As the coronavirus pandemic continues, throwing countries into lockdown and recession, two of the hardest-hit sectors have been travel and events. And startups operating in the space that have recently raised significant funding aren’t immune to the crisis.
Pollen, the U.K.-based influencer marketplace for travel and events that closed $ 60 million in funding in October, has axed about 31% of its staff, nearly 70 people, across the US and Canada, TechCrunch has learned. In addition, multiple sources, who spoke on the condition of anonymity, say that around three dozen staff in the U.K. have been put on furlough and that up to 10 U.K. contractors have been let go.
Founded in 2014 and previously called Verve, Pollen operates in the influencer or “word-of-mouth” marketing space. The marketplace lets friends or “members” discover and book travel, events and other experiences — and in turn helps promoters use word-of-mouth recommendations to sell tickets. Pollen’s backers include Northzone, Sienna Capital, Draper Esprit, Backed and Kindred.
Confirming the North American job cuts, Pollen co-founder and CEO Callum Negus-Fancey (pictured right) told TechCrunch that 24 team members in Las Vegas have been axed, 29 in LA, 6 in Canada, and 10 that worked remote throughout U.S. That’s a cull of approximately 31% of Pollen’s 216 staff overall.
He also said that around 34 U.K. employees have been furloughed, and confirmed that the furloughed staff in question are being paid 80% of their salary up to £2,500 (via the U.K. taxpayer), with no top up from Pollen.
We also understand from sources that U.S. staff were provided with no additional severance, and that some staff were given as little as one week’s notice. Negus-Fancey doesn’t entirely dispute this, telling TechCrunch that “U.S. employees were given 1 week severance, plus 1 week for each additional year they [were] with the company” rounded up to the nearest 12 months.
The Pollen CEO also confirmed that U.S. employees were not given any paid additional medical benefits beyond the month they were served notice. However, each staff member laid off has the option to continue with COBRA coverage at their own cost.
Meanwhile, back in the U.K., a picture of confusion has emerged with regards to whether or not all U.K. staff put on furlough under the Coronavirus Job Retention Scheme will have jobs to return to.
Internal communication seen by TechCrunch shows Pollen management in late March discussing plans to make a group of U.K. staff redundant and then ask them to go on furlough in the interim anyway i.e. in a number of instances there wouldn’t be a job being retained.
Some days later, a series of group Zoom calls, rather than one-to-ones, were held between managers and teams affected. Accounts of exactly what was discussed on those calls vary, although some people present said attendees were “shocked,” with one attendee describing the atmosphere as “uncomfortable”.
Emails subsequently sent from team managers to a number of individual team members appear to offer confirmation that they no longer had a role at the company but would be offered furlough from 1st of April onwards. Those staff were also locked out of Pollen’s systems with immediate effect (Slack, emails etc.), and in some instances offered “next steps” coaching and help with job search.
Separate emails sent to affected staff by Pollen’s General Counsel sought “deemed consent” in relation to being put on furlough, giving them just 24 hours to raise any objections.
Asked about internal discussions with regards to redundancies and staff being told by their managers that they were being let go, Negus-Fancey disputes that U.K. staff put on furlough no longer have jobs to return to. In a statement provided to TechCrunch he said “there is a possibility for every employee who has been put on furlough to have their job back”.
Adds the Pollen CEO:
We believed it was appropriate to tell some employees it was unlikely they would get their job back – this seemed like the humane and appropriate thing to do. There was so much uncertainty at the time and we were processing/managing unknown territory and a lot of new information. We had no way of knowing the answer to the question and did not want to mislead anyone or give them a false sense of hope. This made sure that affected employees fully understood the situation and could plan accordingly. Some have looked for new permanent roles and successfully found a new role and we are happy for them. Our number one goal was to put our team first and support them during this time.
The scheme has been very successful, many employees who would have otherwise been made redundant will now keep their job. The extension of the scheme has further increased the number of jobs which will be saved at Pollen.
Furthermore, Negus-Fancey says “FAQs and other resources” were produced to help managers with furlough conversations, adding that if any management “miscommunicated” to U.K. staff that they were being let go, then this “would have been because of a misunderstanding”.
One question the Pollen founder wasn’t able to answer immediately was why some furloughed employees had access to the company’s systems revoked, while others did not, if they were all expected to return to work once the furlough period ended.
Initially, Negus-Fancey suggested it was so that furloughed staff wouldn’t be tempted to work (under the Coronavirus Job Retention Scheme, working for the company that put you on furlough is prohibited).
Later, after clarifying this with members of his U.K. team, he emailed to say that “employees who were furloughed who had the highest possibility of coming back (top of the list if jobs became available) were not locked out of some systems e.g. social tools. On top of this, anyone who asked not to be locked out, wasn’t locked out”.
Travel and events at a standstill
The upheaval at Pollen is just one example of the challenges that travel and events-focused tech companies have faced in recent weeks. With consumers virtually unable to travel anywhere or converge for any in-person group events, companies that have built business models around such leisure activities have found themselves scrambling to reduce their burn rate or having to more fundamentally change how they operate.
Airbnb is probably the most high-profile example. The popular peer-to-peer accommodation and experiences platform has seen a halt to much of its business in the last two months, leading it to lay off 1,900 employees (25% of its global workforce) and rethink its product offerings. It’s also seen its valuation nearly halved to $ 18 billion according to reports. Another example is TripAdvisor, which announced it was laying off 900 people, or 25% of staff.
In the case of event-based companies (events being a key part of Pollen’s business model), there is an argument to be made that even before the coronavirus took hold, it was a challenging business model for all but the most focused and scaled efforts.
Fyre Festival, with its own focus on exclusivity and influencer marketing, was an infamous flop; the U.K.’s Yplan eventually sold at a major loss, and Eventbrite, which is now public, has seen its stock drop drastically since mid-February, just as COVID-19 really started to take its grip on the globe. It’s not all doom and gloom — pre-coronavirus crisis, Get Your Guide had actually been scaling nicely — but it’s a grim situation.
Turning back to Pollen, the company says that even with the coronavirus crisis, it has been bringing in revenue by shifting to selling experiences for 2021. Asked about current burn-rate, post-layoffs, Negus-Fancey said Pollen does not disclose its cash position publicly. “However, we’re comfortable from a financial perspective,” he added.
Another startup has turned to downsizing and fund raising to help weather the uncertainty around the economy amid the global coronavirus health pandemic. People.ai, a predictive sales startup backed by Andreessen Horowitz, Iconic, Lightspeed and other investors and last year valued at around $ 500 million, has laid off around 30 people, working out to about 18% of staff, TechCrunch has learned and confirmed.
Alongside that, the company has quietly raised a debt round in the “tens of millions of dollars” to make strategic investments in new products and potentially other moves.
Oleg Rogynskyy, the founder and CEO, said the layoffs were made not because business has slowed down, but to help the company shore up for whatever may lie ahead.
“We still have several years of runway with what we’ve raised,” he noted (it has raised just under $ 100 million in equity to date). “But no one knows the length of the downturn, so we wanted to make sure we could sustain the business through it.”
Specifically, the company is reducing its international footprint — big European customers that it already has on its books will now be handled from its U.S. offices rather than local outposts — and it is narrowing its scope to focus more on the core verticals that make up the majority of its current customer base.
He gave as an example the financial sector. “We create huge value for financial services industry but have moved the functionality for them out to next year so that we can focus on our currently served industries,” he said.
People.ai’s software tracks the full scope of communication touch points between sales teams and customers, supposedly negating the tedious manual process of activity logging for SDRs. The company’s machine learning tech is also meant to generate the average best way to close a deal — educating customer success teams about where salespeople may be deviating from a proven strategy.
People.ai is one of a number of well-funded tech startups that is making hard choices on business strategy, costs and staffing in the current climate.
Layoffs.fyi, which has been tallying those losing their jobs in the tech industry in the wake of the coronavirus (it’s based primarily on public reports with a view to providing lists of people for hire), says that as of today, there have been nearly 25,000 people laid off from 258 tech startups and other companies. With companies like Opendoor laying off some 600 people earlier this week, the numbers are ratcheting up quickly: just seven days ago, the number was just over 16,000.
In that context, People.ai cutting 30 may be a smaller increment in the bigger picture (even if for the individuals impacted, it’s just as harsh of an outcome). But it also underscores one of the key business themes of the moment.
Some businesses are getting directly hit by the pandemic — for example, house sales and transportation have all but halted, leaving companies in those categories scrambling to figure out how to get through the coming weeks and months and prepare for a potentially long haul of life and consumer and business behavior not looking like it did before January.
But other businesses, like People.ai, which provides predictive sales tools to help salespeople do their jobs better, is (for now at least) falling into that category of IT still in demand, perhaps even more than ever in a shrinking economy. In People.ai’s case, software to help salespeople have better sales conversations and ultimately conversions at a time when many customers might not be as quick to buy things is an idea that sells right now (so to speak).
Rogynskyy noted that more than 90% of customers that are up for renewal this quarter have either renewed or expanded their contracts, and it has been adding new large customers in recent weeks and months.
The company has also just closed a round of debt funding in the “tens of millions” of dollars to use for strategic investments.
It’s not disclosing the lender right now, but it opted for debt in part because it still has most of its most recent round — $ 60 million raised in May 2019 led by Iconic — in the bank. Although investors would have been willing to invest in another equity round, given that the company is in a healthy position right now, Rogynskyy said he preferred the debt option to have the money without the dilution that equity rounds bring.
The money will be used for strategic purposes and considering how to develop the product in the current climate. For example, with most people now working from home, and that looking to be a new kind of “normal” in office life (if not all the time, at least more of the time), that presents a new opportunity to develop products tailored for these remote workers.
There have been some M&A moves in tech in the last couple of weeks, and from what we understand People.ai has been approached as well as a possible buyer, target and partner. All of that for now is not something the company is considering, Rogynskyy said. “We’re focused on our own future growth and health and making sure we are here for a long time.”
Contractors will reportedly receive no less than two weeks’ pay after receiving notice from their temp agencies.
Airbnb will also reportedly delay hiring undergraduate students until next year. TechCrunch has since heard from an incoming intern that he was notified yesterday and that he’s now scrambling to find a new internship.
Airbnb is not the only tech company to cancel internships amid the COVID-19 pandemic. In March, Yelp canceled its summer internship and TC’s Natasha Mascarenhas has since learned StubHub, Glassdoor, Funding Circle and Checkr have also canceled their respective internships.
These personnel changes come just one day after Airbnb secured a $ 1 billion loan. Earlier this month, Airbnb raised an additional $ 1 billion in debt and equity.
TechCrunch has reached out to Airbnb and will update this story if we hear back.
Additional reporting by Natasha Mascarenhas.
VSCO, the popular photo editing app and Instagram rival, is the latest company to undergo layoffs attributed to the COVID-19 crisis, which has put a strain on venture-backed startups. According to a report from NPR, which was then confirmed by VSCO co-founder and CEO Joel Flory on LinkedIn, the company is laying off around 30% of staff, or 45 of its employees.
Though Flory didn’t reference the COVID-19 outbreak by name, his post described the rapid change to the economy which necessitated the layoffs.
“2020 was staged to be a year where we would continue to forward invest into our business,” Flory wrote. “Overnight our environment changed. We realized that we would need to shift towards running a self-sustaining business.”
In other words, VSCO is anticipating a future where venture capital is less readily available and is making the shift toward running a business that’s no longer reliant on outside capital or funding in order to operate. By laying off a portion of staff, VSCO believes it will be able to sustain its business for many years.
To date, VSCO has raised $ 90 million in outside funding, and sees its app used by more than 20 million active users per week. However, a smaller portion of those users are customers who pay for a VSCO Membership that offers an expanded array of features, tools, presets and other content. VSCO confirmed to TechCrunch in February 2020 that it had around 2+ million paid subscribers.
Late last year, VSCO had said it was on pace to surpass 4 million paid subscribers by 2020 and was approaching $ 80 million in annual revenue. However, these projections were tied to VSCO’s forward investment this year, and the shift towards becoming self-sustainable will impact these numbers, the company says.
PitchBook data valued the business at $ 550 million, NPR also reported — a number that’s made the rounds before, as well.
In 2020, VSCO has rolled out several features designed to better support video editing. It gave creators the ability to publish their video edits to the VSCO feed, and last month, for example, launched a more powerful and feature-rich video editing tool called Montage. The latter was meant to grow VSCO’s paid subscriber base, as it requires users to pay in order to save and publish their finished videos.
VSCO’s profile has also been raised beyond its core user base in recent months, after it became associated with a Gen Z meme that circulated on sites like TikTok.
Though perhaps not the marketing the company would have desired, the VSCO girl meme became a way to mock a certain type of girl — one who sports a messy bun, baggy shirts and scrunchies and carries around eco-conscious items like Hydro Flasks or metal straws. VSCO’s app for making your photos look good became associated with this persona, as it’s often used to filter and edit images in order to give them an aesthetic that teenage girls (VSCO girls) supposedly desired.
As for the layoffs, VSCO says its former employees will receive a minimum of seven weeks of severance pay, and a minimum of two months of COBRA health coverage. In terms of equity, VSCO is pro-rating stock option vesting and extending equity exercise periods post-term, it also notes.
Flory’s LinkedIn post additionally offered a way for those interested in hiring the laid-off VSCO employees to reach the company. He said the email@example.com email address could be used to make inquires about hiring its talent. The company will also be working to provide other job placement resources and support, it says.
“I am deeply saddened to let some incredible people go and am so grateful for everything they’ve done for VSCO and our community,” Flory wrote. “Our mission and vision remain unchanged. Our ability to provide a place for creative expression, inspiration and connection is even more important than ever right now,” he added.