Monday, June 15, 2020
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Grab to lay off 360 people, or about 5% of its employees
Grab is laying off about 360 people, or slightly under 5% of its employees. Co-founder and CEO Anthony Tan made the announcement in a letter to Grab employees today.
A Grab spokesperson told TechCrunch that the company will not be shutting down offices, and that this is the last organization-wide layoff the company will perform this year.
“We do not face capitalization issues. We conducted the layoffs to become a leaner and more efficient organization and we did this by sunsetting non-core projects, consolidating teams and pivoting to focus on deliveries,” the spokesperson said. “We remain laser-focused on adapting our core businesses of transport, deliveries, payments and financial services to address the challenges and opportunities of the new normal.”
She added that the company will talk to affected employees over the next few days.
Grab is the largest ride-hailing platform in Southeast Asia, and like other travel-related companies, including Uber, Lyft, Oyo and Airbnb, its on-demand ride business has been hit hard by the pandemic. Grab also operates several other businesses, however, including deliveries and digital financial services, which is is currently reallocating resources toward because demand for them has increased during the pandemic and stay-at-home orders.
In his announcement, Tan wrote, “Since February, we have seen the stark impact of COVID-19 on businesses globally, ours included. At the same time, it has become clear that the pandemic will likely result in a prolonged recession and we have to prepare for what may be a long recovery period.”
“Over the past few months, we have reviewed all costs, cut back on discretionary spending, and implemented pay cuts for senior management. In spite of all this, we recognize that we still have to become leaner as an organization in order to tackle the challenges of the post-pandemic economy.”
He added that Grab will sunset some “non-core projects,” consolidate functions and reduce team sizes. It is also reallocating more resources to its on-demand delivery verticals.
“We were able to save many jobs through this redeployment of resources and it helped limit the scope of the reduction exercise to just under 5 percent,” Tan wrote.
Grab employees who are laid off will receive severance pay, as well as an enhanced separation payment; a waiver of annual cliffs for equity vesting; medical insurance coverage until the end of the year; encashment of unused annual leave and GrabFlex credits; and, for expecting parents, encashment of their parental benefits, as of the last day of employment.
A new Silicon Valley venture report shocks — because of how little the pandemic has impacted dealmaking
The law firm Fenwick & West has published some new data to highlight how Covid-19 has impacted the world of venture capital in Silicon Valley. The biggest surprise? It’s how little impact the global pandemic seems to have had on dealmaking this spring.
Consider first that valuations in April were actually higher than in March, and that despite massive layoffs in the tech sector, so-called up-rounds only declined modestly, from 72% in March to 70% in April.
In fact, though you’d think the massive disruptions prompted by virus would accelerate things wildly, it looks more like the steady continuation of a trend that began last year, when 83% of financings saw companies receive higher valuations.
We can’t pinpoint when this started based on Fenwick’s report, but our guess is that it kicked off with WeWork’s pulled IPO last fall, which seemingly reminded investors that what goes up — and up — sometimes comes down fast, too.
What about good old-fashioned down rounds? You’d probably guess that a lot of startups — including those in the travel industry or that count the travel industry as a customer — were impacted severely when the coronavirus took hold in the U.S. But again, Fenwick’s data, at least, tells a different story. The number of deals that were marked down by investors accounted for just 12% of all deal volume in April; that’s even lower than in March, when 16% of companies experienced down rounds.
It does make sense, considering that the data is specific to April alone, especially when accounting for the many startups that have been thrown a longer lifeline by their investors in the firm of extensions to earlier rounds. Investors don’t like seeing their deals marked down by new investors, of course. The thinking, too, is just to get the companies through this rough patch, then figure out what’s what. (Relatedly, there was a sizable increase in flat rounds: 18% in April, compared to 13% in March and 9% last year.)
More astonishing was the sheer pace of investing into startups in Silicon Valley. Though there was talk about investors needing to stop and assess the health of their portfolio companies from mid-March to early April, it seems now that VCs never really stepped off the gas. According to Fenwick, the number of deals actually increased from 54 in March to 64 in April; that nearly matches the 65 deals per month that were completed last year, when the world wasn’t grappling with an epidemic.
For what it’s worth, many of these were later-stage deals. Fenwick’s data shows the percentage of Series D and E+ deals increased to 38% of all financings in April, up from 21% in March and the highest that figure has been since August 2018, when Series D/E+ deals combined for 42% of all financings.
In short, VCs were plowing more money into what they see as sure things — and into management teams they weren’t meeting for the first time over Zoom.
Either way, as one of the reports authors — longtime attorney Barry Kramer — noted in a follow-up email, averages “can obscure” the disparities in how companies are being impacted right now, with some benefiting from the stay-work-learn-at-home shift, while others, including biotech research, manufacturing and hardware being hurt by it.
“We aren’t seeing massive upheaval or panic in the industry,” however, wrote Kramer. VCs are instead “adjusting to the current situation.”
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Stockwell, the AI-vending machine startup formerly known as Bodega, is shutting down July 1
Stockwell AI entered the world with a bang but it is leaving with a whimper. Founded in 2017 by ex-Googlers, the AI vending machine startup formerly known as Bodega first raised blood pressures — people hated how it referenced and poorly ‘disrupted’ mom-and-pop shops in one fell swoop — and then raised a lot of money. But ultimately, it was no match for COVID-19 and the hit it has had on how we live.
TechCrunch has learned and confirmed that Stockwell will be shutting down at the end of this month, after it was unable find a viable business for its in-building app-controlled “smart” vending machines stocked with convenience store items.
“Regretfully, the current landscape has created a situation in which we can no longer continue our operations and will be winding down the company on July 1st,” co-founder and CEO Paul McDonald wrote in an email to TechCrunch. “We are deeply grateful to our talented team, incredible partners and investors, and our amazing shoppers that made this possible. While this wasn’t the way we wanted to end this journey, we are confident that our vision of bringing the store to where people live, work and play will live on through other amazing companies, products and services.”
We originally reached out after we were tipped off by someone who had received an email about the closure. Stockwell’s vending boxes were distributed primarily in apartment and office buildings, and it has been contacting those customers for the past week to break the news.
For what it’s worth, the building operator that was using Stockwell vending machines said it is actively in search of a replacement provider, so it seems it did get some use, but more pointedly it’s been very hard for the vending machine industry, where some distributors have seen business losses of up to 90%.
Stockwell’s closure is notable because it underscores how in the current climate, having a strong list of backers and a very decent amount of funding cannot always guarantee insulation for everyone.
As of last September, Stockwell had raised at least $45 million in funding from investors that included NEA, GV, DCM Ventures, Forerunner, First Round, and Homebrew. Its network had grown to 1,000 “stores”, smart vending machines that work a little like advanced hotel minibars: sensors detect and charge you for what you take out, and you use a smartphone app both to track what you buy and to pay for it.
As of last autumn, the company appeared to be gearing up for a widening of its business model, allowing its customers (building, office and apartment managers) to have a bigger say in what got stocked beyond the items Stockwell itself put into its machines, which included water and other beverages, savoury and sweet snacks, and a few home basics like laundry detergent and pain killers.
By December, it seems that McDonald’s co-founder, Ashwath Rajan, had quietly left the startup, and then as 2020 kicked into gear, COVID-19 took its toll.
First, consumers found themselves spending much more time working and simply being at home, going out less and bulk buying to minimise shopping efforts. That, in turn, had a big impact on the sustainability of business models based on casual, small purchases, such as the kind that one would typically make from vending machines like Stockwell’s.
Second, at a time when many are trying to minimise the spread of infection by wearing face masks, washing hands and minimising touching random objects, a big question mark hangs over the whole concept of unattended vending machines, and whether they can ever be properly sanitised. That’s impacted not only people buying items, but the workforce that’s meant to help stock and maintain these kiosks.
There have been some interesting twists in how the vending industry has handled COVID-19. Some are swapping out pretzels and Snickers and replacing them with PPE equipment, and others are finding opportunity in stocking them with healthy food specifically for front-line workers who have no other options and need quick but nutritious fixes during critical times.
But more generally, the vending machine industry has been hit hard by the pandemic.
The wider market in a normal year is estimated to be worth some $30 billion annually — one reason why Stockwell nee Bodega likely caught the eye of investors — but business has fallen off a cliff for many key operators.
The president of the European Vending Association, in an appeal in April to government leaders for financial assistance, said that business had dropped off by 90% and described COVID-19 as having a “devastating effect” on the sector. Difficult numbers for the Pepsi’s and Mondelez’s (nee Kraft) of the world, but surely the nail in the coffin for a young, promising AI-based vending machine startup that nonetheless some doubted from the word go.
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