Postmates cuts dozens of jobs and shuts Mexico City office after investors turn on cash-burning businesses
- Postmates has laid off dozens of employees and told employees in Mexico City that it's closing that office.
- The delivery company filed confidential paperwork for an IPO earlier this year, but the markets turned on cash-burning business after the struggles of Uber and Lyft and near collapse of WeWork.
- Posmates raised $225 million from a private equity firm in September.
Postmates, the food-delivery start-up that competes with Uber, DoorDash and GrubHub, has laid off dozens of employees and closed its office in Mexico City, CNBC has learned.
The company, which had planned to join the ranks of hot consumer IPOs this year, has been forced to reckon with a rapid change in the capital markets following the struggles of Uber and Lyft and near collapse of WeWork. Postmates began the layoffs this week, according to people familiar with the matter, who asked not to be named because they weren't authorized to speak on behalf of the company.
In a statement to CNBC, a company spokesperson confirmed the closure of the Mexico City office and said employees there were informed of the move earlier on Tuesday. The company acknowledged that there had been other job cuts without saying how many. Sources told CNBC the number was at least several dozen and included people in the San Francisco headquarters as well as in Los Angeles, Nashville, Tennessee, and other offices.
"We made the difficult decision to end operations in Mexico City as we focus on our continued growth in the U.S.," a Postmates representative said in an email. "We continually review our business to ensure that staffing is aligned with current business needs and have made small adjustments as a result."
The layoffs were codenamed "Project 710," a number that signifies closures and new beginnings, according to documents viewed by CNBC. One source said the company, which has about 1,300 employees, is also in talks to find a possible buyer.
Postmates had planned to go public in the second half of the year after filing its paperwork with regulators confidentially in early 2019. The systems were being put in place for that to happen until market sentiment turned ane consumer IPOs lost money for investors. The company raised $225 million in financing from private equity firm GPI Capital in September, which was described at the time as a bridge round to get it to an IPO.
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