American delivery startup Nuro has revealed plans to downsize its workforce by 30%, which is about 340 employees, as part of a restructuring meant to extend its capital runway.
Nuro co-founders Dave Ferguson and Jiajin Zhu via a blog post disclosed that the downsizing of its workforce was necessary as the company plans to shift resources away from commercial operations.
Also, owing to the fact that over the past year and a half, capital markets in general, and deep tech funding, have significantly retracted, the company revealed it had to implement new strategies to be more efficient with its balance sheet.
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Part of the blogpost read,
“There is a fundamental tension in the development of self-driving between capital efficiency and speed in building an initial service. We have historically invested heavily in deploying commercial services and have learned a great deal from our customers. But commercial deployments come at a significant cost, both in terms of resources and autonomy focus. And until the unit economics of these services make sense, we think it is prudent to focus on what we can do efficiently as a startup.
“Going forward, we will change our approach to building the Nuro business. While in the past we developed autonomy systems, designed and built custom vehicles, and deployed commercial pilots with partners in parallel, we will now pursue a more sequential development model.
“At the center of this new approach is our hyper-focus on autonomy. Recent advancements in AI have increased our confidence and ability to reach true generalized and scaled autonomy faster. We have invested in AI and ML from day one, and a large portion of our autonomy stack is already directly learnable from data. Our focus now will be on making our autonomy stack even more data-driven, enabling us to scale to larger operating areas even more rapidly.
“In addition, we will delay the previously planned production line of our third-generation vehicle, reduce the scale of our commercial pilots in the near term, and explore more efficient deployment models with partners. This focus on accelerating autonomy progress and sequential development of our service will provide a leaner model for AV development and will more than double our runway from about 1.5 years to nearly 3.5 years”.
Nuro will provide laid-off employees with 12 weeks of severance, plus two additional weeks for employees with two or more years of tenure. Eligible employees will also receive 62.5% of the target bonus (prorated for new hires) or payment of spring bonus amounts for employees on a biannual performance bonus.
This is the second time in less than a year that Nuro has laid off workers in a bid to cut costs and extend the capital runway. In November, the company laid off about 300 people, which is 20% of its workforce.
By implementing a new strategy, the company will be able to operate twice as long, by giving it enough capital to operate the firm for another three years without the need to raise more money for operational purposes.