This story requires our BI Prime membership. To read the full article,
simply click here to claim your deal and get access to all exclusive Business Insider PRIME content.
- SoftBank-backed companies are laying off thousands of employees globally as they struggle to find paths to profitability.
- In the first full week of 2020, four companies – Oyo, Rappi, Getaround, and Zume – laid off a combined 2,600 employees.
- In the last two months, other SoftBank-backed companies including WeWork, Uber, Wag, and Fair have also cut their ranks dramatically.
- If you work at a SoftBank-backed company, Business Insider wants to hear from you. Get in touch on secure messaging app Signal using a non-work phone: 646 768 1627.
- Click here for more BI Prime stories.
Flush with billions of SoftBank dollars, startups ranging from a robot pizza maker to a low-cost hotel operator have swelled their ranks in recent years.
Now, as the Japanese investor faces a reckoning about how the companies will become profitable, layoffs are hitting the companies across the world.
In the first full week of 2020, four of SoftBank’s companies cut a combined 2,600 employees, according to media reports from Business Insider and other outlets.
Those layoffs follow major cuts in the fourth quarter at companies including WeWork, Uber, Wag, and Fair. In total, SoftBank-backed companies have cut over 7,000 jobs in the last year, by Business Insider’s count.
That figure doesn’t include groups of employees like WeWork’s 1,000 janitorial staff in the US and Canada who are being outsourced. Trouble at these companies has knock-on effects since many work with contractors, such as the people that walk dogs for Wag, who enjoy fewer labor protections than full-time employees.
A SoftBank spokesman did not respond to a request for comment.
Business Insider is tracking the layoffs and what’s happening at each company. The numbers are based on our own reporting as well as media reports elsewhere. We will continue to update this page as news evolves.
If you currently work for or were previously employed at a SoftBank-backed company and want to get in touch, use encrypted app Signal to text or call this reporter at 646 768 1627. You can also contact Business Insider securely via SecureDrop.
Oyo cuts 1,800 in China and India – Bloomberg
The restructuring isn’t over: Oyo is planning to cut another 1,200 in India in the next four months, Bloomberg reported.
“We continue to be one of the best places to work for and one of the key reasons for this has been our ability to consistently evaluate, reward and recognize the performance of individuals in a meritocratic manner, and enable them to improve their performance,” Oyo said in a statement to Bloomberg.
The company lets people book hotel rooms in more than 80 countries through its app. It turns struggling local hotels into Oyo franchises, puts up some money to redecorate and make sure the wireless internet is working, and takes a cut on every booking.
Oyo has raised more than $3 billion in capital, though the last fundraise included $700 million from its young chief executive, Ritesh Agarwal. He bought back shares from existing investors Lightspeed Venture Partners and Sequoia Capital, as part of a deal that raised Oyo’s valuation to $10 billion. SoftBank has been pumping money into the company since 2015.
Zume cuts 360 employees and a third of its executive team
Zume, the robotic pizza startup valued at $1 billion, lost a third of its executive team hours after announcing that 360 of its employees were being terminated this week, Business Insider previously reported.
Amid a broader strategy shift away from its famous pizza-making robots towards compostable packaging, Zume now finds itself without a chief business officer, a chief financial officer, a chief technology officer, and a chief revenue officer.
The layoffs come as the Mountain View, California, startup has struggled to secure additional funding from SoftBank. Zume cofounder and CEO Alex Garden has become so cautious that he has restricted all communication from his senior staff to outside investors.
The company was most recently valued at $1 billion after a $375 million venture-capital investment from SoftBank’s Vision Fund.
Getaround lays off 150 – The Information
Car rental platform Getaround is laying off about 150 employees – a quarter of its staff – reported The Information.
SoftBank invested $300 million in the company’s 2018 Series D round.
In a blog post on January 7, Getaround founder Sam Zaid said “growing this fast has also pressure-tested our organization.”
“We’ve learned a lot about our business during this period and the importance of balancing growth with efficiency,” he wrote. “SoftBank has stepped up in a big way with their unique network of experts, resources, and partners to support this change.”
Getaround has raised a total of $612 million and has a $1.7 billion valuation, per Pitchbook.
Rappi cuts about 300 – Brazil Journal
The Latin American food delivery startup is cutting about 6% of its workforce, about 300 employees, according to the Brazil Journal.
The cuts come less than a year after SoftBank led a $1 billion funding round.
“We are in fact actively hiring a large number of people in our areas of focus for 2020,” the company said in a statement to Reuters.
“We are investing heavily in our tech team, automating some roles, re-balancing areas and embracing high performers,” Rappi said, without noting how many employees it plans to add.
Cofounder Sebastian Meijia told Reuters his priority was to grow fast when the outlet asked how soon the company would become profitable.
The company has raised a total of $1.46 billion and has a $3.5 billion valuation, per Pitchbook.
WeWork laid off 2,400 in November and outsourced 1,000 cleaning staff
Embattled office company WeWork cut 2,400 employees globally in November, about 20% of its workforce.
The company is also outsourcing about 1,000 cleaning staff in the US and Canada in a change planned months before its failed IPO.
Earlier this year WeWork was privately valued at $47 billion, which made it the most valuable private startup in America. But filings for WeWork’s highly anticipated IPO revealed wide losses and left prospective investors questioning the company’s leadership and business model.
Now, it’s valued at less than $5 billion, and investors are still marking their stakes down. Jefferies said on Wednesday it slashed the value of its $9 million investment by $69 million last quarter after cutting the value down by $146 million in August.
SoftBank, one of WeWork’s primary investors, ultimately offered a $9.5 billion package to acquire majority ownership of WeWork, giving former WeWork CEO and cofounder Adam Neumann a $1.7 billion deal in exchange for his departure.
Uber slashed more than 1,000 jobs last year
Uber, which went public in May, went through three rounds of layoffs last year that saw the ride-hailing company shed more than 1,000 jobs.
Overall, Uber employs about 27,000 people.
Uber has been under tremendous pressure to reach profitability in the months since its IPO in May. Cost-cutting efforts like job cuts, as well as increased passenger fares, are part of that initiative, and Wall Street analysts have commended the moves so far. Shares of the company have plummeted 17% since going public.
SoftBank is Uber’s biggest shareholder.
Fair cut 300 employees in October
Fair, the short-term car rental platform for consumers and Uber drivers, cut about 300 employees in October.
The layoffs came after a sudden SoftBank audit that led to the ouster of controversial CEO Scott Painter and his brother, the chief financial officer.
Business Insider talked to a dozen current and former employees in November who explained how the startup burned through nearly $400 million, largely from SoftBank, in 10 months, a cautionary tale of a startup on an explosive growth path.
SoftBank’s rescue plan included an immediate $25 million infusion to keep the company afloat.
Wag laid off 182 employees and lost its CEO last year
Dogwalking startup Wag had a turbulent fourth quarter.
CEO Hilary Schneider left in late November to join photo-sharing company Shutterfly, and the company went through its second round of layoffs, bringing the total cuts in 2019 to 182 employees.
SoftBank also announced it would sell its nearly 50% stake back to the company, reportedly at a significant discount, and give up its two board seats.
SoftBank’s Vision Fund first invested in the dog-walking startup early last year, pushing up the company’s valuation to about $650 million. But the startup has struggled to compete, and Bloomberg reported in October that it was seeking to sell itself at a discount.
SoftBank’s Masayoshi Son seemed to express concern about Wag in his latest investor presentation, as he referred to a dog-walking company as one of the Vision Fund’s more troubled investments.
SoftBank’s sale of its stake followed a disagreement within the company’s board on its path to future profitability, one person familiar with the talks told Business Insider.
Wag had raised a total of $361 million, per Pitchbook.
Katerra cut more than 300 last year and lost its cofounder
Katerra, the modular construction company, said in December it would shut down a factory in Phoenix, cutting about 200 jobs, Bloomberg reported.
In November, Katerra cofounder Fritz Wolff left the company, real estate publication The Real Deal said. Katerra has struggled with executive retention, with three CEOs and three CFOs in four years
And in October, The Information reported the company had cut more than 100 employees in three states.
Katerra had raised $1.24 billion, most recently with a January 2018 funding round of $865 million, led by SoftBank. That round valued the startup at just over $3 billion, per CNBC.
Ola restructuring affected 350 employees, with some reassigned to other roles
In November, the Indian ridesharing company said it would restructure about 350 employees’ jobs, with some employees moving to other roles, the Economic Times reported.
The company is still expanding, with plans to launch in London this month, per CNBC. Last year, Uber had its London license revoked by local authorities. Ola already operates in eight UK cities, and in Australia and New Zealand.
The company has raised $3.78 billion at a $4.44 billion valuation, per Pitchbook. SoftBank most recently led a $330 million funding round in February 2017.
Opendoor laid off 50 in July and reduced its free lunches – Bloomberg
Online homeseller Opendoor cut about 50 of its 1,300 staff in June – and stopped free lunches for small offices, Bloomberg reported.
The company also asked about 300 employees in offices across the country to relocate to its Phoenix office. Despite the layoffs, a spokeswoman said Opendoor planned to add 250 employees to the Phoenix office and will
The startup plans to double the number of employees in Phoenix to more than 500 next year, and will continue to hire in all of its markets, Bloomberg said.
Opendoor was last valued $3.8 billion, per Pitchbook.
Brandless cut 13% of its staff and saw its founder leave last year
Sharkey’s role swap wasn’t the only change at the discount e-commerce platform. Brandless cut 13% of its staff in March, per Forbes. The company struggled with inventory management and profitability when its items were all priced at $3.
Now, the company is expanding into CBD, and Brandless’s new CEO told Forbes in July that he thinks the company could be profitable by 2021.
Brandless raised nearly $300 million, per Pitchbook, including a $240 million Series C in September 2018 led by SoftBank.