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The coronavirus' domino effect on startup layoffs

Illustration: Sarah Grillo/Axios

As the coronavirus continues to paralyze much of American daily life, startups that aren’t directly affected by the sudden shift in consumer behavior are now laying off employees too, worried that their products and services won't be in demand anytime soon.

Why it matters: Startups create a lot of jobs — in 2015 alone they created 2.5 million — and their pain could make a recovery from the virus downturn harder.

Driving the news: More young companies are announcing cutbacks, including buzzy retailers like luggage maker Away and software providers like Toast, which in February announced $400 million in new funding.

Others making cuts as the economic ripples gain momentum include:

Between the lines: The U.S. expected that restaurants, stores, hotels, airlines and other businesses would suffer, but now we’re seeing companies whose revenue depends on these businesses suffer.

  • If people aren't booking flights for vacations or work trips, they don’t need to buy luggage.
  • If restaurants are shuttering or offering takeout only, they’re not spending money on software and tools.
  • With most workers no longer reporting to offices right now, their employers aren’t ordering catered lunches or other office-related services.

Moreover, some startups are taking precautionary cuts as the fog over the economy makes it hard to predict the future.

  • Others, like direct-to-consumer lingerie-maker ThirdLove and beverage company Iris Nova, are trimming staff as consumers decrease their spending or shift it elsewhere.

The big picture: Similar dynamics are playing out beyond startup land. News companies — especially local newspapers — are cutting staff as local businesses stop purchasing ads. Travel agencies are taking a hit, as are ticketing and event businesses.

Go deeper: The coronavirus dip is worse than anything startups predicted

Go deeper

Bryan Walsh, author of Future
Aug 12, 2020 - Health

The two sides of America's coronavirus response

Illustration: Eniola Odetunde/Axios

America's bungled political and social response to the coronavirus exists side-by-side with a record-breaking push to create a vaccine with U.S. companies and scientists at the center.

Why it matters: America's two-sided response serves as an X-ray of the country itself — still capable of world-beating feats at the high end, but increasingly struggling with what should be the simple business of governing itself.

Go deeper (2 min. read)Arrow
Kim Hart, author of Cities
Aug 13, 2020 - Economy & Business

The pandemic is hitting city budgets harder than the Great Recession

Expand chart
Data: National League of Cities; Chart: Axios Visuals

With tax revenue in free-fall and expenditures dramatically rising, the coronavirus pandemic is on pace to hit cities' finances even harder than the Great Recession.

Why it matters: Almost all cities are required to balance their budgets, and at this rate they'll have no choice but to cut more services, layoff or furlough more workers and freeze capital projects.

Go deeper (1 min. read)Arrow
Axios
Updated Oct 7, 2020 - Health

World coronavirus updates

Expand chart
Data: The Center for Systems Science and Engineering at Johns Hopkins; Map: Axios Visuals

New Zealand now has active no coronavirus cases in the community after the final six people linked to the Auckland cluster recovered, the country's Health Ministry confirmed in an email Wednesday.

The big picture: The country's second outbreak won't officially be declared closed until there have been "no new cases for two incubation periods," the ministry said. Auckland will join the rest of NZ in enjoying no domestic restrictions from late Wednesday, Prime Minister Jacinda Ardern said, declaring that NZ had "beat the virus again."

Go deeper (1 min. read)Arrow