UPDATED, March 9, 2020, 5:05 p.m.: Although the ink is barely dry on WeWork’s deal to sell office-management startup Managed by Q to rival Eden, there’s been a plot twist. The $25 million deal did not include three-quarters of Managed by Q’s workforce.
Sources said around 70 of Managed by Q’s 100 employees were laid off ahead of the sale, which closed last Tuesday. A source said WeWork was providing those staffers with severance packages.
On Monday, Managed by Q founder Dan Teran posted a “farewell” letter to staffers on Medium, linking to a spreadsheet with the names of 85 former employees who are actively seeking jobs. The layoffs were first reported by Forbes, which also said the Managed by Q brand would be retired in the coming weeks.
The layoffs cap a tumultuous six months for Managed by Q, which WeWork acquired in April 2019 for $220 million in cash and stock. At the time, the company had 500 employees.
Its headcount has steadily dropped, however, as the company shifted its business model and moved from employing to contracting with service vendors.
After WeWork’s bungled IPO, the co-working company put Managed by Q and several other startups up for sale. In December, Teran said he was “actively working to buy back” his company, but a deal did not materialize.
Last Tuesday, rival startup Eden closed on its buy of Managed by Q for $25 million, ending a battle for control of the company.
Sources said Managed by Q’s C-suite had informed WeWork before the sale that they would not stay on at Eden long-term, although several saw the deal through. A number of them also appeared on the spreadsheet shared by Teran, including former CEO Ron Feldman, who was laid off, and CTO Phil Sarin, who left in August. Teran left the company in August.
In Teran’s letter, he took a dig at the sale price. “There isn’t much I can say about the deal itself,” he wrote. “In the words of Warren Buffet, ‘what is smart at one price is stupid at another,’ and here we are.”
He said it had been a privilege to work with Managed by Q’s employees. “Culture can’t be bought and it can’t be sold,” he wrote. “It can’t be taken from you when you leave. I hope our culture is with you throughout your career and I suspect it will be.”
Before WeWork acquired it, Managed by Q raised $128 million from investors including GV, RRE and Kapor Capital.
Last week, Eden — which had until that point raised $69 million total — closed a $29 million round led by JLL to fund the acquisition. JLL also took a minority stake in the company.
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Correction: A previous version of this article erroneously said Eden laid off Managed by Q staffers. Those jobs were not part of the sale.