lswcapSilicon Valley startups are delivering news of restructuring from the new year. Most of them have attracted large-scale investments, but they have difficulty in growth because they do not produce profits.
The ride-sharing platform lift fired 90 employees, or 1.5% of all employees. Rift said it decided to reduce some teams after determining how much resources would be needed to meet its 2020 business goals. It is known that this restructuring will take a toll on the marketing department and corporate sales department as a way to rethink profitability. Rift’s share price, which was $74 at the time of last year’s IPO, has fallen to $47. Concerned about worsening growth, Rift said, “We continue to grow and plan to hire more than 1,000 new employees in 2020.”
Genetic information platform 23andMe also fired more than 100 employees in January. That’s about 14% of employees. 23andMe announced plans to reduce the size of its operations team and focus on growth. Although the reason for the layoff was not clearly stated, it is known that the downturn in the genetic testing market and privacy issues are the biggest factors.
Startups invested by Softbank have faced a crisis since last year. After WeWork failed to list, it went into large-scale restructuring, and the companion animal walking platform Weg was laid off several times, replaced the CEO, and ended overseas expansion plans. Softbank closed the relationship by reselling 50% of Weg’s stake to Weg.
Softbank Portfolio Ltd. delivered news of tightening in the new year. Pizza delivery and food logistics startup Zum fired 53% of its employees while key executives left. To alleviate the cost problem. Zoom, which makes pizza with robots, attracted an investment of $375 million from Softbank in 2018 and was evaluated as a startup worth $22.5 billion.
Getaround, a car rental company that Softbank invested $300 million in 2018, also announced the news of massive layoffs as soon as New Year came. Getaround said it will continue to invest in products and technologies while reducing its global team size and field operations team. According to The Information, a US tech media, Samjaid Get Around, the CEO of Samjaid, said that the financial crisis was attributed to some investors. He called Softbank a thoughtful partner, but noted that SoftBank’s largest investment fund has not had a ripple effect on all portfolios.
According to the industry, the trend of large-scale layoffs of promising startups began to accelerate last year due to the failure of WeWork, which grew large with investments without profits, and is expected to continue this year.
Add comment