“ICYMI (in case you missed it) What’s New in Local” is a periodic series on Localogy Insider that curates and offers brief commentary on items that you may have overlooked related to local and the small-business technology ecosystem. This edition features the return to cost-cutting, fresh casualties in the scooter wars, and what Casper’s prospectus says about the prospects for IPOs in 2020.
Cost Cutting is Cool Again, Apparently
According to Tech Crunch, tech companies were much more focused on costs and profitability in 2019, and many workers paid the price, 64,166 workers to be exact. The tech news site reports this represents a 351% increase in layoffs over 2018.
So what’s behind the wave of austerity? Much of it has to do with the reckonings at the so-called “unicorns” who crashed to earth last year. Many of the companies hit by layoffs ad the common denominator of being backed by SoftBank, e.g., Uber, Wag, WeWork. But Tech Crunch cites a broader trend toward greater austerity among tech companies. In other words, this isn’t just a bunch of unicorns nursing a bad hangover.
Lime, Bolt Are Scooter War Casualties
Two competitors in the war to dominate the frothy electronic scooter market have signaled hasty retreats, according to Gizmodo. Lime announced it will lay off 10% of its workforce and shutting down operations in several global markets. Bolt is also closing down multiple domestic markets.
In a blog post last week, Lime CEO Brad Bao said the following: “While the vast majority of our 120+ markets have adopted micromobility transportation solutions quickly and are profitable, there are select communities throughout the world where micromobility has evolved more slowly.” Lime is ceasing operations in Atlanta, Phoenix, San Diego, San Antonio Linz, Austria; as well as the Latin America cities Bogotá, Buenos Aires, Montevideo, Lima, Puerto Vallarta, Rio de Janeiro and São Paulo.
This means job losses among staff and the “juicers” that Lime relied on to gather and recharge the scooters.
Bolt has been less transparent about its plans. Gizmodo reported only that the company would pull back in “select markets.” Scooter rival Bird has also made cutbacks this year, including some related to its acquisition of Scoot.
Consolidation in this space was inevitable. There is only so much demand for “micromobility” and there are clearly too many companies chasing this opportunity. Tech Crunch wrote about the scooter wars back in 2018, noting big funding rounds, big valuations, and the entry of Uber and Lyft into the scooter space. The article also noted that many cities considered the scooters a nuisance and were pursuing legislative remedies. Durability of the scooters was another major challenge.
Looking back, this space had all the hallmarks of a bubble — too many companies raising too much money in pursuit of an unproven idea. Let’s see if these retrenchments at Lime and Bolt stop the bleeding, or if they are just the first wave of a full-scale collapse of the electronic scooter market.
Will Casper’s IPO Be a Post WeWork Victim?
Casper, that company delivering mattresses in purple boxes to millennials, is planning to go public. But with annual losses topping $90 million after five years in business, the offering begs the question, is this a good time to go public when you’re bleeding cash? We’re in a post-WeWork environment after all.
Casper is going public to raise enough cash to achieve a dominant place in the “sleep economy,” which Casper estimates is $79 billion in the United States and $432 billion worldwide.
However, skepticism is greeting the company’s prospectus. Most concerning is the company’s accelerating losses, rising from $73.4 million in 2017 to $92.1 million in 2018.
Here is Fast Company’s scathing take on the prospectus: “Casper’s earnings sheet—showing enormous and escalating losses over the past three years—reeks of the kinds of IPOs that often fizzle out quickly after beginning with a buzz.”
if Casper does fizzle, it will raise serious questions about what kind of company you need to be to have a successful IPO in 2020. It almost certainly will not be the year of the unicorn. Perhaps 2020 will be the year of the workhorse.