Fired

Softbank unicorns are laying off 1,000s of workers (and we noticed a pattern)

Friday, January 10, 2020 by Robinhood Snacks |

Feeder of the unicorns... That's Japan's Softbank, one of the largest tech-focused venture capital funds ever. Fresh after dropping another $9.5B to save WeWork from bankruptcy, it's got a new problem: 11 startups it’s invested in just had major layoffs. And we noticed a pattern to how their CEOs "announced" the firings:

  • Step 1: Issue company-wide memo that'll ~~probably~~ definitely leak.
  • Step 2: Begin said memo with obnoxious stats about how great the startup is.
  • Step 3: Reveal you're laying people off, but don't use the words "fire" or "lay off" (be way much more ambiguous).
  • Step 4: Make virtuous claim about the future path to profitability.

We've got your case studies right here... Uber let go of 1,000s last year and WeWork fired 2,400. Here are Softbank's 2 most recent portfolio problems:

  • Zume Pizza — raised $375M from Softbank, now firing 400: While shutting down its core robot pizza biz, the CEO wrote they were "blessed with an opportunity to invent brave and innovative solutions.” But “many of the current roles no longer exist.”
  • Getaround — raised $300M from Softbank, now firing 150: The CEO humblebragged about their 6X growth to 5M users, then mentioned they're "reducing field operations."
THE TAKEAWAY

This is the end of the anti-profit startup era... 2019 was the year of tech IPO enthusiasm — but public market investors rejected stocks of loss-making companies like Uber and Slack. Softbank was the VC fueling Uber's money-losing scale-at-all-costs rise (FYI, Uber loses $543K every hour). Now the rest of Softbank's portfolio is adjusting to the new unicorn normal.