scorecardSoftBank-backed robotic pizza startup Zume plans to lay off up to 400 employees and won't renew its Seattle lease amid widespread restructuring to stop burning cash
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SoftBank-backed robotic pizza startup Zume plans to lay off up to 400 employees and won't renew its Seattle lease amid widespread restructuring to stop burning cash

Megan Hernbroth   

SoftBank-backed robotic pizza startup Zume plans to lay off up to 400 employees and won't renew its Seattle lease amid widespread restructuring to stop burning cash
Tech3 min read
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  • Zume, the startup famous for its pizza-making robots, plans to lay off roughly 400 employees across several offices in the United States on January 13, Business Insider has learned.
  • Its Seattle office, which consists mostly of engineering employees, will not renew its lease amid the cuts, one source told Business Insider. Corporate development and operations staff will also be widely impacted, sources said.
  • The layoffs come as the Mountain View, Calif., startup has struggled to secure additional funding from SoftBank. Zume cofounder and CEO Alex Garden has become so cautious that he has restricted all communication from his senior staff to outside investors.
  • Garden has tightened his already vice-like grip on the startup as its troubles continued to mount in the last few months, including canceling a previously scheduled company-wide meeting in December, overseeing departures of executive staff, and effectively shuttering Zume Pizza, the pizza-making robot division on which the startup was initially founded.
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Zume, the startup famous for its pizza-making robot, plans to lay off roughly 400 employees on Jan. 13, Business Insider has learned.

Several divisions will be impacted, according to sources close to the company, but the highest concentration of layoffs will be in the engineering, operations, and corporate development parts of the business. According to current and former Zume employees, those were the divisions that were rapidly scaled, somewhat haphazardly, as the company pitched growth goals and business objectives that were unrealistic. One source said that the startup's Seattle office, which consists mainly of engineering teams, has chosen to not renew its lease amid the cuts.

"They hired so many people," one former Zume employee told Business Insider.

Based in Mountain View, Calif., Zume was founded in 2015 and, as of Monday, had 496 employees listed on its LinkedIn corporate profile. If 400 are cut from the payroll, that would leave the heavily funded but yet unprofitable startup with a skeleton team of under 100 employees to completely overhaul the business, which was most recently valued at $1 billion following $375 million in venture capital, courtesy of SoftBank Vision Fund.

It is not clear what the terminated employees will be offered as severance, but one source close to the company said that all affected employees will receive the same "generous" severance package.

The layoffs are effectively a cost-cutting measure as Zume pursues additional funding, one source said.

In November, Recode's Teddy Schleifer reported that Zume was in talks with SoftBank for additional funding that could value the company as high as $4 billion. The report noted that SoftBank, which has suffered huge write-downs on investments in Uber and WeWork, may not lead the next round in Zume, and that the funding may involve taking some debt.

The status of the new funding round is still very uncertain, and according to several sources, CEO Alex Garden has restricted communication between his leadership team and SoftBank's investment team and other outside investors. Some sources speculated that Garden was trying to retain control of the negotiations due to concerns that SoftBank might try to make him step aside as part of additional funding.

SoftBank did not return Business Insider's request for comment.

In an email reviewed by Business Insider, Garden called off a previously scheduled company-wide meeting in December amid reports of turmoil at the startup and a rash of executive departures. In the email, Garden told employees that the meeting was intended to cover 2020 strategy, but the meeting had to be adjusted because the plan had not yet been finalized.

Zume's original mission was to create a robotic arm that could make and serve pizzas. But as Business Insider previously reported, the robotic efforts have effectively stalled as the company's focus has shifted between efforts like compostable packaging and food truck services. In November, Business Insider reported that Zume was shuttering its standalone pizza business and folding it into Zume Forward, a division that will oversee technology and services for the food-truck industry

A steady stream of departures

The changes have occurred amid an exodus within Zume's senior leadership team, leaving the startup with little direction since June.

Zume executive Kartik Ramachandran, who served as interim CFO and in other high-level roles, was terminated in June. Kira Druyan, the general counsel, departed in October, as did Susan Alban, the vice president of talent. Druyan's replacement, Reggie Davis, also left Zume in December after only weeks in the role.

Rhonda Lesinski, the president of Zume's original pizza business, is leaving the startup in January.

Ron Storn, the head of human resources and recruiting as the chief people officer at Zume, left the company in December. Storn was one of Zume's earliest executive hires, joining in January 2018 after building the recruiting and benefits programs at Lyft as its vice president of people.

Mark Crumpacker, the chief marketing officer of Zume and president of its Zume Culinary food-truck-technology business, left the startup on December 2.

Do you work at Zume or another SoftBank-backed startup and want to share your story? Contact this reporter via encrypted messaging app Signal at +1 (331) 625-2555 using a nonwork phone, email at mhernbroth@businessinsider.com, or Twitter DM at @megan_hernbroth.




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