Tier Mobility Announces Further Layoffs to Cut Costs
German micromobility operator Tier Mobility is laying off another 22% of its workforce in a bid to reduce operational costs and push toward profitability, as shared in a LinkedIn post by CEO Lawrence Leuschner.
Challenges Amid Expansion
The layoffs come as Tier, which started 2022 on a high note with a $200 million Series D round led by SoftBank Vision Fund 2 and Mubadala Capital, faces the challenges of reducing operational losses. Despite a strong start, the company faced a difficult funding environment in 2022, leading to its first significant layoffs and a series of strategic changes.
Tier acquired several companies in 2022, including Nextbike, Wind Mobility’s Italian unit, and Fantasmo, and made a strategic purchase of Spin from Ford to enter the North American market. However, the company had to part ways with Spin in September 2023, selling it to Bird for $19 million.
Focus on Profitability
The latest layoffs are part of Tier's broader strategy to focus on profitability over growth, a trend that many startups are embracing in the current market climate. CEO Lawrence Leuschner emphasized the company’s effort to reduce its cost base and improve its EBITDA margin, which moved from -62% in 2022 to a more promising -15% in 2023.
"We are working tirelessly to achieve profitability in 2023, and we are on track to be profitable in 80% of our markets, including Germany, the UK, and France," said Leuschner.
The Impact of Recent Layoffs
Today’s layoffs affect approximately 140 employees, with most of the cuts focused on Tier’s central and regional workforce. The company did not provide specifics on which teams were most affected but confirmed that the majority of the layoffs were in central roles.
Tier has already experienced significant executive turnover in 2023, including the departure of Matthias Laug, the company’s co-founder and CTO, and other key executives in engineering, finance, and product management.
Looking Ahead: What’s Next for Tier?
Despite these challenges, Leuschner is optimistic about Tier’s future, noting that its e-bike unit has achieved profitability in 2023. However, he cautioned that Tier is not yet fully profitable and that the company must continue to make difficult decisions to ensure long-term sustainability.
"With not enough visibility on how and if markets will recover, we have to presume demand in 2024 will look like demand in 2023. This means that to get to profitability, we need to bring our cost base down," Leuschner added.
As Tier navigates these turbulent times, the company is making strategic moves to focus on profitability while maintaining its presence in key European markets. While the road ahead remains uncertain, Tier’s commitment to reducing operational losses and optimizing its cost structure reflects the wider challenges facing the micromobility industry today.