The Information has a story about how food delivery firm Gopuff, while at one point during the pandemic being valued at $15 billion, is experiencing some growing pains.
According to the story, "Last fall, discussions led by the founders about raising up to $1 billion in new funding fizzled after some investors balked at Gopuff’s cash burn, according to two people familiar with the efforts. Since then, they’ve overseen two rounds of layoffs totaling hundreds of workers. Earlier this year, Gopuff instituted a temporary hiring freeze for employees and also shuttered a fledgling pharmacy delivery business, say people familiar with those efforts. And they’ve lost several executives recruited from tech companies like Facebook and Airbnb to modernize their e-commerce software and build a new advertising business.
"That upheaval has raised questions among some employees about the leadership abilities of co-CEOs Yakir Gola and Rafael Ilishayev. At an all-hands meeting for the product and engineering teams in early April to address the past month’s layoffs—a meeting from which Gola and Ilishayev were absent—one employee asked whether the founders were still fit to helm the company, given what that employee said was a lack of business experience … The increased strains on Gopuff’s leadership comes as a potential economic recession threatens to further slow down delivery sales growth and narrow prospects for easily raising more cash. The freewheeling funding environment that allowed Gopuff to raise over $2 billion in cash last year to back its money-losing expansion into Europe and large U.S. cities like New York and Los Angeles has ended. It has already delayed plans for an initial public offering, which had been expected for the second half of this year, amid a sharp sell-off in technology stocks. Investors in both public and private tech companies are now focusing on backing companies with more-predictable revenue streams and lower costs."
The story notes that "last year, the delivery service lost $500 million in cash before one-time expenses like stock compensation and acquisition costs, while the Gopuff app generated around $1 billion in sales, said two people with direct knowledge of the matter. In 2020, the company similarly lost an amount that was roughly half of its e-commerce revenue, which totaled $340 million, one of the people added. (A Gopuff spokesperson said its total revenues for 2020 was close to $500 million.)
"DoorDash, which investors frequently compare to Gopuff, went public in December 2020 with a much healthier business. In 2020, the firm generated $2.9 billion in revenue and made $189 million in comparable profits, or adjusted earnings before interest, taxes, depreciation and amortization."
- KC's View:
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One of the things that is mentioned the story as being of concern to employees is "the founders’ remote management."
Here's how it is described by The Information: "The two men, friends who started Gopuff as college students in Philadelphia, moved to a swanky Miami suburb near Aventura after the outset of the pandemic. That relocation and lifestyle has added to worries about their ability to lead a company attempting to go public, according to three former employees. A Gopuff spokesperson said the founders moved to Miami for personal and professional reasons and that the city has become a second headquarters for the firm, with almost 100 employees working there."
I've been binge-watching a number of TV series about business leaders who lost their way, including "Super Pumped: The Battle for Uber," "WeCrashed," and "The Dropout," all of which portrayed founders of disruptive businesses who lost their way, believing it was all about them. I have no idea whether this story is a precursor to a TV series about Gopuff, though I have a feeling that down the road there could be a series about all the e-grocery delivery companies racing down parallel lanes and yet seemingly on a collision course - in part with reality.
