co-founder and chief culture officer, spoke to staff at headquarters in New York for the first time since WeWork announced a takeover by its largest shareholder, SoftBank. They reiterated that staff cuts are coming and addressed some questions from anxious employees, according to people who attended the meeting.

WeWork’s parent company, We Co., is reeling from a botched initial public offering that led to the departure of the chief executive officer, Adam Neumann, and left the business financially strapped. The company’s rise was fueled by Neumann’s charisma and more than $12 billion of investor money and debt. In recent weeks, management has been weighing the sale or closure of some assets, including software businesses and an elementary school, as well as a headcount reduction that could number in the thousands. (The Financial Times puts the total at as high as 4,000.)

The goal is to narrow the unprofitable company’s focus to its original business of renting and renovating office spaces. SoftBank asked WeWork to redesign its headquarters in Tokyo and will broker similar projects for the conglomerate’s portfolio companies, Claure wrote in an email to WeWork staff. He also thanked employees for “staying strong throughout this crisis.”

Many employees were irate to learn this week of a payout to Neumann for his departure. Claure said it was a necessary expense and that while he respects Neumann for the company he built, WeWork needs a different approach, said one of the people in attendance who asked not to be identified because the information was meant only for employees. The best public relations strategy, Claure told employees, is to have a plan, show results and let the results speak for themselves. A spokeswoman for WeWork declined to comment on the meeting.

WeWork’s co-CEOs, Artie Minson and Sebastian Gunningham, were at the meeting but did not speak. The pair were the subject of some criticism from employees on Tuesday for not addressing reports of the company’s sale. In the past week, the two men finalized a multi-million-dollar severance package with the board, though they have expressed no intention of leaving any time soon, people with knowledge of the matter said.

Minson and Gunningham sent an email to employees Wednesday in an apparent bid to lift morale. “We know that the last several weeks have felt like we couldn’t catch a break,” they wrote in the email seen by Bloomberg. “As your co-CEOs, we are committed to working with Marcelo and SoftBank to position our company for long-term success.”

One topic weighing heavily on employees is the value of their stock. At the meeting Wednesday, workers asked whether WeWork would offer a solution to those with shares that are underwater, said one of the people there. Claure said he didn’t have a plan but that he wanted to find a way to help.

(Updates with additional information starting in the fourth paragraph.)

To contact the reporters on this story: Ellen Huet in San Francisco at ehuet4@bloomberg.net;Gillian Tan in New York at gtan129@bloomberg.net

To contact the editors responsible for this story: Mark Milian at mmilian@bloomberg.net, Anne VanderMey

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