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In the Beat a few weeks back I mentioned how Mixpanel, a West Coast competitor of Localytics, had done some layoffs. Then for #BostonPride I threw in a boast about how Localytics had been hiring, aggressively.
Fracked that one up.
We later learned from CEO Raj Aggarwal that Localytics, too, has gone through layoffs (h/t to Scott Kirsner, who was first to that news). Thirty-seven layoffs, or 15 percent of staff, to be exact. So not a tiny move. But now it’s also looking like the layoffs at these companies may have been less market-specific than I’d assumed.
On Monday Fortune's Barb Darrow reported that another New England tech up-and-comer, Nashua’s DataGravity, has gone through a round of layoffs. No specific numbers were given, but prominent executive Michael White—director of DataGravity Labs, and formerly of VMware—was among those let go (DataGravity had put out a press release in 2014 when they hired him). CEO Paula Long (who’s no newbie—she previously co-founded EqualLogic) told Fortune that her company just needed to cut spending. Perhaps their “hiring outpaced overall growth,” as Aggarwal has described the situation at Localytics.
The two companies won't be the last to reach that conclusion, most likely.
"The smartest companies in the market that I know are (doing) pragmatic cost cutting."
Mark Suster, the Los Angeles-based VC, wrote Monday on the “resetting of the startup industry,” as he terms our current cycle, writing that “the smartest companies in the market that I know are working aggressively to lower burn rates through pragmatic cost cutting knowing that the next fund-raising cycle may be unpleasant. This prudence is smart and welcomed.” Indeed, both of our two New England examples, Localytics and DataGravity, could reasonably be looking for a new round this year (DataGravity raised $50 million in late 2014, Localytics raised $35 million in March 2015). They’re probably not the ones to worry about, though. Our biggest concern should be for the companies that haven't been cutting jobs—but that ought to be, according to Suster. “This isn’t a fire alarm. Just a message to less experienced entrepreneurs that the capital markets may have begun to change and if you’re not aware of how this could affect you then you could be a casualty,” he writes.
This "resetting" has been a while coming now, of course—no one really thought the frothiness could last forever or that a herd of unicorns was sustainable. I hate to see anyone lose their jobs (and for companies to lose some steam), but a "resetting" of this sort, I think, is a lot better than a 2008-style economic crisis or a 2000-style bubble bursting.
