Delivery robot maker Starship Technologies cuts 11% of workforce

Listen to this article

Starship Technologies, one of the earlier companies to enter the outdoor robot delivery market, recently laid off 11% of its global workforce. The company, which has engineering headquarters in Estonia and business headquarters in San Francisco, said it has been negatively impacted by the “dramatic downward shifts” in the global economy and investment market.

On top of the layoffs, Starship is closing a small number of unnamed service locations in the U.S. and Germany over the next two months. It said all of the changes focus on cost savings and improving profitability. According to Digi Geenius, an Estonian news outlet, Starship also laid off a number of employees in March 2020, which is when the COVID-19 pandemic started to impact the world.

“The locations that we must close do not have the right mix of merchants and customer base to meet our near-term profitability goals,” the company said. “In addition to the staff impacted by these decisions, we are also reducing the team at the corporate level.”

One of those shuttered locations is Save Mart’s flagship store in Modesto, California. It came as quite a surprise because in February 2022, the companies announced the robot delivery service was being expanded to another location.

Starship has added its delivery robots to a growing list of college and corporate campuses, which could be a more profitable, controllable environment for the robots. In 2018, Starship co-founder Ahti Heinla seemingly told The Robot Report college and corporate campuses were a more sustainable approach.

“The needs of people on corporate campuses are very different,” Heinla said. “In suburban neighborhoods, people don’t order food much because they’re at work. At corporate campuses, it’s vice versa. Food ordering is the most popular ordering service.”

Not only are people’s needs different, but the economics of campus delivery vs. city and suburban delivery are also different. Keep an eye on the partnerships Starship announces going forward to see if they’re more focused on campuses.

The layoffs come just months after Starship raised another round of funding. At the time, Starship said the new funding would be used to further research and development and build thousands more robots in Estonia. The company has raised around $200 million in total funding.

Delivery robots face more competition

Starship was founded in 2014 by Skype co-founders Janus Friis and Heinla. Its commercial service launched in 2018 in Milton Keynes, which is the largest settlement in Buckinghamshire, England, and has covered more than 4 million miles ever since with Level 4 autonomy.

However, the outdoor robot delivery market has become much more crowded since 2018. Not only are there many more companies developing sidewalk delivery robots – see Coco, Kiwibot, Serve Robotics, and Synkar, to name a few – other companies such as Nuro and White Rhino are developing autonomous delivery robots that can carry heavier payloads and drive on streets. Nuro, for example, recently raised $600 million in funding and announced a partnership with FedEx.

Food delivery giant DoorDash also appears to be developing its own autonomous delivery robots. DoorDash has filed several relevant patents with the United States Patent and Trademark Office for autonomous delivery vehicles.  DoorDash tested last-mile delivery with a number of robotics companies since 2017, including Cruise, Marble and Starship. However, none of those solutions seem to have stuck for DoorDash.

There have also been legal hurdles for sidewalk delivery robots over the years. San Francisco in late 2017 voted to ban delivery robots on most sidewalks and greatly restrict use in permitted areas. The ban prevented robotics companies from operating sidewalk delivery robots in San Francisco until 2019. Then in December 2021, the Toronto City Council voted to ban sidewalk robots until the council has the opportunity to further study the effects they have on the community. The ban prevents all robots that operate on anything other than muscular power, are automated or remote controlled, and don’t transport passengers from traveling on the sidewalks and in bike lanes.

“These unfortunate but necessary changes will help put Starship in a stronger position moving forward. We are continuing to improve efficiencies over time and this focus will set us up for long term success,” Starship said. “We believe our delivery robots are a big part of the solution to the pain a lot of other delivery companies are experiencing right now, and we’ve already proven this in multiple places. We are eternally grateful for our partners and customers who have supported us and we hope that we can continue to earn the love and loyalty for those we still continue to serve.”