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> But the technical achievement wasn’t translating into revenue growth, and by last year, with the company at 130 employees and burning through cash, Masad said
by fredfsh 1y ago
> But the technical achievement wasn’t translating into revenue growth, and by last year, with the company at 130 employees and burning through cash, Masad said he had to make a painful decision. “I looked at our burn, and I looked at our progress on our revenue chart, and it just didn’t make any sense. The business wasn’t viable.” Replit cut its headcount by 50%, bringing it down to around 60 to 70 people at its lowest point.
> Plus, Replit has another unusual advantage for a startup: a $350 million war chest. Despite raising $100 million in 2023, the company “hadn’t touched” those funds by the time it raised this latest round, Masad told me. The company is capital efficient by design, though Masad joked that as an entrepreneur who grew up watching his refugee father struggle, “one thing I need to learn is to be less frugal and start spending money.”
- HDThoreaun 1y agoIts a business, not a charity. Just because they have money doesnt mean they should spend on people who arent contributing to the bottom line.
- SadTrombone 1y agoWhat information do you have that they weren't contributing to the bottom line?
- cj 1y agoThe CEO saying "the business isn't viable" says a lot.
- abuani 1y agoThat sounds a lot like the CEO is throwing 50% of the company under the bus for his own failures to you know, make the business viable.
- deleted 1y ago[deleted]
- victorbojica 1y agoAnd would it be better that the whole 100% go under the bus for his own failures?
- Retric 1y agoIt’s better for startup investors if it goes big or fails sooner. That’s the entire purpose of investing 100’s of millions into these companies. If the CEO has no idea how to do that they should shut down the company or stand aside and find a better CEO, not try and milk as much money from they can by keeping the company shambling along as long as possible.
- abuani 1y agoDid I suggest that? I'm pointing out the blaring hypocrisy of a company sitting on $350M in cash that opted to double the size of their company without having a clear strategy to become profitable. Then after laying off half the company, the CEO publicly states it's because the laid off workers don't have the skills they need for "the new era". I would really like to see in these scenarios the CEO accept a tiny bit of responsibility for their failures to set strategy and over hire, instead of publicly shaming 70 people they chose to hire in the first place. That's a failure in leadership, not in employees.
- gruez 1y ago>the CEO publicly states it's because the laid off workers don't have the skills they need for "the new era". Where did he say this?
- Matticus_Rex 1y agoIf they thought they would make more money on net with the employees than without them, they wouldn't have laid them off?
- renewiltord 1y ago130 employees making <$3m in revenue seven years in means you have to do something else. The information we all have now is that the bottom line is not very much so whatever they were contributing to the bottom line can't be that much. You have to go find a different business when this happens.
- almostgotcaught 1y agoWhat information do you have that they were contributing to the bottom line?
- ahf8Aithaex7Nai 1y agoThe burden of proof lies with the person making the claim (even if implicitly), not with the person questioning the claim.
- kaashif 1y ago$2.8m revenue with 130 employees is about $21,000 per employee. The numbers here don't look good.
- ahf8Aithaex7Nai 1y agoThis has nothing to do with charity. Every employee can contribute to the bottom line. It is the company's responsibility to organize and empower its employees in such a way that added value is created. If this is not achieved, the employees have still given up their time and must be compensated for it. You are welcome to optimize your processes so that you no longer need any employees. But society will still consist of people who need money. And if you don't pass on the surplus you have accumulated in the form of salaries, they will get what they need from you by other means.
- tczMUFlmoNk 1y agoWow, so, connecting these dots: - reducing headcount by 50% down to ~70 people = firing 70 people - at a generous estimate of total burdened cost of $1M/person/year, that's $70M/year - which accounts for a full 5 years of that war chest - and, moreover, "at its lowest point" suggests that perhaps Replit has expanded headcount again since; the article mentions that it has done some acqui-hires. Levels.fyi shows Replit salaries in the $200k–300k range, so even at a 2× burden rate, I think that this is probably a significant overestimate of the costs. Firing 70 people when you have $100 million that you haven't touched, have raised money on top of that, and have many years of runway for the people you fired… comes together to paint a picture that is, imho, less than flattering.
- justonceokay 1y agoEhh. I don’t love it and it isn’t good optics, but if you can’t find a way to utilize your employeees (such as having a hard time finding a maeket fit for an existing product) then it isn’t your moral obligation to keep paying them. It isn’t clear what employees were laid off ir for what reason either.
- shash 1y agoThe original sin was probably hiring those people for a not-yet-clear business in the first place…