Start-up darling Mr Yum cuts almost 20pc of workforce

Mr Yum, regarded as one of Australia’s start-up stars, has cut almost one-fifth of its workforce after admitting it grew staff numbers ‘too quickly’.

Mr Yum chief Kim Teo has told staff “every function will be impacted”. Picture: David Crosling

Mr Yum investor AirTree says it supports a move by the payments and ordering start-up to sack almost 20 per cent of its staff and slash costs – with the company admitting it hired too quickly and was “overly bullish” last year.

Mr Yum, which has attracted significant investor support and had been spruiking a valuation of around $400m in late 2021, announced company-wide lay-offs late on Monday in an all-staff letter from chief executive Kim Teo.

Ms Teo said the cuts would be across all functions, and come in the context of widespread capital market uncertainty.

“We completely accept and own that we increased our headcount too quickly,” the letter reads. “We made an assumption that the strong economic environment would continue deeper into 2022; instead, conditions deteriorated rapidly in May … And capital markets have remained soft since,” she wrote. “We plan not to have to make headcount reductions again and to move forward with a more capital-efficient structure that supports our growth in all markets.”

The company said it would offer laid-off staff a minimum six weeks of severance pay on top of notice periods, accelerated stock option vesting, career transition support and three months of mental health support.

“I have 100 per cent conviction in what we‘re building here and these lessons will make us stronger,” Ms Teo added.

One of those leaving the company is Mike Mortimer, the head of product at Mr Yum.

“Yesterday Kim had to deliver the very difficult news that Mr Yum were entering a round of headcount reduction, a significant one to ensure the future of the company,” Mr Mortimer wrote in a post on LinkedIn

“As a result many of the team were impacted, myself included. To those that remain, survivors guilt is real – take care of yourselves and just be there for each other like I know you will be.”

Mr Yum’s platform offers QR codes for mobile menus, ordering and payments for restaurants, and the company quickly grew amid the Covid-19 pandemic with rapid adoption of the technology.

James Cameron, a partner at AirTree Ventures, told The Australian that Mr Yum had been performing strongly, especially overseas, but had been hit by the increased cost of capital.

The company raised $US65m ($95m) in December in what was the largest ever for a female-led company in Australia, with backing from AirTree Capital and Steve Baxter’s TEN13 fund.

“When the macroeconomic landscape changes, the worst thing you can do is a founder is do nothing and not assess the cost and length of your runway, and the best founders are always doing scenario planning and making sure they have runway to last several years,” Mr Cameron said. “I always want to back the founders that are agile enough to adapt to the landscape outside of their companies and do it in a way that is empathetic and decisive and that’s exactly what Kim and the team have done.”

AirTree Ventures Partner James Cameron. Source: Supplied.

The smartest founders “do it this year rather than waiting too long” when it comes to adjusting headcount, Mr Cameron added.

“That’s ultimately what can potentially kill start-ups, if they don’t act decisively. The ones you want to back are the ones who are able to do it, and quickly.”

Ms Teo declined to comment.

Mr Yum’s $US65m funding round — Australia’s third-largest Series A — also attracted investment from Skip Capital founder Kim Jackson and her husband, Atlassian co-founder Scott Farquhar, Kogan chief Ruslan Kogan, basketball star Patty Mills, musician Rufus Du Sol and Tennis Australia.

The redundancies follow a similar move at social media start-up Linktree, another Airtree portfolio company, which shed 17 per cent of its workforce.

Linktree, based in Melbourne and Sydney and also backed by AirTree, was most recently valued at $1.78bn, growing from a linking service for influencers to a platform enabling brands, artists and businesses to monetise their content through social media.

Linktree was co-founded by chief executive Alex Zaccaria, his brother Anthony and their friend Nick Humphreys. Picture: Sarah Chavdaroska.

“Today I shared the difficult news with our team that Linktree is reducing our global workforce by 17 per cent in order to emerge stronger from the economic downturn,” chief executive Alex Zaccaria said in a LinkedIn post at the time. “Our people have built Linktree into what it is today: trusted by millions of people around the world. I‘m heartbroken to say goodbye to some incredible teammates today.”

Earlier this month, Australia’s largest venture capital firm Blackbird revealed its total portfolio valuation has fallen by nearly one third in six months. It slashed its valuation of Canva by 36 per cent – about $20.7bn – and has overhauled the process for how it values tech companies.

“It’s been brutal for technology companies out there in the public markets,” Blackbird partner Rick Baker said in a recent company blog post. “After a decade of strong support for technology companies, culminating in a huge surge of valuation increases in 2021, the last six months have seen this unwind.