Sonder, the short-term rental startup whose shares have plummeted more than 80 percent since it went public in a SPAC merger five months ago, has laid off a fifth of its staff in an effort to cut costs.
The San Francisco-based firm is eliminating 21 percent of corporate roles and 7 percent of “front line” roles, according to a Thursday SEC filing first reported by Skift. Among those departing in what Sonder termed its “Cash Flow Positive Plan” is chief technology officer Satyen Padella, who stepped down on Wednesday but will continue serving in an advisory role “to ensure an orderly transition.”
Sonder reported an $83 million loss in the first quarter, its first as a public company, as its expenses ballooned 72 percent to $176 million. The company expects to incur another $3.5 million to $5.5 million in restructuring costs in a longer-term effort to cut its expenses by $85 million per year.
As of midday Friday, Sonder’s shares were trading at $1.73, down 2.8 percent from Friday’s open and nearly 83 percent from their Jan. 3 debut — though it’s far from the only real estate-related startup to struggle on the open markets in recent months.
Sonder, which says it operates short-term rentals in 35 markets spanning three continents, went public on Jan. 19 in a merger with a blank-check firm sponsored by billionaires Alec Gores and Dean Metropoulos.
The SPAC deal valued Sonder at $1.9 billion; ahead of the merger, the company had raised at least $560 million in venture capital. A Series E funding round in June 2020 valued it at $1.3 billion.
The company, which CEO Francis Davidson founded in 2014, differs from the likes of Airbnb by leasing and managing its rentals itself.
Last year, it became the first tenant at Jeff Sutton’s proposed Midtown hotel, reportedly inking a 15-year lease at the planned 363-room hotel at 25 West 34th Street. The company also signed a long-term lease for the 76-key Gowanus Inn & Yard in Brooklyn last year.
While Sonder may be hurting, its CEO doesn’t seem to be. Earlier this year, Davidson paid $9.2 million for a 6,100-square-foot Hollywood Hills home previously owned by rapper and record producer Pharrell Williams.
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[Skift] — Holden Walter-Warner