Investor pressure has been steadily increasing on richly funded tech startups to show a path to profitability. When this happens, management is typically forced to shift drastically from burning cash to slashing costs – particularly in labor. Getaround, a car rental startup that received a $300 million infusion from Softbank, is reportedly laying off about 25% of its workers. Another Softbank-backed company, robotic pizza maker Zune, is said to be cutting its workforce by 50%.
It’s not immediately clear which operations are being impacted by these layoffs. But it should never be surprising to see marketing greatly affected, since startups characteristically have poured lots of cash into beefing up their marketing to drive fast growth. We are already seeing many signs of marketing teams being decimated when tech companies need to cut back on costs. It’s a trend that’s only going to continue as long as the pressure builds to prove a viable path to generating profits.