layoffs
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Lime is laying off about 100 people and ceasing operations in 12 markets
Lime is hoping to achieve profitability this year by laying off about 14% of its workforce and ceasing operations in 12 markets, Axios first reported.
“Financial independence is our goal for 2020, and we are confident that Lime will be the first next-generation mobility company to reach profitability,” Lime CEO Brad Bao said in a statement to TechCrunch. “We are immensely grateful for our team members, riders, Juicers and cities who supported us, and we hope to reintroduce Lime back into these communities when the time is right.”
That means Lime is shutting down in Atlanta, Phoenix, San Diego, San Antonio, Linz, Bogotá, Buenos Aires, Montevideo, Lima, Puerto Vallarta, Rio de Janeiro and São Paulo.
This is not the first time Lime has pulled out of markets. Over the span of about a year, Lime exited at least 11 markets while it entered 69 new ones. Between 2018 and 2019, competitor Bird pulled out of 38 markets and entered 36 new ones.
And while layoffs are not fun, Lime is not alone. Last year, both Bird and Lyft laid off employees working on micromobility. In March, Bird laid off up to 5% of its workforce and then cut up to a dozen Scoot employees in December. Lyft, similarly, also laid off up to 50 people on its bikes and scooters team in March.
Following Lime’s $310 million round in February led by Bain Capital, it hit a valuation of $2.4 billion.
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HQ Trivia lays off ~20% as it preps subscriptions
HQ Trivia is struggling after a mutiny failed to oust its CEO. Downloads per month are down 92% versus last June according to Sensor Tower. And now four sources confirm that HQ laid off staff members this week. One said about 20% of staff was let go, and another said six to seven employees were departing. That aligns with Digiday reporter Kerry Flynn’s tweet that 7 employees were let go bringing HQ to under 30 (shrinking from 35 to 28 staffers would be a 20% drop).
That will leave the company short-handed as it attempts to diversify revenue with the upcoming launch of monthly subscriptions. “HQ Words Everyday. Coming next month . . . Bigger prizes . . . More ways to win. $9.99/mo. subscription” the company tweeted from the account for its second game, the Wheel Of Fortune-style HQ Words. The company has been trying to regain momentum with new hosts since the departure of Quiz Daddy aka Scott Rogowsky, HQ Trivia’s original host.
The cuts hit HQ’s HR, marketing, and product engineering teams, according to LinkedIn profiles of employees let go. The cuts could further hamper morale at the startup following a tough first half of the year. HQ Trivia and co-founder Rus Yusupov did not respond to repeated requests for comment.
HQ Trivia employees petitioned to remove co-founder Rus Yusupov from the CEO position
Following the tragic death of co-founder and CEO Colin Kroll, Yusupov retook control. But staff found him difficult to work with as he’d allowed the product to stagnate and popularity to decline. Yusupov was slow to make changes to the app, and “no one wanted to work under Rus” a source told me.
That led 20 of 35 staffers to sign a letter to HQ Trivia’s board asking them to remove Yusupov, though it was never formally sent. Yusupov caught wind of the plot and fired two of the leaders of the petition. That further sunk morale, leading to the exit of HQ Trivia’s SVP of brand partnerships and its marketing manager. The board began a search for a new CEO, though it’s unclear how that’s panned out.
Since then, new games HQ teased in April haven’t materialized as its download rate continued to suffer. It’s dropped to the #731 US game on iOS according to AppAnnie. HQ Trivia saw just 827,000 downloads from January through June 2019, down 92% from the 10.2 million it saw in the same time frame in 2018 according to Sensor Tower. That’s the same percentage drop in downloads from June 2019 versus June 2018, indicating Rogowsky’s replacements that started in April couldn’t turn things around.
Interest in the live game show format seems to be waning as a whole. HQ Trivia fan site HQTrivia.fan shut down this week fearing the end was near for the official game, and the (Business) INSIDER-run clone of the game on Facebook Watch called Confetti stopped airing at the end of June.
HQ Words Everyday. Coming next month.
Play HQ Words every day.
Bigger prizes.
More ways to win.
$9.99/mo. subscription.
RT and reply with your username for a chance to win a free year. #wordseveryday
— HQ Words (@hqwords) June 26, 2019
Rather than solely monetizing a waning audience via in-app purchases and sponsorships, HQ Words announced it would debut a $9.99 monthly subscription sometime this month that would grant access to winning “bigger prizes”. This could be a smart way to squeeze more dollars out of a smaller but more diehard audience.
While HQ Trivia was an inspiring approach to mobile gaming, its twice-daily games didn’t fit the always-on nature of mobile. It’s failed build a proper onboarding experience that gives users a taste of it games right away rather than forcing them to wait for the next scheduled match as we suggested over a year ago. Gamers are fickle, craving instant gratification, and HQ hasn’t tried to meet them in middle.
Perhaps there’s a future for HQ on cable television, or as a small but steady business on mobile catering to loyalists. But all the unfortunate events and mismanagement may make it difficult to exceed the $100 million valuation it raised money at during its peak.
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Laundry startup FlyCleaners confirms major layoffs
FlyCleaners, a New York startup offering on-demand laundry pickup and delivery, has laid off “a large number” of its employees, co-founder and CEO David Salama told TechCrunch.
This confirms a story earlier this week in Crain’s New York reporting that FlyCleaners filed a notification with the Department of Labor outlining plans to close its Long Island City plant and lay off 116 employees.
As Salama explained when we profiled him several years ago, FlyCleaners customers can use the mobile app whenever they want someone to pick up their laundry — the startup handles pickup and return, while the actual cleaning is handled by local businesses.
In an email about the layoffs, Salama told me that the company (which raised a $2 million round led by Zelkova Ventures back in 2013) created its own team for pickup and delivery because “when we started FlyCleaners six years ago, the last-mile logistics industry was simply not where we needed it to be in order to effectively service our customers.” More recently, however, the company has been testing partnerships with other logistics companies as a way to “supplement” its own team.
“Recently, it became clear to us that the cost of our internal team was just too large to bear and it was starting to hamper our ability to execute strategically and to sustain and grow our business,” Salama continued. “And so, that [led] to the painful decision to lay off a large number of employees and to proceed as a more asset-light organization.”
He added, “We don’t anticipate that this change will materially decrease the service we offer our customers. If anything, by partnering with larger-scale logistics providers, our service should be more efficient and resilient than it currently is.”
But if partners are handling pickups, delivery and the laundry, what does FlyCleaners bring to the table? When I asked what the company will focus on moving forward, Salama said, “I prefer to be discreet about it[,] but I’m comfortable saying that our plan is to leverage our technology to create the best customer experience possible.”
He also said that the startup is working with its logistics partners to find new positions for laid-off employees.
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Maker Faire halts operations and lays off all staff
Financial troubles have forced Maker Media, the company behind crafting publication MAKE: magazine as well as the science and art festival Maker Faire, to lay off its entire staff of 22 and pause all operations. TechCrunch was tipped off to Maker Media’s unfortunate situation which was then confirmed by the company’s founder and CEO Dale Dougherty.
For 15 years, MAKE: guided adults and children through step-by-step do-it-yourself crafting and science projects, and it was central to the maker movement. Since 2006, Maker Faire’s 200 owned and licensed events per year in over 40 countries let attendees wander amidst giant, inspiring art and engineering installations.
“Maker Media Inc ceased operations this week and let go of all of its employees — about 22 employees” Dougherty tells TechCrunch. “I started this 15 years ago and it’s always been a struggle as a business to make this work. Print publishing is not a great business for anybody, but it works…barely. Events are hard . . . there was a drop off in corporate sponsorship.” Microsoft and Autodesk failed to sponsor this year’s flagship Bay Area Maker Faire.
But Dougherty is still desperately trying to resuscitate the company in some capacity, if only to keep MAKE:’s online archive running and continue allowing third-party organizers to license the Maker Faire name to throw affiliated events. Rather than bankruptcy, Maker Media is working through an alternative Assignment for Benefit of Creditors process.
“We’re trying to keep the servers running” Dougherty tells me. “I hope to be able to get control of the assets of the company and restart it. We’re not necessarily going to do everything we did in the past but I’m committed to keeping the print magazine going and the Maker Faire licensing program.” The fate of those hopes will depend on negotiations with banks and financiers over the next few weeks. For now the sites remain online.
The CEO says staffers understood the challenges facing the company following layoffs in 2016, and then at least 8 more employees being let go in March according to the SF Chronicle. They’ve been paid their owed wages and PTO, but did not receive any severance or two-week notice.
“It started as a venture-backed company but we realized it wasn’t a venture-backed opportunity” Dougherty admits, as his company had raised $10 million from Obvious Ventures, Raine Ventures, and Floodgate. “The company wasn’t that interesting to its investors anymore. It was failing as a business but not as a mission. Should it be a non-profit or something like that? Some of our best successes for instance are in education.”
The situation is especially sad because the public was still enthusiastic about Maker Media’s products Dougherty said that despite rain, Maker Faire’s big Bay Area event last week met its ticket sales target. 1.45 million people attended its events in 2016. MAKE: magazine had 125,000 paid subscribers and the company had racked up over one million YouTube subscribers. But high production costs in expensive cities and a proliferation of free DIY project content online had strained Maker Media.
“It works for people but it doesn’t necessarily work as a business today, at least under my oversight” Dougherty concluded. For now the company is stuck in limbo.
Regardless of the outcome of revival efforts, Maker Media has helped inspire a generation of engineers and artists, brought families together around crafting, and given shape to a culture of tinkerers. The memory of its events and weekends spent building will live on as inspiration for tomorrow’s inventors.
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EA lays off 350 people
Though Apex Legends continues to be a bright spot for EA, the game publisher and the industry as a whole still have hurdles ahead. Today, EA confirmed that it laid off 350 people in marketing, publishing and other departments.
Kotaku obtained an email sent to employees by EA CEO Andrew Wilson, which said that the main focus is increasing the quality of its games. A part of that is “ramping down” the company’s presence in Japan and Russia. Famitsu later confirmed that the Japan office has been closed entirely.
Of the 9,000 global employees at EA, the 350 people laid off represent 3.8 percent of EA’s workforce.
EA isn’t alone. The publisher’s biggest competitor, Activision Blizzard, let go nearly 800 employees, roughly 8 percent of its workforce, in February.
“We have a vision to be the World’s Greatest Games Company,” wrote Wilson in an email obtained and published by Kotaku. “If we’re honest with ourselves, we’re not there right now. We have work to do with our games, our player relationships, and our business. Across the company, teams are already taking action to ensure we are creating higher-quality games and live services, reaching more platforms with our content and subscriptions, improving our Frostbite tools, focusing our network and cloud gaming priorities, and closing the gap between us and our player communities.”
EA sent Kotaku the following statement:
Today we took some important steps as a company to address our challenges and prepare for the opportunities ahead. As we look across a changing world around us, it’s clear that we must change with it. We’re making deliberate moves to better deliver on our commitments, refine our organization and meet the needs of our players. As part of this, we have made changes to our marketing and publishing organization, our operations teams, and we are ramping down our current presence in Japan and Russia as we focus on different ways to serve our players in those markets. In addition to organizational changes, we are deeply focused on increasing quality in our games and services. Great games will continue to be at the core of everything we do, and we are thinking differently about how to amaze and inspire our players.
This is a difficult day. The changes we’re making today will impact about 350 roles in our 9,000-person company. These are important but very hard decisions, and we do not take them lightly. We are friends and colleagues at EA, we appreciate and value everyone’s contributions, and we are doing everything we can to ensure we are looking after our people to help them through this period to find their next opportunity. This is our top priority.
Gaming continues to grow, and record-breaking titles like Fortnite and EA’s own Apex Legends show that there is plenty of money to be made. In fact, Blizzard Activision CEO announced record earnings in 2018, but also said that the company failed to reach its full potential.
That potential has to do with a shift from a model that generates revenue once for a single title to something more akin to a content subscription service. In-app purchases and gaming subscriptions are accounting for more and more of game publishers’ revenues. The Financial Times reported in 2017 that, 10 years prior, one-off sales of packaged home-console software accounted for 64 percent of the global gaming market. That number dropped to 30 percent as in-game purchases and subscriptions continue to grow in popularity, as seen with games like Fortnite and Apex Legends.
This more layered revenue structure creates something sticky with consumers, but also runs the risk of alienating them by constantly asking for more money, especially with a game that isn’t free to play.
We’ve reached out to EA and will update if/when we know more.
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London proptech startup Nested has laid off 20% of its workforce citing ‘Brexit uncertainty’
Nested, the London-based “data-driven” estate agency that provides a cash advance to help you buy a new home before you’ve sold your old one, has laid off 20 percent of its workforce, TechCrunch has learned.
According to sources, the more than 15 staff being let go were informed earlier today. The majority of departures are within Nested’s operations team, including sales, although I understand they also include a number of engineers and other product people.
Contacted by TechCrunch, Nested co-founder Matt Robinson confirmed the departures, citing the uncertainty of Brexit, and the impact this is having on liquidity in the housing market. It is understood that the layoffs are designed to place Nested in a better financial position and enable it to continue weathering the Brexit storm, and ultimately position the company to reach profitability in the future.
Robinson provided the following statement:
We have come off a record year and quarter but with continued uncertainty around Brexit market volumes have fallen significantly. We will continue to grow share, however, given the external environment we must remain cautious as we build the business for the coming years.
Launched in late 2016, Nested competes with high-end estate agents by providing all of the services needed to sell your house, but with a key difference. In addition to handling valuation, marketing and sales, the startup will loan you between 90 and 95 percent of the market value of your property as a cash advance so you can purchase a new home prior to your old one selling.
Before Brexit and the uncertainty it has caused with regards to U.K. house prices, that figure was “up to 97 percent” of the market value of the property.
More broadly, the idea behind Nested is to eliminate much of the stress and uncertainty of selling and buying a home, including what your final budget will be, and also ensure that you’re never caught up in the dreaded property “chain” and miss out on your desired home. By becoming a cash buyer, it also puts you in a stronger position to negotiate your onward purchase.
Related to this, it is unknown to what extent the downward pressure on house prices in the U.K. has affected Nested’s market fit, or its ability to use data to accurately value the properties it lends cash against. However, the core value-add of not being stuck in a chain would seem to be just as useful in a downturn as it is in an overheated market.
Meanwhile, the downsizing of Nested comes just four months after the startup raised a further £120 million in funding, a combination of £20 million equity financing and £100 million in debt. The equity part of the round was led by Northzone and Balderton Capital, while the source of the debt financing, to be used primarily for the cash advances Nested provides to sellers, was not disclosed.
Previous backers in Nested include Rocket Internet’s Global Founders Capital, and London-based Passion Capital. The current listed directors are CEO Robinson, Rocket Internet’s Oliver Samwer, COO James Turford and Northzone’s Jeppe Heinrich Zink.
Separately — and unrelated to today’s layoffs — TechCrunch has learned that Phil Cowans, who co-founded Nested alongside CEO Robinson and COO Turford, stepped down as CTO of Nested in the last few weeks, although he remains at the company in a different role and as co-founder. He also resigned as a director of Nested on the 25th of February, according to a regulatory filing with the U.K.’s Companies House.
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Rackspace announces it has laid off 200 workers
Rackspace, the hosted private cloud vendor, let go around 200 workers or 3 percent of its worldwide workforce of 6,600 employees this week. The company says that it’s part of a recalibration where it is trying to find workers who are better suited to their current business approach.
A Rackspace spokesperson told TechCrunch that it is “a stable and profitable company.” In fact, it hired 1,500 employees in 2018 and currently has 200 job openings. “We continue to invest in our business based on market opportunity and our customers’ needs – we take actions on an ongoing basis in some areas where we are over-invested and hire in areas where we are under invested,” a company spokesperson explained.
The company, which went public in 2008 and private again for $4.3 billion in 2016, has struggled in a cloud market dominated by giants like Amazon, Microsoft and Google, but according to Synergy Research, a firm that keeps close watch on the cloud market, it is one of the top three companies in the Hosted Private Cloud category.
It’s worth noting that the top company in this category is IBM, and Rackspace could be a good target for Big Blue if it wanted to use its checkbook to get a boost in market share. IBM is in third or fourth place in the cloud infrastructure market, depending on whose numbers you look at, but it could move the needle a bit by buying a company like Rackspace. Neither company is suggesting this, however, and IBM bought Red Hat at the end of last year for $34 billion, making it less likely it will be in a spending mood this year.
For now the layoffs appear to be a company tweaking its workforce to meet current market conditions, but whatever the reason, it’s never a happy day when people lose their jobs.
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SAP job cuts prove harsh realities of enterprise transformation
As traditional enterprise companies like IBM, Oracle and SAP try to transform into more modern cloud companies, they are finding that making that transition, while absolutely necessary, could require difficult adjustments along the way. Just this morning, SAP announced that it was restructuring in order to save between €750 million and €800 million (between approximately $856 million and $914 million).
While the company tried to put as positive a spin on the announcement as possible, it could involve up to 4,000 job cuts as SAP shifts into more modern technologies. “We are going to move our people and our focus to the areas where the new economy needs SAP the most: artificial intelligence, deep machine learning, IoT, blockchain and quantum computing,” CEO Bill McDermott told a post-earnings press conference.
If that sounds familiar, it should. It is precisely the areas on which IBM has been trying to concentrate its transformation over the last several years. IBM has struggled to make this change and has also framed workforce reduction as moving to modern skill sets. It’s worth pointing out that SAP’s financial picture has been more positive than IBM’s.
CFO Luka Mucic tried to stress this was not about cost-cutting, so much as ensuring the long-term health of the company, but did admit it did involve job cuts. These could include early retirement and other incentives to leave the company voluntarily. “We still expect that there will be a number probably slightly higher than what we saw in the 2015 program, where we had around 3,000 employees leave the company, where at the end of this process will leave SAP,” he said.
The company believes that in spite of these cuts, it will actually have more employees by this time next year than it has now, but they will be shifted to these new technology areas. “This is a growth company move, not a cost-cutting move; every dollar that we gain from a restructuring initiative will be invested back into headcount and more jobs,” McDermott said. SAP kept stressing that cloud revenue will reach $35 billion in revenue by 2023.
Holger Mueller, an analyst who watches enterprise companies like SAP for Constellation Research, says the company is doing what it has to do in terms of transformation. “SAP is in the midst of upgrading its product portfolio to the 21st century demands of its customer base,” Mueller told TechCrunch. He added that this is not easy to pull off, and it requires new skill sets to build, operate and sell the new technologies.
McDermott stressed that the company would be offering a generous severance package to any employee leaving the company as a result of today’s announcement.
Today’s announcement comes after the company made two multi-billion-dollar acquisitions to help in this transition in 2018, paying $8 billion for Qualtrics and $2.4 billion for CallidusCloud.
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Munchery shuts down operations in LA, New York and Seattle
Munchery, the on-demand food delivery startup, has shut down its operations in Los Angeles, New York and Seattle, the company announced on its blog today. That means the teams from those cities are also being let go.
“We recognize the impact this will have on the members of our team in those regions,” Munchery CEO James Beriker wrote on the company blog. “Our teams in each city have built their businesses from scratch and worked tirelessly to serve our customers and their communities. I am grateful for their unwavering commitment to Munchery’s mission and success. I truly wish that the outcome would have been different.”
With LA, New York and Seattle off the table, Munchery says it’s going to focus more on its business in San Francisco, its first and largest market. This shift in operations will also enable Munchery to “achieve profitability on the near term, and build a long-term, sustainable business.”
The last couple of years for Munchery has not gone very well, between scathing reports of the company wasting an average of 16 percent of the food it makes, laying off 30 employees and burning through most of the money it raised.
During that time, Munchery tried a number of different strategies. Munchery, which began as a ready-to-heat meal delivery service, in 2015 started delivering meal recipes and ingredients for people who want to cook. Then, Munchery launched an $8.95 a month subscription plan for people who order several times a month. In late 2016, Munchery opened up a shop inside a San Francisco BART station to try to bring in new business.
But it’s not just Munchery that has struggled. The on-demand food delivery business is tough in general. Over the last couple of years, a number of companies have shuttered due to the now well-known fact that the on-demand business is tough when it comes to margins. The most recent casualty was Sprig, which shut down last May, after raising $56.7 million in funding. Other casualties include Maple, Spoonrocket and India’s Ola.
Munchery has raised more than $120 million in capital from Menlo Ventures, Sherpa Capital and others. In March, the company was reportedly seeking $15 million in funding to help keep its head above water.
I’ve reached out to Munchery and will update this story if I hear back.
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Twitch lays off some employees as part of ‘team adjustments’
Twitch, the Amazon-owned live-streaming platform for gaming, laid off “several” people yesterday, Polygon first reported.
It’s not clear how many people were let go, but according to Polygon, probably no more than 30 people. Twitch has since confirmed the layoffs to TechCrunch.
“Coming off the record-setting numbers shared in our 2017 Retrospective, Twitch is continuing to grow and advance with success stories from Overwatch League to Fortnite’s milestone-setting streams,” a Twitch spokesperson told TC. “In order to maintain this momentum, we have an aggressive growth strategy for 2018 with plans to increase our headcount by approximately 30%. While we’ve conducted team adjustments in some departments, our focus is on prioritizing areas most important for the community.”
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