Bellevue, Wash.-based mobile marketplace operator OfferUp is laying off about 19% of its staff, joining a growing list of tech companies slashing costs amid a shaky economy.
“We grew headcount rapidly over the past few years — at a rate that outpaced revenue growth,” OfferUp CEO Todd Dunlap wrote in an email to employees Tuesday.
OfferUp did not provide details on total headcount. The company has just shy of 500 employees listed on LinkedIn.
Nearly 800 tech companies have laid off workers in 2022, including many with a presence in the Pacific Northwest. Amazon is reportedly laying off 10,000 corporate and tech jobs; Seattle-area startups such as Convoy and Flyhomes also recently announced cuts.
OfferUp still had “multiple years of runway” before deciding to cut staff, Dunlap wrote in the memo. But OfferUp is not hitting its revenue growth projections for 2022 and leadership concluded that “our current cost structure is preventing us from achieving our goals.”
Dunlap, a former leader at Microsoft and Booking.com, took the CEO reins at OfferUp last year. He replaced founder Nick Huzar, who remains at the company as a board director.
Founded in 2011, OfferUp competes against Craigslist, eBay, Facebook and other marketplaces where users buy and sell goods. The company has 56 million buyers and sellers on its platform and is currently ranked No. 6 on the Startup 200, our index of Pacific Northwest startups.
OfferUp raised $120 million in March 2020 and acquired rival Letgo. The company is among an elite group of Seattle-area unicorns with a valuation of more than $1 billion.
Earlier this year OfferUp added job listings with the launch of OfferUp Jobs in the company’s mobile app.
Read Dunlap’s full memo below:
Today is a difficult day for OfferUp and its employees, as I just met with some of our friends and colleagues to let them know that they are leaving OfferUp. This was a tough decision and it will have significant impacts on the people who are leaving, those who are staying, and the Company, so I wanted to take a few minutes to share with you the reasons for the decision and why I think it is necessary for OfferUp’s long-term success.
Before I talk about the future, I want to acknowledge our colleagues who are leaving. They are valued contributors to OfferUp who had the misfortune to be in roles that are not required for our 2023 plans. We will miss them and I encourage you to reach out to them. I want you to know that we are doing everything we can to ease this transition. For those who are leaving today, we are offering:
- Severance – We wanted our colleagues to have pay through the holidays and into the new year, so all departing employees will receive at least 8 weeks of pay.
- Healthcare – To lessen the burden of healthcare costs, we will cover the employee portion of COBRA through January 2023.
- Outplacement Services – To help our departing colleagues transition into new roles, all of them will have access to career services through a company that specializes in career transition and job placement services.
- Stock Options – To give everyone a better opportunity to share in our future success, we are asking the Board to approve an extension of the expiration of departing employees’ vested stock options from the standard 3 months to 12 months.
- Laptops – In an effort to empower people to find their next job, we are allowing everyone to keep their OfferUp-issued computers at no cost.
We wish our colleagues well and we hope to cross paths with them again in the future. Please join me in thanking them for their contributions to OfferUp.
Now I’d like to talk about how we came to this decision.
Many other companies at our stage are currently laying off employees and cutting costs because they face the possibility of going out of business if they don’t. Fortunately, we are not in that position and had multiple years of runway before the changes today. Having a stronger financial position is a benefit, but it can also allow leadership to avoid hard choices that are necessary.
We grew headcount rapidly over the past few years – at a rate that outpaced revenue growth. I had hoped that our 2022 operating plan would generate enough revenue growth to allow us to grow into our current cost structure. However, by mid-year, it became clear that we would miss our revenue growth projections. The management team and the Board had a number of strategic discussions, both internally and with advisors, about how to proceed. These conversations always ended with the same conclusion – our current cost structure is preventing us from achieving our goals.
We have built a large and active marketplace that serves tens of millions of users every month, but we’re not yet at a revenue scale that allows us to thrive without continued growth. At our stage, we need to demonstrate at least 2 or 3 of the following factors:
- Significant user growth,
- Significant revenue growth,
- Profitability, and
- Expansion of our market opportunity that will allow us to sustain growth and profitability well into the future.
Our cost structure has not allowed us to make as much progress on these factors as we should have. As one example, to save expenses, we’ve mostly relied on organic growth in recent years. We spent a fraction of what other marketplaces spend on marketing, missing the opportunity to further raise awareness of OfferUp. Successful marketing tests earlier this year and increasing revenue per user give us some signal that we can spend more to bring users onto our platform in a manner that will be sustainable and profitable. However, that investment was not possible with our cost structure. There are other ways that we hope to do more by shifting our spending that I will share as we discuss more over the coming weeks.
I am enthusiastic about the 2023 plan we just previewed with the Board, and I look forward to sharing details with all of you in the coming weeks. This is a plan that is both attainable and exciting, and it is only possible because of the additional capital available as a result of today’s decision. With a leaner, nimbler Company in 2023, we intend to:
- Develop features for our advertising products that will allow us to better monetize our marketplace activity – ideally in a way that improves the experience for both advertisers and users.
- Continue to expand our offerings into adjacent spaces – most notably by building on the early success of the jobs marketplace we launched this year. We’ve seen really strong signals in this effort and we think it can be a big part of the future of OfferUp and open the door to additional expansion opportunities.
- Significantly increase our user growth marketing investment to drive additional users, revenue, and profit.
- Offer additional tools and services to help the numerous sellers on our platform who are already successfully using OfferUp to enable their own business – whether they be a local merchant, a regional retail chain, or an individual making extra cash as a “side hustle”.
- Continue investment in the trust and safety initiatives that have made OfferUp the safest, most trusted local marketplace.
- Become EBITDA profitable by Q4 2023.
Our 2023 plan is very focused on our best opportunities. If we achieve these plans, we will have many more options than we have today. It’s important that everyone who continues with OfferUp has the opportunity to benefit from those increased options, so I’ll be sharing some plans we have to share Company success with each of you.
The leadership team will host a town hall discussion and listening session this Friday. More details on where to submit your questions for the town hall will come later today.
I want to close by thanking you for your continued support of OfferUp and assuring you that I will do all I can to make sure that support is appropriately rewarded. For those of you who don’t have any urgent tasks today, please feel free to take the rest of the day to process today’s news.
Lost a job? Need help finding work? Startup’s new recruiting service, GeekWork, can help. Reach out to GeekWork managing director Jason Greer to learn more on how we connect technical talent to amazing job opportunities. Contact: firstname.lastname@example.org.