Exit This Way
A tipster contacted Betabeat to let us know that Ben Fischman, the founder and longtime CEO of lifestyle and fashion ecommerce site Rue La La, had stepped down from his role. A press release obtained by Betabeat confirms the news: Mr. Fischman will be replaced by Steve Davis, Rue La La’s president.
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.
Seed Stage Slaughter
Earlier today, the Boston Business Journal broke the news that Rue La La, private shopping and flash sales site, was going to lay off nearly half of its 200-person staff and had already let go of 30 people today. Betabeat heard that across the country, local teams have closed their doors. Now the Boston Globe, has confirmation from the company that it is cutting 60 people from a staff of 550 people.
Rue La La, a Boston-based company founded in 2008, is operated by a parent company called Retail Convergence Inc. The Business Journal reported that Retail Convergence plans to close down SmartBargains.com, a separate discount site, and merge it into Rue La La. “They [Rue La La] certainly have a better brand than Smartbargains,” noted Fashism founder Brooke Mooreland when reached for comment.
The company told the Globe, that it plans on “outsourcing our sales force and consolidating SmartBargains.com into Rue La La…These moves unfortunately resulted in the elimination of some staff positions.”