As the Covid-19 pandemic brought businesses to a standstill, governments around the world took radical measures to help workers from the prospect of mass joblessness, extending billions to businesses to keep people employed.
However, layoffs were coming anyway. Many European companies prepared to carry out downsizing plans in order to save their businesses from collapsing.
In the most recent realignment, Berlin-based unicorn Gorillas, a grocery delivery startup, announced on Tuesday that it will lay off 300 of its team members “with a heavy heart” in order to cut costs and extend the company’s runway.
Aims to take strategic steps to succeed
Besides the layoff, the delivery startup also looks to shut shop in several markets including Italy, Spain, Denmark, and Belgium. Instead, it will now focus on reaching profitability in its five key markets – Germany, France, the UK, the Netherlands, and the US – where the startup sees huge potential in the near future.
Over 90 per cent of the company’s revenue comes from these markets, says the startup.
In a statement, Gorillas mentions, “After closing our last funding round in October 2021, we shifted our focus from hyper-growth to a clear path to profitability, which enabled us to increase the efficiency of our business significantly. The recent developments in the capital markets confirmed this strategy and proved that we need to reinforce our company’s focus on profitability. As a part of our plan, we have precisely defined our next strategic steps and how we can succeed in reaching our ambitions.”
The startup will start working towards the assortment of its pricing, order experience, and logistics in order to provide customers with “the best shopping experience possible”. The company says, “We are starting the discussions today and, over the coming weeks, we will follow with local employee consultation processes in each market as appropriate.”
Gorillas: Fastest unicorn in Europe
Founded in 2020 by Kagan Sumer, Gorillas is a grocery delivery provider that claims to deliver desired goods from the cart to the doorstep in just 10 minutes. Its users benefit from access to more than 2,500 essential items at retail prices for a delivery fee of just over $2.
In other news: Klarna to layoff 10% of employees
Another European unicorn, Klarna, a Stockholm-based fintech giant that offers “buy now, pay later” service (BNPL), announced the layoff of 10 per cent of its global staff members, according to reports from TechCrunch. Klarna’s LinkedIn page says it currently employs 7,000 people which means about 700 employees may be laid off.
On 23rd May, Klarna’s CEO and co-founder, Sebastian Siemiatkowski, shared this message with all employees across the business. In that message, he mentions that the reason for the layoffs has many factors involved – “a tragic and unnecessary war in Ukraine, a shift in consumer sentiment, a steep increase in inflation, a highly volatile stock market and a likely recession. All of which have marked the beginning of a very tumultuous year.”
Siemiatkowski adds that employees working in Europe will be offered an “associated compensation”, however, employees from outside of Europe will “look different” depending on location.
Klarna was founded in 2005 by Niklas Adalberth, Sebastian Siemiatkowski, and Victor Jacobsson. It is an e-commerce payment solutions platform for merchants and shoppers. Currently, the company serves over 400,000 merchants and 150 million consumers around the world.
Over the years, Klarna has expanded to over 45 markets and launched new products. Some of its global retail partners include H&M, Saks, Sephora, Ralph Lauren, IKEA, Expedia Group, Nike, and Samsung, among others.
Last year, in June, 2021, the company raised $639M in funding at a valuation of $45.6B and claimed to be the highest-valued private fintech in Europe. And after witnessing such growth, Wall Street Journal recently reported that Klarna was looking to raise fresh capital by cutting its valuation to a “low $30-billion-range” post-money valuation.
Despite the decreased valuation and layoffs, Siemiatkowski mentioned in his message that “Klarna continues to hold a strong position in the market” and that he’s still “relentlessly optimistic about Klarnas’s future.”