Money, money, money!
Money, money, money!
Making sense of state budgets, IPOs and layoffs
With the Feds feeling decidedly less gloomy about the economy this week, it’s a good time to take a step back and look at some recent financial news: IPOs, layoffs, acquisitions, government financing, etc. While some companies are still struggling to raise capital, there are plenty of other encouraging signs that suggest there’s a light at the end of the tunnel.
Nextbite Splits; Layoffs Hit Olo, Grubhub
Let’s start with the less cheery news, and work our way up. Grubhub cut 400 employees, about 15% of its workforce, as the company continues to struggle to keep up with DoorDash and Uber Eats. Since Amsterdam’s Just Eat Takeaway bought the company in June 2021, their competitive position has deteriorated; overall sales, not just market share, appear to have dropped since the deal closed. It would be nice to see the company come up with a strategy other than cut workers, complain about wanting to undo the acquisition, and throw discounts at Amazon Prime members…
Online delivery and dispatching software provider Olo is also making (gentler) cuts, as the company says goodbye to 81 workers as part of a reorganization. The motivating strategy seems to be reducing redundancies driven by its recent acquisition of Wisely, setting it up for a longer-term push into payments.
And after a few rounds of layoffs, it looks like Nextbite has found not one, but two white knights. The online ordering meets virtual kitchen innovator is selling those two arms off separately. India’s UrbanPiper will pick up Ordermark, the company’s software business. And C3 by SBE is set to acquire the virtual brand side of the biz, with founder Alex Canter staying on that side of the split to keep growing the licensing portfolio.
A Fork in the Road for Micromobility.com and Electrameccanica
On the decidedly weirder side of the financial news spectrum, there’s the curious case of small-cap mobility companies. Electrameccanica has been spinning its wheels for a few months now, after having to recall essentially all of its three-wheeled vehicles. While the company’s newish CEO with an automotive background plans to refocus the company on four-wheel vehicles, investors seem cool to the idea. Currently the market cap of the company appears to be less than its cash-on-hand, which surely has some 1980’s style corporate raider licking his lips. But instead of squeezing the company dry, maybe someone can come in and encourage leadership to retool towards three-wheeled delivery vehicles? A newsletter can dream…
While it’s not nice to kick someone (hello, corporate personhood) when they’re down; longtime followers know I’ve always been suspicious of any company that SPACs - the market has essentially caught up with all the blank check companies that hoovered up cash from less sophisticated retail investors. Micromobility.com, née Helbiz — the scooters and ghost kitchens and soccer streaming corporation — continues to fight a Nasdaq delisting.
In the past eight days, the company first announced plans to merge with EVmo, a fleet management company that trades on the OTC markets. (Ticker symbol “Yayo” makes me wonder what they spent their offering proceeds on… 😉) EVmo’s stock currently trades at less than eight cents per share, and the company is in default with its lender. The following day Micromobility.com celebrated a permit extension in Austin, since it’s “bolstering its footprint in the rapidly expanding U.S. micromobility market” and “confirming U.S. market momentum.” Three business days after that, the company announced that actually “micromobility.com Inc. Exits Unprofitable US and European Markets to Refocus on Financial Self-Sustainability.” A lot can change in a weekend!
Cava Excites IPO Watchers
Part of the slowdown in venture financing has been driven by the cool IPO market, as maturing startups lacked a lucrative way to exit. This morning, DC-based Cava tested the waters, and it looks like things are hot. Initially hoping to price at $17-19 a share, the company bumped that to $22 as investors showed initial interest. But wow did they leave some money on the table, as stock popped as high as ~$47, before closing today at $43.78.
With the company raising $318 million, and employees not facing the prospect of having to stay locked-up to a falling stock, expect this to push a lot more mature startups to finally list. Among the interesting companies that have been sitting on their S1s: Surf Air, Turo (cough,) ABB E-Mobility, Instacart…
Public Sector Budgets Improving Too
Moving from private to public, it’s worth noting that the cautious optimism extends to cities, states and transit agencies as well. Starting with the “death of downtown” narrative that the financial media loves to harp on, new data strengthens the case that cities are recovering fairly well. In New York City, the comptroller finds that even in a “doomsday” scenario where office values decline 40% in six years, the city would only have a $1.1 billion fiscal shortfall, amounting to 1.4% of revenues. Not great, but manageable, although one can worry about where the Adams administration would choose to make cuts.
Over in San Francisco, there’s been a lot of hullabaloo about mall operator Westfield surrendering its downtown shopping center. No doubt the mall will have a tough few years, especially as whoever the bank offloads it to will need to find a new tenant for the Nordstrom’s and Cinemark spaces, but someone will make the property work at the right price. And while Downtown SF has struggled thanks to how remote work-friendly many of its employers are, those same workers that aren’t eating or shopping at 5th and Market still need to spend money somewhere. That makes this an even bigger opportunity for the Bay Area’s suburbs to get their own regional centers into top shape.
Pulling back one level, things are looking better for transit operators in the Bay Area, and the state as a whole, as the legislature has proposed a budget that fills in much of the fiscal hole that BART and Muni were barreling towards. The new cash is a mix of cap and trade dollars, plus restored capital funding that can be flexed to cover operations, that will help keep operations from death-spiraling for the next few years.
While it’s not a permanent fix, it buys Bay Area officials enough time to get a 2026 tax measure off the ground, which if passed would better pay for operations. From an equity perspective, this is way overdue; BART in particular has long balanced its budget on the backs of poorer workers: fares can be as high as $18.10 one way.
On both the public and private sides, it seems like the economic mood has brightened enough that vital services and solid ideas can once again attract dollars, while things aren’t frothy enough to paper over long-shot bets.
HOT INDUSTRY NEWS & GOSSIP
Big transit news from coast-to-coast: Tomorrow’s the long-awaited opening of LA’s Regional Connector: a second downtown subway that ties together a number of the county’s disparate light rail lines. See you folks out there for opening day festivities? And new funding looks to bring better bus shelters and service to the city’s westside. Across the country, Pittsburgh received nearly $150 in federal funding for a new BRT line in its buzzy Uptown and Oakland neighborhoods. Pittsburgh was the first city in the U.S. to introduce bus rapid transit, way back in 1977, so it’s encouraging to see them continue to invest.
In NYC biking news: First from a leisure perspective, the city announced the dates for its “Summer Streets” open street events. While it’s nice to see this expand to all five boroughs, there’s no excuse to cap this at just five events over two months. Things are looking better for bike-based workers, as local officials passed a minimum wage of $17.96 for third-party deliverers. The city estimates 60,000 couriers will see their incomes rise as a result, while consumers should expect to see higher tabs as well.
Meet Japan’s Taxi Prince: While Uber has become the undisputed king of ridehailing in the U.S. and many other markets, there are still some countries where it’s yet to fully find its foothold. Japan’s "Taxi Prince” Ichiro Kawanabe has kept Uber at bay with a mix of legislative maneuvering and driver cooperative cajoling, plus a dash of local customs. Uber is still pushing to grow its share of the East Asian market, but to quote famed Baltimore urbanist Omar Little: “you come at the king, you best not miss.”
Pickup up, delivery down? New data from Brick Meets Click suggests consumer preferences are continuing to shift in the face of rising grocery prices. Pickup (+9.1% YoY) has overtaken delivery (-11.7%) and ship-to-home (-17%) as the preferred way to digitally shop for groceries.
But that won’t stop Uber: Perhaps in response to that trend, Uber just announced that not only can you get prescriptions delivered via Eats, select patients will also be able to get “food as medicine” delivered to their homes.
Worker-friendly labor ruling: The NLRB just revamped the legal test used to decide if a worker is an employee or independent contractor, undoing a Trump-era decision that had been criticized for elevating “entrepreneurial opportunity” over other factors. Returning to the 10-factor “Fedex test” is likely to impact a number of gig worker powered platforms.
Payments and dispatching merge: Not only is delivery dispatcher Olo getting deeper into payments (as we teased above,) DoorDash and CloudKitchens look to be building out POS systems. Coming at the same result from the opposite direction, Snack POS announced direct integration with UberEats, Grubhub, DoorDash and Postmates. Seems like everyone wants to be the one app to rule them all…
Profit bots? Delivery robot player Cartken just announced its delivery operations are profitable, thanks to its level 4 fully autonomous technology. A few remote-operated delivery bot companies have recently teased that they’re profitable on a per-delivery basis as well, so it looks like this sector is here to stay.
Teeny weeny machiney: Adorable Swiss micro-car maker Microlino just rolled the 1,000th vehicle off its assembly line. As usual, these sensibly scaled vehicles show more promise in Europe and Asia than in SUV-lovin’ America. But can we see a version equipped to do deliveries?
A few more links: A few photos from last week’s excellent happy hour! New data points to the need for more electric vans and trucks, not just cars. Why can’t they do this for transit projects instead? Ports, longshore workers reach agreement. Congrats to our friends at Automotus. Now that the Business Insider strike is over, we can share last week’s article on CloudKitchens getting into the coffee biz. When LA City Councilors aren’t too busy getting indicted, they’re hard at work declaring that “parking lots serve that [community’s] authenticity and character.” (Expand the city council when?) Philly pleads for new Roosevelt Blvd Subway - but that road is so wide they could basically run a train at-grade. NJ still fighting congestion pricing. A very good curb!
Until next week…
- Jonah Bliss & The Curbivore Crew