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Just a few months ago, discount hotel chain OYO seemed unstoppable. The India-based startup touted plans for global expansion and saw its valuation double to $10 billion in October. But in mid-January, the company began sweeping layoffs that have seen thousands lose their jobs.
Last September, Fair.com, a car-leasing startup that raised nearly $400 million in a funding roughly a year earlier, acquired one of its rivals, Canvas, only to slash 40% of its workforce weeks later. The goal, according to a memo at the time that Fair.com directed CNN Business to from its then-CEO, was to "be a smaller team, focused on doing fewer things well." One laid off Canvas-turned Fair employee said it was "a rollercoaster." (Fair declined to comment beyond the memo.)
Meanwhile, Wag, a startup that raised $300 million for its Uber-style dog walking business in early 2018, held a San Francisco holiday party on a Friday where it rented out a lounge with catered food, an open bar and a photo booth, one former employee told CNN Business. The following Monday, it let go of at least 90 staffers and announced that a major investor had sold its stake in the company.
Across the tech landscape, from New York to San Francisco to Gurgaon, India, some high-flying startups that enjoyed a swift rise are now having a reality check. Businesses seemed poised to dominate thanks to having raised eye-popping sums — until they weren't. And their biggest checks often came from the same source: SoftBank, a Japanese conglomerate with an unprecedented war chest of nearly $100 billion.
But, a number of these SoftBank-backed startups, including OYO, Wag and Fair.com, have undergone layoffs as of late. In total, more than 7,300 people have lost their jobs across 12 privately-held SoftBank-backed companies in the past four months, according to a CNN Business tally based on company sources, media reports, and company filings. Those impacted include people who worked in engineering, marketing, human resources and mergers and acquisitions, among other departments.
For two years, the tech world was upended by SoftBank's Vision Fund, which looked to pump $93 billion into tech companies — and quickly. Companies working on services such as coworking, vertical farming and pizza-making robots raised hundreds of millions, or even billions, of dollars. The recipients went on hiring sprees, acquired other startups and expanded at a breakneck pace. Startup valuations, already criticized for being lofty in the years leading up to the fund's launch, soared ever higher.
Then, just as suddenly, Wall Street signaled it had reached its limit for tolerating wildly unprofitable businesses. Uber (UBER) was pummeled by investors after going public. WeWork tried and failed to IPO. The effects reverberated across the industry. And SoftBank (SFTBF), which put billions into Uber, WeWork and many other startups, has also been humbled.
CNN's tally does not include the roughly 1,000 WeWork building maintenance staffers who were given the option to work for a third-party outsourcing company when they lost their jobs. It also does not encompass the more than 1,100 people laid off from Uber this fall, months after the company went public. The ride-hail company was one of SoftBank's biggest bets, having received more than $7 billion in funding.
"With the change in market sentiment, businesses are facing pressure to reach profitability faster," a SoftBank Vision Fund spokesperson said in a statement to CNN Business. "A number of our portfolio companies have acted quickly and responsibly to make some difficult decisions to better position themselves for long-term success. We expect -- and are already seeing -- that other companies will also adapt."
CNN Business spoke with nine of those laid off across various SoftBank-backed companies all of whom spoke on condition of anonymity citing either non-disclosure agreements or fear of retribution. Those people range from VP-level hires to entry-level staffers who thought they were boarding a rocket ship only to be back on the job hunt.\
Details of the ongoing upheaval vary from company to company. Wag had struggled to keep up with the competition and endured some layoffs -- according to a previous CNN Business investigation -- even before SoftBank sold its stake in the company. Wag declined to comment for this story. In an email at the time of the latest layoffs, Wag's CEO told staffers the company was "amicably parting ways" with SoftBank and said job cuts were an "extremely painful and difficult step" but an "important one for our future." Brandless, a retail startup that shut down this month, also signaled trouble when it swapped its CEO earlier this year. In a statement about its closure, Brandless' CEO said, "I'm proud of what we created at Brandless and the hard work and dedication of everyone on the team ... I'm confident the next great brands of tomorrow will be built from this experience."
A number of the companies are touting a focus on profitability as they undergo layoffs and restructurings.
For some, the shift felt stunningly quick.
Compass held a "recruiter appreciation" event on the 11th floor of its New York headquarters to praise employees and look forward to the year ahead, one former employee said, noting that some leadership was present. Just a couple weeks later, Compass laid off more than a dozen recruiters amid staff cuts, the person said. About 40 people across various teams lost their jobs. Compass declined to comment but the company's chief business officer Rob Lehman said at the time, "we are continuing to invest and grow at the same rate we always have, and we expect to increase our headcount every month this year."
Employees inside OYO couldn't help but notice how rapidly headcount was growing last year. New hires were joining twice a week, on Mondays and Thursdays, and some people would scratch their heads wondering who they all were. A former OYO recruiter told CNN Business they joined because "it was a company everyone was talking about."
the rest at:
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Last September, Fair.com, a car-leasing startup that raised nearly $400 million in a funding roughly a year earlier, acquired one of its rivals, Canvas, only to slash 40% of its workforce weeks later. The goal, according to a memo at the time that Fair.com directed CNN Business to from its then-CEO, was to "be a smaller team, focused on doing fewer things well." One laid off Canvas-turned Fair employee said it was "a rollercoaster." (Fair declined to comment beyond the memo.)
Meanwhile, Wag, a startup that raised $300 million for its Uber-style dog walking business in early 2018, held a San Francisco holiday party on a Friday where it rented out a lounge with catered food, an open bar and a photo booth, one former employee told CNN Business. The following Monday, it let go of at least 90 staffers and announced that a major investor had sold its stake in the company.
Across the tech landscape, from New York to San Francisco to Gurgaon, India, some high-flying startups that enjoyed a swift rise are now having a reality check. Businesses seemed poised to dominate thanks to having raised eye-popping sums — until they weren't. And their biggest checks often came from the same source: SoftBank, a Japanese conglomerate with an unprecedented war chest of nearly $100 billion.
But, a number of these SoftBank-backed startups, including OYO, Wag and Fair.com, have undergone layoffs as of late. In total, more than 7,300 people have lost their jobs across 12 privately-held SoftBank-backed companies in the past four months, according to a CNN Business tally based on company sources, media reports, and company filings. Those impacted include people who worked in engineering, marketing, human resources and mergers and acquisitions, among other departments.
For two years, the tech world was upended by SoftBank's Vision Fund, which looked to pump $93 billion into tech companies — and quickly. Companies working on services such as coworking, vertical farming and pizza-making robots raised hundreds of millions, or even billions, of dollars. The recipients went on hiring sprees, acquired other startups and expanded at a breakneck pace. Startup valuations, already criticized for being lofty in the years leading up to the fund's launch, soared ever higher.
Then, just as suddenly, Wall Street signaled it had reached its limit for tolerating wildly unprofitable businesses. Uber (UBER) was pummeled by investors after going public. WeWork tried and failed to IPO. The effects reverberated across the industry. And SoftBank (SFTBF), which put billions into Uber, WeWork and many other startups, has also been humbled.
CNN's tally does not include the roughly 1,000 WeWork building maintenance staffers who were given the option to work for a third-party outsourcing company when they lost their jobs. It also does not encompass the more than 1,100 people laid off from Uber this fall, months after the company went public. The ride-hail company was one of SoftBank's biggest bets, having received more than $7 billion in funding.
"With the change in market sentiment, businesses are facing pressure to reach profitability faster," a SoftBank Vision Fund spokesperson said in a statement to CNN Business. "A number of our portfolio companies have acted quickly and responsibly to make some difficult decisions to better position themselves for long-term success. We expect -- and are already seeing -- that other companies will also adapt."
CNN Business spoke with nine of those laid off across various SoftBank-backed companies all of whom spoke on condition of anonymity citing either non-disclosure agreements or fear of retribution. Those people range from VP-level hires to entry-level staffers who thought they were boarding a rocket ship only to be back on the job hunt.\
Details of the ongoing upheaval vary from company to company. Wag had struggled to keep up with the competition and endured some layoffs -- according to a previous CNN Business investigation -- even before SoftBank sold its stake in the company. Wag declined to comment for this story. In an email at the time of the latest layoffs, Wag's CEO told staffers the company was "amicably parting ways" with SoftBank and said job cuts were an "extremely painful and difficult step" but an "important one for our future." Brandless, a retail startup that shut down this month, also signaled trouble when it swapped its CEO earlier this year. In a statement about its closure, Brandless' CEO said, "I'm proud of what we created at Brandless and the hard work and dedication of everyone on the team ... I'm confident the next great brands of tomorrow will be built from this experience."
A number of the companies are touting a focus on profitability as they undergo layoffs and restructurings.
For some, the shift felt stunningly quick.
Compass held a "recruiter appreciation" event on the 11th floor of its New York headquarters to praise employees and look forward to the year ahead, one former employee said, noting that some leadership was present. Just a couple weeks later, Compass laid off more than a dozen recruiters amid staff cuts, the person said. About 40 people across various teams lost their jobs. Compass declined to comment but the company's chief business officer Rob Lehman said at the time, "we are continuing to invest and grow at the same rate we always have, and we expect to increase our headcount every month this year."
Employees inside OYO couldn't help but notice how rapidly headcount was growing last year. New hires were joining twice a week, on Mondays and Thursdays, and some people would scratch their heads wondering who they all were. A former OYO recruiter told CNN Business they joined because "it was a company everyone was talking about."
the rest at:
These startups raised billions and then laid off thousands. Workers are shocked and frustrated
Just a few months ago, discount hotel chain OYO seemed unstoppable. The India-based startup touted plans for global expansion and saw its valuation double to $10 billion in October. But in mid-January, the company began sweeping layoffs that have seen thousands lose their jobs.
edition.cnn.com
