Update 1/10/20: Crunchbase News has learned from Zume that 53 percent of original jobs are lost. Zume CEO Alex Garden sent out a memo clarifying the company’s 2020 vision. Read our story here for the latest.
In a little over a year, pizza-making robot startup Zume has gone from getting $375 million from SoftBank, to pivoting to food packaging through an acquisition, to raising at a reported $4 billion valuation, to its latest: laying off 80 percent of its employees, as reported by Business Insider.
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According to BI, several teams will be affected by layoffs, with the highest concentration in engineering, operations and corporate development. This follows a massive executive exodus triggered in June. According to his LinkedIn, beverage industry exec David Kamenetzky, the newest board member for Zume, left in December.
The company’s press team did not immediately respond for comment.
The cycle of startups going from landing nine-figure rounds, as well as scooping up other companies, to laying off hundreds of employees is nothing new. Especially in the SoftBank world: The Japanese conglomerate has been looked at as part of the problem, if not the main perpetrator, for ballooning valuations overnight with heavy-handed checks. Its portfolio shows its large sums of cash doesn’t fix everything: think WeWork, and if you have energy, look at Uber. I need not say more, but I can: days after WeWork’s CEO, Adam Neumann, departed due to investor pressure, reports came out that another real estate company, Compass, also invested in by SoftBank, has been facing a large executive exit as well. The New York startup has raised $1.6 billion in known funding to date, and has lost a slew of senior-level individuals over the past two years, including its chief financial officer, chief marketing officer and chief technology officer.
But the problem appears to have deepened. For example, Axios reported that SoftBank is cutting its ties with startup investments, even after signing term sheets. Per the story, one of the startups SoftBank is messing with is Creator, a San Francisco-based startup that develops hamburger-making robots (coincidentally enough). After signing an exclusive term sheet, SoftBank has left the deal in flux.
Bottom line: Zume, one of the biggest capital-backed companies in the pizza startup space, was raising money at a $4 billion dollar valuation in November. Now, two months later, it’s facing cuts. No matter how you slice it, it looks like 2020’s reckoning has begun.
Illustration: Li-Anne Dias