Wheels, a Los Angeles-based startup that rents electric bikes in over a dozen cities, is laying off 6 percent of its staff, The Verge has learned. The company is the latest micromobility firm to shed employees in the quest to find a profitable business model.
Wheels was founded in early 2019 by Jonathan and Joshua Viner, brothers who also founded the popular dog-walking app Wag. Since its launch, Wheels has expanded to San Diego, Miami, Dallas, Austin, Scottsdale, Cleveland, Chicago, Tallahassee, Texas A&M, Orlando, and Salt Lake City, as well as Stockholm, Sweden.
Its electric-powered vehicle falls somewhere in between a bike and scooter, with no pedals, a seat, small but thick wheels, and a distinctive frame. The company has since raised nearly $100 million in venture capital to fund the expansion of its rentable e-bike service. Its latest round was last October and was led by DBL Partners, an early investor in Tesla.
But like other scooter and bike companies, Wheels is not immune to the financial rollercoaster of the dockless bike and scooter market. During an all-hands meeting on February 24th, the company’s founders informed staff that around 6 percent of the 300-plus person company, or about 20 people, would be laid off, a company spokesperson confirmed in an email.
“While this action affected only a very small portion of the company, it best positions us for success as we continue to grow and scale,” the Wheels spokesperson said.
In addition, a source said the company would be shutting down operations in three cities: Cleveland, Salt Lake City, and Chicago. The company disputes this, though. According to the spokesperson, Wheels started deploying a very small number of e-bikes over the past several weeks in Salt Lake City in anticipation of launching much larger operations following the upcoming RFP process there. In Cleveland, Wheels temporarily paused operations during the coldest part of winter but plans to redeploy soon. And in Chicago, where the city’s e-scooter pilot just ended, Wheels is in the process of applying for a permit.
One laid off employee told The Verge that the staff could sense bad news in the air: prior to the all-hands meeting, Wheels had let go dozens of contingent workers hired through a third-party company called BlueCrew that supplies temporary workers like mechanics, field operations crew, and supervisors. Now they were learning that some of their jobs would be cut as well.
Another ominous sign was the departure, weeks before, of the company’s VP of operations, Ben Story, who had only joined the company some three months before. The Wheels spokesperson denies that Story’s resignation had anything to do with the layoffs.
Most of the layoffs are from the company’s operations team, with others coming from divisions focused on asset recovery, supply chain, and recruitment. The founders explained that Wheels was going to focus on expansion in Europe, and not the US, having just acquired a Madrid, Spain-based startup called Mygo with the goal of launching in other cities in Europe. The operations team, which is responsible for expanding into new cities, finding warehouses, and hiring and training staff, had previously been told they’d be launching in three or four US cities a month, at minimum; now they were being told that plan was on hold.
The spokesperson said Wheels still has plans to grow in the US. “Over the next several months, we are planning for similarly rapid expansion both in the US, where we continue to regularly launch new markets (we just launched Orlando and Tempe in the last couple of weeks and have a number of new markets coming up), and across Europe, where we will be launching a number of new markets in the near term,” he said in an email.
Other micromobility providers have announced layoffs in recent months. Major operators like Bird, Lime, Uber, and Lyft have laid off workers, yanked bikes and scooters off city streets, and pulled out of markets as they become laser-focused on making their business profitable. Even the rollout of tougher, longer-lasting scooters hasn’t reversed the flow of more money going out than coming in.
To be sure, no scooter company in operation today is profitable. All of them lose money, thanks to rising costs associated with wear and tear and vandalism. It’s been a rough winter for the e-scooter industry, and it’s unclear when things will begin to pick up.