Loggi is the latest national ‘unicorn’ (startup worth more than a billion US dollars) to make mass layoffs. The startup specialized in logistics laid off 15% of its 3,600 employees this Monday, the 8th morning. The entire company was affected by the cut, including operational, administrative and technological areas – the information was revealed by Fabien Mendez, CEO and co. – company founder.
“The world and Brazil were hit by strong opposing forces in 2022. We had the return of inflation, which was exacerbated by the war in Ukraine, the collapse of the stock markets and the specter of a global recession. These forces, which seem far away, have a very big impact on our business,” says the French CEO.
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Mendez says the return of inflation is causing e-commerce to stagnate. And this, consequently, directly affects the business of Loggi, which specializes in the delivery of sales packages via the Internet — the company is present in 4,000 Brazilian municipalities. The CEO says that the sector managed to do business with growth until February this year. According to him, there was stagnation that has remained unchanged since April.
Last November, the company opened a R$150 million delivery warehouse in Cajamar (SP). The forecast, in this case, is that the installation would handle 1 million packages per day by 2023. Those numbers, however, have been revised.
Benefits for the dismissed
Monica Santos, director of human resources at Loggi, says those who have been laid off will have a benefits package. This includes: three months of health insurance, including dependent family members; three months of Zenklub for psychological support; exchange service on the market and flexibility in terms of participation in company shares for employees who worked for a shorter time.
This is not the first time that Loggi has carried out mass shutdowns. The company went through moments of uncertainty at the beginning of the pandemic, which resulted in up to 120 layoffs in March 2020. However, as the months progressed, the company began to grow at a rapid pace. A year later, the company raised US$212 million, the largest funding the company has ever raised.
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Now the company’s idea is to preserve the funds raised in the latest investment round. Mendez promises the company won’t see any new cuts — some national startups have continued to lay off “on a trickle” after large rounds of layoffs. The CEO also stated that from now on the company will be very strict about new hires.
Loggi changes the lead
In addition to the layoffs, Loggi also announced changes in the company’s leadership. As of this Tuesday, August 9, Thibaud Lecuyer takes over as CEO — the Frenchman has been the company’s CFO since October 2019.
Fabien Mendez will take over the position of president of the company’s management board. “It is a movement that will use the strength of each of them. In my case it means entrepreneurial spirit, strategic thinking, long-term vision. And this allows us to bring out the talents that we nurture within the company”, explains the founder of the company.
Upon arrival, the new boss tells the journalist what his priorities are. “First, let’s take care of our employees. Second, we will take care of our customers who trust us a lot. E-commerce requirements are changing, so we need to help them adapt. Third, we will improve our operational efficiency,” says Lecuyer.
“Thibaud is a very focused contractor and a veteran of the e-commerce market,” Mendez says of his successor.
The crisis is severe among the giants
Known for hiring hundreds of employees per month, startups have laid off hundreds around the world — a phenomenon not unique to Brazil. The period has been called “startup winter”, after the positive wave caused by the digitization of the pandemic in the last two years.
According to experts consulted by Estadão in recent months, the layoffs are taking place as a diversion amid rising global prices and the Ukraine war, which is disorganizing the global production chain. In this scenario, investors turn their backs on risky investments, such as startups. As a result, raising rounds has been more difficult than during the pandemic, when the source of capital seemed endless.
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The process was particularly difficult for larger startups, which are currently known as “late stage”. At this stage of maturity, companies spend money rapidly in an attempt to grow and gain market share. But with no money, they must conserve cash to survive. Among the national unicorns that have already made massive layoffs in 2022 are QuintoAndar, Loft, Facily, Vtex, Ebanx, Mercado Bitcoin and Olist. Mexico’s Kavak, Latin America’s largest unicorn, has also made serious cuts to its Brazilian operation.
Revaluation of startup investments
Investment funds have warned startups of a challenging scenario in the first months of the year. Investor Masayoshi Son, chairman of SoftBank, one of Brazil’s biggest startup investors and an investor in Logga, said the Japanese conglomerate is expected to reduce investments in technology companies this year.
Along with SoftBank, the accelerator Y Combinator, one of the most famous in Silicon Valley, recommended startups to review their finances and prepare to reduce costs. The measure, according to the accelerator, is a way of predicting up to 24 months without investment. “Economic crises often become great opportunities for founders who quickly change their mindset, plan ahead and ensure the survival of their company,” she said in the letter.