Delivery service gorillas: glory and misery of a startup

First big visions, expansion plans halfway around the world, now millions in losses remain: Gorillas is financially in a dead end. Internal information provides insights into the interior of the startup.

Not so long ago, delivery service Gorillas was a darling of media and investors. A Berlin startup founded in lockdown that made shopping via app possible. In March 2021, Gorillas is estimated to be worth one billion dollars, never before has a German startup become so valuable so quickly.

“In 20 years we will say: We damn well built the new Nike. We will have an influence of a comparable extent,” Gorillas founder and CEO Kagan Sümer told his employees at an internal online meeting in January. But the delivery service is now apparently in crisis, investor funds are melting, and a rescue sale to rivals is under discussion. How could it come to this?

Internal numbers give clues panorama and the “Süddeutsche Zeitung” (SZ) present. Both media have evaluated more than two dozen internal video conferences and presentations that take place every two weeks with headquarters employees. In July, gorillas made an average order of 27.20 euros after deducting all operating costs, a bottom line minus of 5.30 euros. This does not even include the additional costs for administration, headquarters and marketing.

Source: : ARD panorama based on gorilla numbers

So each order increases the minus in the checkout of the delivery service. The figures are already significantly better than a year ago. In an internal video conference, Sümer told his employees that in September 2021 every order of 25 euros also meant a minus of 25 euros. Gorillas does not want to comment on financial details “for competitive reasons”.

Burned tens of millions every month

The so-called “cash burn rate” shows how quickly the losses add up for many orders – this means how much loss the startup makes in ongoing business, how much money is literally burned. These losses, which Gorillas founder Sümer presented to his employees in August, were 52 million euros a month at the beginning of the year. Thanks to radical austerity measures, they fell to at least around 25 million by July.

It’s still a remarkable number, even though Gorillas has already laid off half of its employees at headquarters, closed its shops in entire countries such as Italy and Belgium and also gradually closed warehouses in Germany and the Netherlands that are making too high losses . One-off costs, which can also run into the millions, are not included in the calculation.

Gorillas already heralded the first austerity measures in autumn 2021 under pressure from investors. It was actually the greatest moment of success in the history of the startup: Sümer managed to collect one billion dollars from investors. But the board, a body through which investors influence the course of the start-up, said with regard to changes in the interest rate market: Gorillas must “go from ‘Let’s grow at any price’ to ‘We also have to slowly show that this can become profitable in the medium term'”. This is how one of the investors, Philipp Klöckner, put it in an interview panorama and the SZ. Klöckner itself is represented by another investor on the board.

Growth at all costs

In the initial phase, the startup apparently had the motto: growth at any price. A look at Gorillas’ expansion plans shows what that meant: the delivery service not only wanted to conquer Germany and Europe, but half the world – all the way to Australia. According to research, employees have even been hired there. Ultimately, however, Gorillas never opened warehouses there – just like in Poland and some US cities. All of those plans were put on hold in fall 2021.

Gorillas writes: “[…] As we entered Q3 2021, we shifted our strategic focus from hyper-growth to a clear path to profitability. As part of this shift, we have decided to focus our attention on our key markets and pause our expansion plans.”

Drastic austerity measures

After the situation on the financial market deteriorated dramatically in the spring with the war against Ukraine, Gorillas took radical steps: In the fall, 300 employees at headquarters were laid off, half of the workforce there. The business in Italy, where Gorillas had already opened two dozen warehouses, was closed again and the warehouses cleared. In Spain Gorillas reduced the number of warehouses, in Belgium the startup sold most of the company. In Holland and Germany, Gorillas also continues to close warehouses that have little chance of profitability, such as recently in Dortmund, Gelsenkirchen, Münster and Bochum.

“We completely overestimated us”

Seif El-Sobky worked on the expansion plans at Gorillas. Most recently he was employed there as “Director Purchasing”. He too was dismissed from his post in May. Now he has set up Seyouf Kitchen, a production company for Egyptian street food. Now the Egyptian-born is the first former employee to openly speak out in front of a camera. “We completely overestimated ourselves,” says the 33-year-old today. “At the time we thought we could do whatever we want.” The hasty expansion plans were too risky because Gorillas has not even proven in one country that the business model can work.

Despite everything, founder Sümer has stuck to his visions so far. “We have created a movement, not just a company,” he told his employees at a video meeting in May. Two and a half years after Gorillas was founded, it is still unclear whether there is also a functioning business model behind the vision.

Investor Klöckner says the development of gorillas is similar to the typical phases of young startups, only the dimensions are more extreme. Also with regard to the losses: “That’s normal and that’s the requirement if you want to build something really big. There is nobody today who accuses Jeff Bezos or Mark Zuckerberg of burning hundreds of millions in the beginning.”