Sun. Jan 26th, 2020

Are OYO’s deep cuts a reality check for unicorns?

Hello and welcome back to our regular morning look at private companies, public markets and the gray space in between.
After a short pause, we’re back on the topic of unicorn layoffs. While it’s cheery that a number of companies are chugging ahead with ARR growth powered by efficient spend, not every company has taken a similar approach. As we’ve seen in the last six months, many companies that raised big checks wound up spending too much and are now reducing headcount and other costs.
Today I want to chew over the latest news from OYO, which is beating a retreat to reduce losses. And, I’m following recent notes from venture capitalist Bill Gurley about how much money a company could raise before an IPO without engendering market speculation that it’s a money bonfire, torching cash to cast itself in good light.
Retrenchment
OYO, the SoftBank-backed budget hotel startup, is releasing staff, reducing capacity and pulling out of some locations altogether. The firm, famous for its hyper-growth and aggressive capital raises, will cut 1,450 staff, including 1,000 in its home country of India. In fact, the company is leaving several hundred cities in India and has cut tens of thousands of rooms from its rolls, according to reports.

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