Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.
Today, we’re taking digging into two trends: recent layoffs at various domestic unicorns and secondly, how those layoffs match a recent uptick in austerity across the technology industry itself. It seems that some belt tightening is afoot, something that we’ll need to keep an eye on as the 2020 IPO cycle begins. There are no domestic technology IPOs scheduled yet, but there are rumblings of impending offerings. (Restaurant SaaS company Olo, for example, is expected to be among the first out of the gate.)
With news of layoffs at Zume and Getaround coming this week, 2020 is already off to a trot when it comes to publicly-known staff reductions at tech and otherwise venture-backed companies. Let’s dig in.
A caveat before we get any further: for most people, losing a job creates serious emotional and financial consequences. While seeing some CEOs forced to publicly admit mistakes may be pleasant, layoffs are never good; you just don’t like to see them. Nothing we discuss this morning — or yesterday, to be clear — is brought to you for reasons other than to better understand the market.
That said, there have been issues at a number of companies in the Vision Fund startup arsenal over the last 12 months. In 2019, layoffs reached a number of companies that the SoftBank-backed capital machine had invested in, including Uber, Wag, WeWork, Fair and Katerra. There’s nuance to each situation (including that Katerra laid off some staff but hired elsewhere), but seeing that many reductions was noteworthy.
That two more companies — Zume and Getaround — are undergoing cost-cutting through staff reductions in rapid succession so far this year implies that something larger is going on. There is, as it turns out.