The CEO says that they are letting go of about 500 people to “curtail our cash burn.”
According to a statement from the company and a report in The Boston Globe, Starry, an ISP that brings internet to your home without cables but with wireless antennas, is letting go of about half of its employees, or just over 500 people. The company is also telling investors that they can no longer count on the goals it set for this year. This probably doesn’t come as a surprise, since its earnings report this summer showed that it had around $100 million in cash and had lost almost $90 million since the beginning of 2022.
Starry says it will also stop hiring and spending money on things that aren’t essential. This is to “slow down our cash burn while we look into strategic options,” as the company’s CEO, Chet Kanojia, said in a statement included in the press release.
This summer, the company had only about $100 million in cash, and it was going quickly.
One way it is trying to cut costs is by cutting back on its plans to grow. In August, Starry said it was “strongly positioned to continue on its growth trajectory.” It now says it wants to focus on areas where it has “already invested capital,” i.e., areas where its network can already reach. The company didn’t directly answer The Verge’s question about whether that meant it would stop adding new locations and buildings altogether. According to Light Reading, Starry said last week that it wouldn’t be completing the bids it won through the FCC’s Rural Digital Opportunity Fund. Those bids were worth $269 million.
The company has offices in Boston, Denver, Los Angeles, New York City, Washington, DC, and Columbus, Ohio. Its Thursday report says it has more than 91,000 “customer relationships,” which it uses to refer to both individual users and users who are part of bulk billing agreements. On the other hand, it says its service can reach almost 6 million homes.
Starry came out in 2016, promising to offer gigabit internet through wireless networks instead of the more common DSL, cable, or fiber infrastructure. It works by sending data from a big antenna to a bunch of smaller antennas spread out across a city. These antennas then connect to traditional routers. Part of its business plan is to work with building owners so that apartment management companies can offer the service to their tenants.
The Globe says that the company went public earlier this year through a SPAC, which is a merger with a shell company that has already gone public. This allows the company to skip the traditional IPO phase and raise about $176 million. Since then, its stock has plummeted. In June, it was worth around $10.61, but now it’s only worth about $1.15. This makes it hard for Starry to get the money it needs, as its own press release says. We probably won’t know how much money it still has in the bank until November 2, when the company releases its Q3 results.
SPACs explained
Starry is not the only company that is letting people go as the economy gets worse.
