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More tech layoffs hit Seattle area as mobile marketplace OfferUp cuts 19% of workforce

(OfferUp Images)

Mobile market operator based in Bellevue, Washington OfferUp is laying off around 19% of its staff, joining a growing list of tech companies cutting costs in a faltering economy.

“We have grown our workforce rapidly over the past few years – at a rate that has outpaced revenue growth,” said the CEO of OfferUp. Todd Dunlap wrote in an email to employees on Tuesday.

OfferUp did not provide details on the total workforce. The company has just under 500 employees listed on LinkedIn.

Almost 800 technology companies laid off workers in 2022, including many with a presence in the Pacific Northwest. Amazon is would have laying off 10,000 jobs in business and technology; Seattle-area startups such as Convoy and Flyhomes also recently announced cuts.

OfferUp still had “several years of track” before deciding to cut staff, Dunlap wrote in the memo. But OfferUp is not meeting its revenue growth forecast for 2022 and management has concluded that “our current cost structure prevents us from achieving our objectives”.

Dunlap, a former Microsoft and Booking.com executive, took over as CEO of OfferUp last year. He replaced the founder Nick Huzarwho remains with the company as a member of the board of directors.

Founded in 2011, OfferUp competes with Craigslist, eBay, Facebook, and other marketplaces where users buy and sell goods. The company has 56 million buyers and sellers on its platform and is currently ranked #6 on the GeekWire 200our index of Pacific Northwest startups.

OfferUp raised $120 million in March 2020 and acquired rival Letgo. The company is part of an elite group of Seattle-area unicorns with a valuation of over $1 billion.

Earlier this year OfferUp jobs added with the launch of OfferUp Jobs in the company’s mobile app.

Read Dunlap’s full memo below:

OfferUp Team:

Today is a difficult day for OfferUp and its employees, as I have just met with some of our friends and colleagues to let them know that they are leaving OfferUp. This was a difficult decision and it will have significant impacts on those leaving, those remaining and the Company, so I wanted to take a few minutes to share with you the reasons for the decision and why I believe it is necessary for success. term of OfferUp.

Before talking about the future, I would like to salute our departing colleagues. They are valuable contributors to OfferUp who have had the misfortune to fill positions that are not required for our 2023 plans. They will be missed and I encourage you to contact them. I want you to know that we are doing everything we can to facilitate this transition. For those leaving today, we offer:

  • Severance pay – We wanted our colleagues to be paid during the holidays and at the start of the new year, so that all departing employees receive at least 8 weeks of salary.
  • Healthcare – To reduce the burden of healthcare costs, we will cover the employee share of COBRA until January 2023.
  • Outplacement Services – To help our departing colleagues transition into new roles, they will all have access to career services through a company specializing in career transition and placement services.
  • Stock Options – To give everyone a better opportunity to share in our future success, we are asking the Board to approve an extension to the expiration of vested stock options of departing employees the standard period from 3 months to 12 months.
  • Laptops – In an effort to empower people to find their next job, we’re allowing everyone to keep their OfferUp-issued laptops for free.

We wish our colleagues good luck and hope to see them again in the future. Please join me in thanking them for their contributions to OfferUp.

Now I would like to talk about how we arrived at this decision.

Many other companies at our stage are now laying off employees and cutting costs because they risk closing their doors if they don’t. Fortunately, we are not in that position and had several years of track before today’s changes. Having a stronger financial position is an advantage, but it can also allow leadership to avoid the hard choices that are necessary.

We have grown our workforce rapidly over the past few years, outpacing revenue growth. I had hoped that our 2022 operating plan would generate enough revenue growth to allow us to grow within our current cost structure. However, towards the middle of the year, it became clear that we were going to miss our forecast for revenue growth. The management team and the board have had a number of strategic discussions, both internally and with advisors, about how to proceed. These conversations always ended with the same conclusion: our current cost structure prevents us from achieving our objectives.

We’ve built a large, active market that serves tens of millions of users every month, but we haven’t yet reached a revenue scale that allows us to thrive without continued growth. At our stage, we must demonstrate at least 2 or 3 of the following factors:

  • Significant user growth,
  • Significant growth in turnover,
  • Profitability, and
  • Expansion of our market opportunity that will allow us to sustain growth and profitability in the future.

Our cost structure has not allowed us to make as much progress as we should have on these factors. For example, to reduce expenses, we have mainly relied on organic growth in recent years. We spent a fraction of what other marketplaces spend on marketing, missing the opportunity to raise awareness of OfferUp. Successful marketing tests earlier this year and increased revenue per user give us a signal that we can spend more to bring users to our platform in a way that will be sustainable and profitable. However, this investment was not possible with our cost structure. There are other ways we hope to do more by shifting our spending that I’ll share as we discuss over the coming weeks.

I’m excited about the 2023 plan we just previewed with the Board, and I look forward to sharing the details with you all in the weeks to come. This is both an achievable and exciting plan, and it is only possible because of the additional capital available as a result of today’s decision. With a leaner, more agile business in 2023, we intend to:

  • Develop features for our advertising products that will allow us to better monetize our marketplace activity – ideally in a way that improves the advertiser and user experience.
  • Continue to expand our offerings into adjacent spaces, including building on the early success of the job market we launched this year. We have seen some very strong signals in this effort and believe this can be a big part of OfferUp’s future and open the door to further expansion opportunities.
  • Significantly increase our marketing investments for user growth to drive additional users, revenue and profit.
  • Offer additional tools and services to help the many sellers on our platform who are already successfully using OfferUp to enable their own business – whether local merchant, regional retail chain or someone earning extra money as a “side hustler”.
  • Continue to invest in the trust and security initiatives that have made OfferUp the most secure and trusted local marketplace.
  • Become profitable EBITDA by Q4 2023.

Our 2023 plan is very focused on our best opportunities. If we carry out these plans, we will have many more options than we have today. It is important that everyone who continues with OfferUp has the opportunity to benefit from these increased options. So I’m going to share some plans we have to share the success of the business with each of you.

The leadership team will host a public discussion and listening session this Friday. More details on where to submit your questions for Town Hall will come later today.

I would like to conclude by thanking you for your continued support of OfferUp and assuring you that I will do my utmost to ensure that this support is appropriately rewarded. For those of you who don’t have urgent tasks today, feel free to take the rest of the day to deal with today’s news.

Todd

Have you lost a job? Need help finding work? GeekWire’s new recruiting service, GeekWork, can help. Contact GeekWork Managing Director Jason Greer to learn more about how we connect technical talent to amazing job opportunities. Contact: [email protected]



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