While one on-demand delivery startup expands this week, another is contracting a bit. TechCrunch has learned and confirmed that Postmates has let go of all of its city managers, as it centralizes some of its operations at its headquarters in San Francisco. The total number of people affected by the move is 15 across markets like Boston, Denver, Las Vegas, Nashville, New York, Philadelphia, St Louis, San Diego, and Washington, DC.
In a statement, Postmates said that general managers will take on city managers’ responsibilities.
“Postmates has grown rapidly over the last six years — and continues to grow in more than 200 cities across the U.S. As part of that growth, we’ve decided to centralize some of our regional marketing efforts within our San Francisco headquarters,” a spokesperson said in the emailed statement. “Centralizing these functions will enable us to execute more quickly — and ultimately help us be more nimble and effective as we continue to aggressively scale the company. Our general managers will remain in place and continue to help lead our local efforts. We are thankful to our city managers for all their hard work, and we’re confident that they will be successful in their future endeavors.”
It’s not clear why Postmates decided that now was the time to centralize operations, particularly in light of the statement about aggressively scaling the company. But it’s not the first centralising move to come from the company: it also eliminated the community manager role earlier this year, affecting around 30 people.
One of the tipsters, an ex-city manager, said that employees were taken by surprise: Postmates had just earlier this month organised a retreat for the city managers, which they saw as a team building exercise.
The tipster also added that the murmurs were that the cost-cutting was being done “as a precursor to an acquisition,” but Postmates’ spokesperson denied that this is the case, and also ruled out a merger and fundraising as reasons for the cuts.
Founded just over six years ago, Postmates has shaped up to be one of the more prominent of the startups leading the challenge against Amazon and others in the world of on-demand deliveries.
The company may be best known for food — 80 percent of its business is in providing services to restaurants, cafes, stores and other establishments that want to outsource delivery (notable partners include Starbucks). But it also delivers office supplies, alcohol, and other things to and from stores (eg, getting your broken iPhone to a Postmates-using repair shop).
Earlier this year it acquihired a startup called Bold and picked up its co-founder David Byttow (formerly of Secret fame/infamy) to become its new product lead. Byttow has spoken very confidently of how he thinks Postmates will develop. “I think Postmates is in a very unique position to leapfrog itself and continue be the leader in the on-demand delivery space,” Byttow told TechCrunch at the time of the acquisition.
But on-demand is hard and we’ve seen a lot of casualties (closures include Sprig, Washio, Postmates-style French service Tok Tok Tok, Take Eat Easy, Kitchit and many more). With companies like Amazon, Uber (via UberEats) and GrubHub all continuing to pump money into their own delivery operations, smaller Postmates may feel the heat and could be rethinking how to operate best and at the lowest cost base. The company has yet to expand beyond North America.
Postmates last raised money in October 2016, $140 million at a $600 million valuation. At the time, that was described by observers as a flat valuation, although others might have argued that holding back its pricing was intentional.
At the same time, the company has been focused on turning profitable — something that it has yet to do but has been talking about for years already.
In an interview in March 2017, CEO and founder Bastian Lehmann said Postmates was aiming for a $1 billion revenue run rate by March 2018, with an IPO in 2019. In March, the company had an annualized run rate of $1 billion in gross merchandise value (the total sales volume ordered via Postmates), and revenues of $250 million (that is, the cut that Postmates gets from delivery fees and commission percentages).