German micromobility operator Tier Mobility is taking steps to improve its financial situation by laying off 22% of its workforce, according to a recent LinkedIn post by CEO Lawrence Leuschner. This move comes as Tier aims to cut costs and strive for profitability in the highly competitive micromobility market.
Key Takeaway
Tier Mobility, a German micromobility startup, is implementing a workforce reduction of 22% in order to achieve profitability. The company is making this strategic move as part of its efforts to cut costs and overcome the challenges faced in the micromobility market.
A Roller Coaster Year for Tier Mobility
Tier Mobility had started 2022 on a positive note, securing a $200 million Series D funding round from SoftBank Vision Fund 2 and Mubadala Capital. The company also made significant acquisitions, including docked e-bike share company Nextbike, Wind Mobility’s Italian unit, Fantasmo, and Spin from Ford. These strategic moves were aimed at expanding Tier’s presence in the global market, particularly in North America.
However, the company faced setbacks in August 2022 when it had to undertake its first round of layoffs, letting go of 180 employees due to a challenging funding climate. In the following months, Tier laid off an additional 100 employees. In May, Tier sought a buyer after failed acquisition talks with Bolt and Lime, securing a convertible note to sustain itself during the search. Eventually, in September, Tier sold its subsidiary Spin to Bird for $19 million.
Focus on Profitability
Today’s layoffs indicate a significant shift in Tier Mobility’s strategy, as the company recognizes the importance of prioritizing profitability over growth and expansion. CEO Lawrence Leuschner emphasized the company’s ongoing efforts to achieve profitability, sharing that Tier has improved its EBITDA from -62% in 2022, with the projected -15% for 2023. Additionally, the company expects to achieve annual profitability in 80% of its markets, including Germany, the U.K., and France. Leuschner also highlighted the profitability of Tier’s e-bike unit in 2023.
Despite these positive developments, Leuschner acknowledged that Tier has not yet reached profitability. He emphasized the need for further actions and decisions to be made in 2024 in order to reduce the company’s cost base and successfully achieve profitability. The layoffs announced today will impact around 140 employees, but specific details regarding the affected teams have not been disclosed.
In addition to the workforce reduction, Tier has experienced the departure of several top-level executives throughout the year, including co-founder and CTO Matthias Laug, as well as the heads of engineering, finance, corporate strategy and development, and product and growth.
Tier Mobility’s journey toward profitability continues as it navigates the challenges and uncertainties of the micromobility market. By strategically cutting costs and streamlining its operations, the company aims to position itself for financial success and long-term sustainability.
