Startups

Gopuff is allegedly planning hundreds of layoffs ahead of a 2022 IPO

After a banger fundraising year, the Philly company is reported to be poised to lay off 3% of its employees to save $40 million. At least one local expert doesn't think that's so unusual.

Gopuff delivery.

(Courtesy photo)

Instant needs delivery giant Gopuff, a well-known Philadelphia tech success story, is getting ready to lay off about 3% of its employees, equating to hundreds of its 15,000-person workforce, The Information reported late Tuesday.

The cuts are meant to reduce the company’s annual head count costs by at least $40 million, per the national tech news site’s report, as the company faces a likely IPO this year. The job losses are likely to be “top-earning managers outside Gopuff’s core delivery operations,” a source told The Information. The Callowhill-headquartered company allegedly parted ways with Sharad Sundaresan, its SVP of product and growth who reported directly to co-CEOs Rafael Ilishayev and Yakir Gola, on Friday.

A Gopuff spokesperson did not reply to multiple requests from Techncial.ly for comment on the layoff news, nor did they clarify if the 15,000 employee number included both full-time employees and drivers.

Are pre-IPO layoffs unusual?

The news comes after an outwardly banger year for the company. In 2021, Gopuff raised more than $3.5 billion, accounting for nearly half of all venture capital raised by Philadelphia companies that year. It’s also scooped up a number of smaller, international companies in the same industry via acquisition, expanded officially to Europe, and set up thousands of micro-fulfillment centers across the US.

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In December, news broke that actress Selena Gomez had invested in the company. Soon after, TechCrunch reported that Gopuff’s latest $1.5 billion deal would bring it a $40 billion valuation. The raise was reported to be structured as a convertible note, with a 2022 IPO feeling inevitable.

Technical.ly heard in December from Dean Miller, president of PACT (aka the Philadelphia Alliance for Capital and Technologies), that an IPO would be a natural part of the evolution of a consumer company like Gopuff that’s rapidly scaling. While he didn’t have any insider knowledge on the company’s rumored layoffs this week, he said shedding some personnel before an IPO isn’t unusual.

“I don’t find it unusual for a company as it’s scaling to rationalize its workforce through a layoff,” Miller said in an email. “With the hyper growth of companies like GoPuff, hiring happens at such a rapid pace that it can be hard to fill the strategic needs of the company perfectly which may require some shifting of priorities. There is also the potential that the move is designed to actually make the company more attractive in an IPO with a smaller loss on the bottom line.”

Gopuff’s big year

Gopuff has made some major moves outside its original business model in the last year or so, but has faced some scrutiny by gig workers and government agencies.

In 2021, it partnered with Uber to bring its “everyday essentials” of snacks and alcohol delivery items to Uber Eats customers through its network of micro-fulfillment centers, but the deal that was scrutinized by the Federal Trade Commission. We’ve spotted no updates on the inquiry since August.

It also began fulfilling made-to-order meals via its app, thanks to a business model expansion called Gopuff Kitchen, and expanded its alcohol offerings after some West Coast acquisitions. The company in January also launched its own line of items called Basically.

In July, it was at the center of a petition signed by a few dozen drivers calling for better pay practices and clarification around their role, saying their independent contractor status is unlike those at other gig-based companies like Uber and that they can be terminated from the app for missing a shift or refusing an order, among other things.

Though the company itself has yet to confirm plans for going public, earlier this year, Reuters reported it was working with Morgan Stanley and Goldman Sachs Group Inc on its planned stock market float.

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This is a developing story and may be updated. If you have insight into Gopuff’s moves or want to share your expert opinion, please email us at philly@technical.ly. 

Companies: Gopuff
People: Dean Miller
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