Retail startup founders have some tough choices ahead of them in the coming weeks.
As many states are continuing to order non-essential retail stores to stay closed, and shoppers tighten their wallets, startup founders are having to take a look at what costs they can cut to ensure their can keep their business running through the coronavirus outbreak. Many startups are cutting their digital advertising spend. Others are trying to renegotiate leases. Many founders are taking extreme pay cuts themselves, and asking their executive teams to as well. And, ultimately many of them are also having to layoff or furlough staff, or asking them to take unpaid leave as well.
Some startups that have recently raised venture capital money, have a smaller staff, or are selling products that are seeing a surge in demand like sweatpants and hand sanitizer, may be able to weather the storm better than others.
Modern Retail will be tracking the job and salary cuts announced by startups, by date of when they were first reported. The goal is to get a better sense of how the coronavirus outbreak will impact the burgeoning consumer startup sector, as well as how founders are trying to preserve as much of their workforce as they can while also providing some assistance to laid-off workers. Send tips confidentially to me at [email protected]
Universal Standard, an apparel brand focused on inclusive sizing, did make some layoffs, co-founder and creative director Alexandra Waldman told Modern Retail. The company did not disclose exactly how many people were laid off. “We made sure that this was done at a time when we could afford to be the most generous we could as a company while still allowing them to apply for any kind of governmental assistance,” Waldman said, adding that laid off employees were provided with a severance package, as well as some additional stipends.
Vibhu Norby, co-founder and CEO of retail-as-a-service startup b8ta said on Twitter that the company laid off more than half of its corporate team, and furloughed its retail staff, so that they could continue to maintain their health care coverage. b8ta also gives its retail employees equity, which they will retain access to while they are furloughed. The remaining b8ta corporate employees have also taken a pay cut. When reached for comment, Norby said the company was forced to start thinking about cuts when it had to “forcefully close all of its retail locations,” thanks to shelter-in-place orders that started being issued 10 days ago.
Eight Sleep, a high tech mattress brand, laid off roughly 20% of staff, the Information reported. Founded in 2014, Eight Sleep had raised $65 million in total in venture capital funding, including a $40 million round which was announced in November, Forbes reported. At the time, Eight Sleep had planned to double its headcount from 50 to 100, but it is unclear exactly how many employees Eight Sleep had at the time of layoffs. The company did not reply to a request for additional comment from Modern Retail by press time.