Lot 18, the troubled New York-based wine sales marketplace, has booted another batch of staffers. AllThingsD broke the news that the company laid off 25 employees this morning, cutting approximately 35 percent of its staff. This brings the total employees to 46, about half as many as it boasted just a year ago.
Yesterday, Lot18–the members-only site for flash sales of wine–announced in a statement distributed to wine industry publications that it will permanently shutter its U.K. operations, effective at the end of the week. That includes laying off six full-time employees.
Apparently, British oenophiles are hard customers to come by these days.
The statement explains the closing: “The supermarkets’ stranglehold on the UK market proved too powerful for us to compete with and we have not experienced the anticipated growth rate.”
For those keeping score at home, this is not the first time Lot18 has dropped the axe on a significant number of employees. Back in January, the luxe startup let go of 15 percent of its staff–its first stumble following an explosive expansion. At the time, Lot18 CEO Philip James told Betabeat, “A lot of this is a natural part of the way a business grows and evolves.” Think he’s currently eating–or perhaps swigging–his words?
Take the Money and Run
New York-based Lot18 may have gotten ahead of itself there for a bit. The members-only flash sales site for wine, which raised a total of $44.5 million from investors, is down to 70 employees after a reorganization that was finalized internally today. The company is cutting 11 employees and eliminating the food and travel verticals that were launched in June and October, respectively.
While customers buying wine were also often interested in cheese and chocolate, Lot18 realized that the verticals didn’t overlap much on the back end, and “just the distraction involved in building five things at once,” was taxing for the company, founder and president Philip James told Betabeat.
“A startup has limited resources. We almost raised $50 million, but reinventing a multi-billion dollar industry and hopefully having an impact on the industry for the next 50 or 100 years takes a lot of focus,” he said. “The business lines that we are shutting down in themselves are probably really good businesses. But as a startup, it’s better to do one thing well, be a laser, do one thing better than anybody else.”
He added, “One of the perils of having a lot of money is, it’s easy to launch a lot of things.”
the startup rundown
On Thursday night, Philip James, the oenophilic founder and CEO of the well-funded wine and artisanal sales startup Lot18, was confident, bordering on blustery. The wine market is bigger than the entertainment market, Mr. James told an audience that had gathered at the Seamless office for an Internet Week panel, adding that Lot18 rejects 93 percent of vendors who apply to sell there.
Some of that braggadocio came through last week in a company-wide meeting, where Mr. James announced an offer to buy out some of his own employees.
If you’re unhappy at Lot18, he told employees, I will pay you a month’s salary to leave now.
six seven people have accepted the buyout.
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Around 4 p.m. on a recent Thursday, all but 14 of the employees of the members-only luxury e-commerce site Lot18 got an email asking them to report to the new conference room for an urgent meeting. The remaining employees, including the vice president of operations and director of operations, received an almost-identical note but were asked to report to the “alt” conference room instead. They were told they were being let go, asked to leave the building immediately and instructed to return on Saturday to clean out their desks.
The survivors were shocked by the layoffs, which came a day earlier than planned due to inquiries by Betabeat. Lot18, which started with private sales for wine before moving into full-price wine and epicurean deals, has raised a total of $44.5 million from investors—its latest round spearheaded in November by the highly regarded Accel Partners. Lot18 also moved into a new office over the summer that features a tasting room, mounted LCD screens that pop up a buyer’s location on a map every time Lot18 sells a bottle and a permanent DJ booth. In its one-year existence, Lot18 launched several new verticals, bought Paris-based e-commerce site Vinobest, and announced a foray into Europe.
To industry insiders, the scenario sounded familiar. Mass flash sales—deep discounts that expire usually after one to three days—had been touted as the first real innovation in e-commerce in years, and start-ups that applied the flash-sales phenomenon to the luxury market had investors salivating. But the former venture capital darlings suddenly seemed to be hemorrhaging employees. Earlier this month, another site, Boston-based Rue La La, slashed 60 of its 550 employees after months of growth.
Suddenly, the question is being asked: Could flash sales for the well-to-do wind up being more of a marketing gimmick than a business model?
News of layoffs at flash fashion startup Rue La La leaked last week: 60 people of the company’s 550-strong workforce had to be made redundant. But an SEC filing unearthed by TechCrunch today shows an odd contradiction: Rue La La just raised $22 million. UPDATE: The filing is not new money, Rue La La says, but rather a valuation filed as part of Rue La La’s equity plan, putting a dollar figure on equity and options that had already been issued.
Lot18, the membership-based luxury item site that raised a whopping $45 million over the last year, just laid off 14 people, or 15 percent of the staff.
“A lot of this is a natural part of the way a business grows and evolves,” Lot18 founder Philip James told Betabeat. “Some positions aren’t needed. At the same time, we’re hiring heavily in areas that do make sense for us. This puts us back to October’s level, so just a couple months ago.”
The company was planning to slash a significant part of its workforce tomorrow morning, followed by a company-wide meeting. After Betabeat began inquiring, the company confirmed the layoffs and pushed them up to this afternoon.
Oh You Fancy Huh?
Lot18, the e-commerce startup focused on wine and fancy foodie items, has raised a whopping $45 million during its first year of existence. With backing from big names like Accel, it recently acquired Paris based Vinobest, and says it plans to conquer the old world wine market, a business twice as large as its U.S. cousin.
Lot18, the New York-based, members-only deal site for oenophiles and foodies, announced a $30 million round of funding this morning, about double what was raised in its seed, A, B and B-angel rounds. Accel Partners lead the round, which included existing investors New Enterprise Associates and FirstMark Capital. “The funds will support continued growth, as well as further technological and product development, particularly the expansion of Lot18 Gourmet and Experiences, the company’s food and travel verticals, respectively,” according to a news release.