April 1, 2020

As the Start-Up Boom Deflates, Tech Is Humbled

Start-ups that once touted fast growth are changing their tune. Brad Bao, chief executive of Lime, wrote in a blog post last month that his scooter company was withdrawing from 12 cities and had shifted its “primary focus” to making a profit.

“Firms that were spending money in an un-economic way can’t do it any longer,” said Steven N. Kaplan, a professor of finance and entrepreneurship at the University of Chicago.

More workers are questioning the promises from start-ups, Kate Bratskeir said. She knows — she lost her job at a start-up twice in 12 months. A year ago, Ms. Bratskeir, 30, was laid off from her job as a writer at Mic, a digital media start-up in New York that failed to turn a profit. In November, she was again let go, this time from a marketing job at WeWork.

“People are becoming more critical and skeptical before just joining the party,” said Ms. Bratskeir, who received severance from both companies and is now working on a book about sustainable food shopping.

Some start-ups are even laying off the robots. Last month, Café X, which operates robot coffee shops and raised $14.5 million in venture funding, closed three stores in San Francisco. Henry Hu, its chief executive, said in an email that the company had “learned everything we could” from the shops and now planned to “laser focus” on airports, where it has two stores.

A bounce back does not appear likely soon. When Casper — which raised more than $300 million in venture capital — went public this month, its stock promptly plummeted. That served as a warning to other high-profile start-ups that are expected to go public this year, including Airbnb and DoorDash, the food delivery company. Both companies are losing money.

Article source: https://www.nytimes.com/2020/02/24/technology/tech-start-up-boom-deflate.html

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