NerdWallet, a start-up specializing in personal finance, seems to be on the hot seat. It has just fired 53 people (about 11% of its workforce) because it does not achieve its profitability goals, TechCrunch learned. . As part of the restructuring, NerdWallet's sales and partnership teams will be grouped into different product teams, a spokesman for NerdWallet told TC.
Layoffs occur due to declining NerdWallet's revenue growth at market conditions. The company is missing its 2017 revenue forecast, the company said. NerdWallet's CEO, Tim Chen, sent an email to staff this morning, informing them of layoffs.
"It was an incredibly difficult decision and not a decision we made lightly," Chen wrote. "Two factors motivated this decision – we do not achieve our profitability targets, and some areas of our organization do not work as effectively as they should be."
In his email, Chen noted that as NerdWallet was developing this year, the company hit "some unexpected patches that affected our revenues, which taught us an important lesson in the more conservative budgeting going from there. ;before."
This is the third round of layoffs at NerdWallet this year. In July, NerdWallet fired six people from its marketing team. In April, NerdWallet laid off more than 40 people, representing 8% of its workforce. As part of the changes in April, Henry Hsu, vice president of growth at NerdWallet, left the company and NerdWallet's chief operating officer, Dan Yoo, took an advisory role
In July, Chen told me that NerdWallet was still growing and was financially sound. He also stated that there were no more layoffs planned in the foreseeable future. Clearly, things have changed.
"It's the right decision for NerdWallet, but it's also extremely painful," Mr. Chen said in his e-mail today. "We are doing everything we can to support people during this transition and wish them the best."
NerdWallet raised $ 69 million in funding, with its last round in May 2015 from Institutional Venture Partners.
Here is Chen's full email to the staff:
Hi the nerds,
I have some hard news to share today.
As part of the 2018 planning process, the management team spent a lot of time assessing our needs for next year and decided to make some necessary changes to ensure we a long-term success. Unfortunately, that means we're going to say goodbye to 53 talented Nerds, all of whom have contributed significantly to building NerdWallet. It was an incredibly difficult decision and not a decision we took lightly.
Two factors motivated this decision – we do not achieve our profitability targets, and some areas of our organization do not work as effectively as they should be.
Profitability: Every year since the founding of NerdWallet in 2009, we have exceeded our aggressive income targets. We have become accustomed to exceeding our targets, and this has influenced our judgment on the prudence we needed for our 2017 expenses. Although we experienced growth this year, we experienced unexpected harshness that affected our revenues, which taught us an important lesson in more conservative budgeting going forward.
Operational Efficiency: The focus on growth in recent years has led us to focus less on certain areas of our business that were not functioning effectively. We need to streamline some functions, speed up others, and put in place certain processes and infrastructure to scale them up effectively.
Profitability and operational efficiency are of paramount importance to the success of this venture. They allow us to control our own destiny, invest in initiatives with the greatest impact, think long-term and, above all, serve consumers well.
Today, it is not easy, but I am confident that we will make the right investments in 2018. Our transition to a mobile-focused business is well underway and we know that consumers want and need. These investments complement the brand and the strengths we have worked hard to build, helping us better serve the 100 million people who come to us for help every year and will propel our next phase of growth.
I want to thank everyone for their hard work, dedication and commitment to our business. As difficult as they are, these changes bring us to a better operating model and prepare us for long-term success. It's the right decision for NerdWallet, but it's also extremely painful. We are doing everything we can to support people during this transition and wish them the very best.
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