Joe Einhorn’s e-commerce shop Fancy, which was rumoured to be in ~$US1 billion acquisition talks with eBay in September, has laid off an estimated one-third of its staff, multiple sources tell Business Insider.
A few layoffs were scattered throughout the summer, two sources say, with the largest round occurring on or about September 30. There, 10-15 staffers across different departments were handed paperwork by the company’s lawyer, Andrew Tuch. COO Michael Silverman only said a sentence or two, then dismissed the group.
“Just fired 16 employees in one day with no warning and no explanation,” an anonymous reviewer wrote on Glassdoor in October. A number of Glassdoor reviewers allege that the company has a tendency to fire employees just before their stock options vest.
Two former Fancy employees estimate that one-third of the company was cut that day, scaling a team of 45 US employees last year down to about 15 or 20 now. Another person who confirmed the layoffs thinks the one-third estimate is too high and estimates the the company had about 80 employees world-wide during its prime.
Two executives have departed in recent months: Creative Director Jake Frey and General Merchandising Director Lee Assoulin. One source says the layoffs struck shortly after a board meeting. Roles cut include buyers, sales processors and business development.
The reason for the layoffs vary depending on whom you ask. Those who are disgruntled feel the company spent too much cash and is in desperate need of a lifeboat. “If I had to speculate, [the layoffs occurred] because Fancy isn’t making enough money to support the business and pay salaries, and the investment money from last year (about $US60 million) is pretty much all gone,” one person says.
A SEC filing showed that executives from Fancy took about $US20 million off the table during the company’s last fundraise. A source familiar with the company’s thinking admits that the filing looked bad, but says the money was distributed among a dozen early supporters of the company.
“That money was distributed between 10-12 people who were part of the beginning fundraising,” this person says. “It wasn’t getting anyone super rich.” This person says the company is currently raising a new round, but wasn’t sure of the valuation.
In September, Bloomberg reported that Fancy was in talks to get acquired by eBay for ~ $US1 billion. One former staffer guessed layoffs might have had something to do with that.
While Fancy did meet with eBay’s Marketplaces Business Unit President, Devin Wenig, a source familiar with the talks says no buyout price was ever discussed and was sceptical acquisition talks with eBay had ever occurred. This person says it was a typical business meeting, similar to one Fancy had with Twitter, which resulted in a Twitter Commerce partnership.
Fancy recently pivoted its business from being a first-party merchant (storing inventory and shipping it to customers) to a third party merchant, where other businesses promote, sell and ship their own items to Fancy’s users.
“What they were doing with first-party buying was — well, it was working in that it was making revenue and blah, blah, blah — but it wasn’t getting the full social shopping experience, where a user could look at whatever they wanted and get it in the same day,” a source familiar with the company’s thinking says. “When things started getting slow, Fancy had to pivot and make this third-party storefront. It’s an incredible tool. Imagine going on Shopify and buying everyone on there all in one place.”
The pivot, this person says, is what forced the company to downsize.
“It is clear as day what was happening with Fancy,” says the source. “We went from first party to third party merchants, so there was a group of people in charge of that. Fancy tried to repurpose as many of those people into other roles as possible but at the end of the day, it’s a startup and when it pivots it pivots…[Layoffs are] always unfortunate but at the end of the day, Fancy is a startup that is still young and agile.”
Fancy COO Michael Silverman and CEO Joe Einhorn did not return requests for comment.