Tech

SoftBank-backed Zume is laying off half its staff and shuttering its pizza delivery business

Key Points
  • SoftBank-backed Zume is laying off 360 employees, representing about half its staff, and shuttering its robotic pizza-making and delivery business.
  • CEO Alex Garden said the company is creating 100 new positions in its food packaging unit.
  • It's another black eye for SoftBank's Vision Fund, which has seen several portfolio companies suffer through layoffs in recent months after a lackluster debut from Uber and an abandoned IPO from WeWork.
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SoftBank-backed Zume to lay off about half of its staff

SoftBank-backed Zume is laying off 360 employees, accounting for about 50 percent of its workforce, and shuttering its robotic pizza business to focus on food packaging.

It represents another black eye for SoftBank's Vision Fund, which has seen a number of its portfolio companies announce layoffs and executive changes over the last year -- earlier this week, SoftBank-backed car rental company Getaround laid off about 150 employees, or about one-quarter of staff. It also follows disappointing public market debuts from some of SoftBank's biggest and highest profile investments, including Uber and WeWork, whose IPO was suspended last year.

News of impending layoffs at Zume was previously reported by Business Insider.

SoftBank invested $375 million in Zume in 2018, giving the start-up a $1 billion valuation. Previously, Zume was valued at just $218 million and had risen $71 million in total, according to Pitchbook.

Like other SoftBank-backed startups, Zume used the capital to quickly scale and increase its workforce. But, over the last year, investors have shifted their focus from "growth at all costs" to a clearer path to profitability.

Zume CEO and founder Alex Garden tells CNBC that it's a difficult day for the startup, but the changes being made will focus the business on "the inventions that are showing strong commercial traction."

Garden says the company is creating 100 open roles in the Source Packaging unit that employees can reapply for. Pizza Hut has been testing Zume's round boxes on a limited basis. Zume's packaging -- which the company says is covered by a number of patents -- is made of sustainably harvested plant fiber and is industrially compostable.

Zume Pizza truck
Scott Mlyn | CNBC

As for his relationship with SoftBank, Garden says, "It's incorrect that there was any acrimony. We are in constant discussion with them in a constructive way." He says that SoftBank, and Zume's other investors, are aligned with the changes being made today.

Garden says that when he was first introduced to Masayoshi Son, SoftBank CEO and architect of the $100 billion Vision Fund, he was inspired. "He's a person who has one goal in mind and that's to improve the quality of people's lives," Garden says. "It aligned well with Zume's vision."

Here is Garden's full letter to staff:

Dear Zume Team Members,

Since Zume was founded nearly five years ago, we have been blessed with an opportunity to invent brave and innovative solutions intended to improve our global food system. Ours is a broad agenda including new methods to produce food, deliver it, and package it in increasingly sustainable ways. Today our mission is the same, and requires the same bold thinking, but with increased focus.

Our 2020 strategic plan is weighted to strongly support our growing Zume Source Packaging business and to increase our ability to provide companies around the world with sustainable alternatives to plastic. This focus, along with other changes to our priorities, means we must significantly modify the structure of our company.

As we move forward with this new strategy, many of the current roles at Zume no longer exist and we regret we must say goodbye to a number of our valued friends and fellow Zumers. These decisions were incredibly difficult, as we could not have reached our current success without the talents of these same people. We have done everything we reasonably can as a company to offer exit packages that will ease the transition of our impacted employees to the next phase in their careers.

Zume was founded on a clear mission to engineer a more sustainable food system. Our mission has not changed. We are still providing solutions which allow our partners to improve their sustainability and their margins at the same time.

How Zume is doing this:

In Zume Source Packaging we are doubling down on our market-leading innovations in compostable molded-fiber packaging. We will expand facilities and manufacturing capabilities in the USA, India and other global markets so that we can meet the tremendous demand for our products and solutions in this important space.

In Zume Forward Mobile we will continue to provide food production and delivery systems, which help restaurants and food brands improve the delivery process and bring food closer to their customers.

About Zume Pizza... With admiration and sadness, we are closing Zume Pizza today. Over the last four years this business has been our invention test bed and has been our inspiration for many of the growth businesses we have at Zume today.

Zume R&D. Zume will continue to invest in key R&D efforts across our portfolio.

I want to thank you all for your patience as we set our course for this year and beyond. After much discussion with leadership, our Board, and our Investors, we have a clear path to provide what the market wants and what the world needs - a more sustainable food future.

Please be sure to attend today's All-Hands in-person in the specific room to which you were invited so that we can further discuss these changes.

With respect and compassion,

.a

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