layoffs

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Amid unprecedented growth on its platform, Acorns cuts roles and shuts down an office

Acorns, which helps millions of people invest their spare change in the stock market, has laid off between 50 to 70 people, TechCrunch has learned from multiple sources.

The Irvine, Calif.-based company would not confirm the total number of people laid off, but did confirm that there were cuts at the company as a result of broader business changes.

The news emerged days after the fintech company closed its Portland office earlier this week, one of four offices the company maintained. While Acorns offered Portland employees an opportunity to relocate to its Irvine headquarters, some roles were terminated as part of the relocation, the company said.

Employees laid off largely were members of Acorns’ support team. And the internal cuts are related to an external partnership with TaskUs, which out-sources customer care and support needs for other businesses. Acorns will bring on roughly 80 new TaskUs support roles in the next year, which the company said would grow its support team, just not its internal staff.

The internal Acorns support team will handle high-touch customer care situations via phone, while external roles will handle email support.

Beyond support roles, Acorns cut some people from various teams across the company.

Acorns has found unprecedented growth as the coronavirus brings new users into its world of investing and saving money. The company recently hit a milestone of 7 million sign-ups, continuing the trend that trading apps are benefiting from a down market.

At the same time, Acorns also launched a debit card that depends on users spending in order to make sense as a business product. Payment processing is a risky space to play in right now because consumer spending has nosedived due to shelter in place orders. It could be a weak spot for the company at the moment. Earlier today, Brex laid off 62 staff members, just one week after raising $150 million in venture capital money.

So, why does a company like Acorns, that is facing immense growth, need to do layoffs? Even if you’re winning right now, the pandemic and potential of an extended recession is forcing businesses to reevaluate the way they’re spending money. In Acorns’ case, it will have more headcount next year than it does right now. But dig a little deeper, and its choice to outsource roles and shut down an office means that growing right now can come at the cost of slimming down.

Investors in Acorns include PayPal, DST Global, Rakuten, Greycroft and Bain Capital.

Munchery shuts down operations in LA, New York and Seattle

Munchery, the on-demand food delivery startup, has shut down its operations in Los Angeles, New York and Seattle, the company announced on its blog today. That means the teams from those cities are also being let go. In total, 257 people (about 30 percent of workforce) were let go, according to a Munchery spokesperson.

“We recognize the impact this will have on the members of our team in those regions,” Munchery CEO James Beriker wrote on the company blog. “Our teams in each city have built their businesses from scratch and worked tirelessly to serve our customers and their communities. I am grateful for their unwavering commitment to Munchery’s mission and success. I truly wish that the outcome would have been different.”

With LA, New York and Seattle off the table, Munchery says it’s going to focus more on its business in San Francisco, its first and largest market. This shift in operations will also enable Munchery to “achieve profitability on the near term, and build a long-term, sustainable business.”

The last couple of years for Munchery has not gone very well, between scathing reports of the company wasting an average of 16 percent of the food it makes, laying off 30 employees and burning through most of the money it raised.

During that time, Munchery tried a number of different strategies. Munchery, which began as a ready-to-heat meal delivery service, in 2015 started delivering meal recipes and ingredients for people who want to cook. Then, Munchery launched an $8.95 a month subscription plan for people who order several times a month. In late 2016, Munchery opened up a shop inside a San Francisco BART station to try to bring in new business.

But it’s not just Munchery that has struggled. The on-demand food delivery business is tough in general. Over the last couple of years, a number of companies have shuttered due to the now well-known fact that the on-demand business is tough when it comes to margins. The most recent casualty was Sprig, which shut down last May, after raising $56.7 million in funding. Other casualties include Maple, Spoonrocket and India’s Ola.

Munchery has raised more than $120 million in capital from Menlo Ventures, Sherpa Capital and others. In March, the company was reportedly seeking $15 million in funding to help keep its head above water.

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