Buy Together Die Together
Betabeat has learned that Gilt Groupe is in the final stages of acquiring the troubled daily deal site BuyWithMe, which laid off more than half its staff last week to sweeten the deal for potential buyers. The sale is a win for Matrix Partners, who has invested in both firms, and been backing BuyWithMe across three rounds and $30 million in venture funding.
BuyWithMe will officially be part of Gilt starting Nov. 1. The remaining sales staff who were left after last week’s layoffs will be let go with one weeks pay. Gilt gets a lean company consisting largely of technology, a few executives, a large email list of customers and merchants partners in cities around the country.
Betabeat has been covering the layoffs at BuyWithMe since Wednesday, when more than half the staff, at least 100 people, were laid off without warning or severance. There has been almost no word from the company or its management. As a result, we’ve had to rely mostly on anonymous sources who know bits and pieces. But over the last 24 hours, we’ve been able to put together some big pieces of the puzzle.
The statement released yesterday by CEO James Crowley, that the company was reorganizing to best serve its clients and customers, was disingenuous at best. Numerous sources Betabeat spoke with confirmed that BuyWithMe is looking to be acquired by a larger player in the daily deal space, and has been for some time now. The layoffs were intended to make it a more attractive purchase.
How did BuyWithMe end up in such dire straights? Betabeat has heard from a source that not only did the company purchase six smaller startups in the last six months, burning through some of its capital, but it also took out a $10 million debt round from its backers that was never disclosed to the press. That goes a long way towards explaining how the company got to where it is today.
BuyWithMe wasn’t the only local company hemorrhaging jobs this week. Betabeat has learned that TheLadders laid off about 30 employees this week, across all departments.
“It was like Black Wednesday,” said the source of the overlapping job losses. However, where BuyWithMe let go of 55 percent of its staff, TheLadders downsizing was less severe, with seven percent of its 420 employees, according to our source who was familiar with the situation.
Until a month ago, TheLadders focused exclusively on the $100,000+ jobs market–its key differentiator in the market. The source said the layoffs were related to flat revenue growth at about $80 million, adding that the company’s two biggest expenses were people and marketing costs. “They already cut marketing significantly,” said the source, who called the job losses “cost cutting to reforecast budget due to lower than expected revenue growth.”