Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.
Today we’re taking stock of what’s happening to a number of unicorns, both public and private. This is the third time we’ve sat down to document what feels like a wave of unicorn cuts, capped in this case by Airbnb’s decision to cut around a quarter of its global staff (25.3%, according to provided numbers).
Airbnb’s cuts follow recent excisions at Lime, Oyo, and others. Notably the cuts are not only landing amongst the best-known unicorns. Indeed, Crunchbase News (n.b. I was once its Editor in Chief) wrote a few weeks back that 36 unicorns had cut a known 8,416 jobs, according to a layoff tracker.
The numbers are now sharply higher if we only added in Airbnb’s cuts. However, looking at the same database this morning, cuts amongst late-stage startups since the prior count was assembled include reductions at Swiggy, Deliveroo, Sisense, Magic Leap, DesktopMetal, Cohesity, and others.
TechCrunch first covered a wave of unicorn layoffs towards the start of the year, when companies backed by SoftBank’s Vision Fund were rapidly trying to curtail their costs and move closer to profitability. Suddenly their chief-backer, formerly the most aggressive pool of private capital in the world was on retreat, and it was time to batten the hatches.
Those cuts, however, felt less driven by a unicorn-wide issue and more led by quarters of overly indulgent self-aggrandizement by a number of business that ran further in the red than made sense.
The second wave of unicorn layoffs came in the early days of the COVID-19 pandemic. Well-known companies like Bird, ZipRecruiter, GetAround, Sonder, TripActions, and others cut staff as the economy rapidly changed as cities and states asked regular folks to stay home.
That post, out towards the end of March, almost looks like we published it too early in retrospect. It came before Toast dramatically cut staff or BounceX’s own layoffs. In other words, the trend we were discussing was just getting started.
So let’s talk about what’s happened since our March 30 check-in on the state of unicorn employment, and why we’re now in what could be the third wave of unicorn cuts this year.
Cuts
The news yesterday that Airbnb was cutting jobs was not a surprise, though the scale of the reductions was. The firm had previously said that layoffs were not off the table. If you’d put a gun to my head, I would have guessed a 10% to 15% cut; 25% is 150% to 66.7% more than I expected.
But Airbnb’s reductions are not alone. Earlier this week, lost amidst the general chaos of the pandemic-driven news cycle, Uber’s CEO told his staffers “that plans for layoffs would be finalized within two weeks.” According to Business Insider who wrote the story, the cuts could lead to 4,000 exits, inclusive of regular attrition.
Lyft’s own cuts from about a week ago came to just under 1,000, not including another 288 furloughs. Airbnb’s 1,900 plus 4,000 from Uber and around 1,300 from Lyft works out to 7,200 jobs cut from three unicorns in a few weeks’ time, once the Uber layoffs are finalized and executed.
The Airbnb layoffs were placed under a short-term embargo so that the press could be briefed ahead of the internal release of the news. That was a reasonable choice, if an odd moment to experience. Uber pre-announcing cuts is even more surreal.
And there’s more trouble on the horizon. Pinterest’s earnings were panned yesterday, slashing the valuation of the recently-public unicorn (it went public in April, 2019), and Lyft and Uber report earnings today and tomorrow, respectively. The numbers from the ride-hailing giants will be worse than what Pinterest offered, though investors have been forewarned a number of times.
Heck, if Uber manages to stuff Lime’s cap table up its own ass, acquiring a disaster stake in the struggling scooter unicorn and later buys its remains, who wants to bet that will keep all its staff? It won’t.
So now the unicorn landscape, instead of being a fraught squabble for talent, is a harbor of stuck (mostly) and sinking (some) ships whose crews are looking for gigs on boats better-equipped for the present squall. But there aren’t enough remote-work unicorns, private and recently public, to hire them all.
Call it the great unicorn retreat.