Nearly everyone was shaken by the closing of COVID-19. Among the most recent say so in public is Far, a trendy, five-year-old New York-based travel brand that has raised around $ 180 million from investors over the years, including last year’s $ 100 million round that pegged the company’s valuation on $ 1.4 billion – almost three times the value of the previous year.
With travel down almost 100% when coronavirus makes its way across the US and the world, the company has seen sales of its products fall off the cliff, said the company’s founder Steph Korey and Jen Rubio in a new post. In particular, they revealed that today, sales of their luggage, bags and interior organizers have fallen by more than 90% over the past few weeks.
The company, which started as a direct-to-consumer brand, first took steps to reduce its burning rate by closing 10 of its retail stores, while paying its retail team “as long as we expect it to be short-term closure.”
Not surprisingly, given that human resources are usually the company’s biggest cost center, the strategy did not go far enough, so the company had to resign “about half” from its team and lay off another 10%, he said.
“This is a devastating decision and we only consider it a last resort,” Korey and Rubio said in their post. “The pride we once had in creating so many opportunities for people now is fear, frustration, and concern for the large number of people who don’t deserve this result. Many of them are people we personally employ, and many are friends. “
The founders also suspended their own salaries, they added, and they said senior leadership at the company had agreed to reduce salaries.
Far do this the right way. Rubio and Korey said those who were laid off would receive a minimum of eight weeks’ severance and would see their health care coverage until the end of June.
The company said that they have also released the cliff vesting on equity and extended the period of exercise of stock options so that affected employees do not have to make decisions about their equity while they frantically find out the next step for themselves.
They also noted that thanks to government assistance, employees who were on leave – many of whom worked in customer support – had to continue to receive 100% of their wages and benefits until they could return to work full time.
Away is described by some former employees as having a toxic culture at The Verge late last yearpartly because of CEO Korey’s management style. Soon after, Korey apologized and stepped aside, but weeks later he announced through The New York Times that, on second thought, he will not relinquish its role in the company, the position he currently shares with Stuart Haselden, who agreed to join the company of Lululemon Athletica when Korey first left.
Whether the two continue to share this role is another question and one that may depend on how long the current decline lasts.
Meanwhile, Away is smart to do everything in its power for employees who can no longer pay – and to overcome employee leakage about layoffs by posting the news itself to Medium.
Of course, this is not the first company to do it. Last week, as one example, the CEO of a personal stationery startup Printed outMariam Naficy also posted on Medium her letter to employees about Layoffs at the company and precisely what the former staff can expect by severance pay. It’s easy to imagine many others adopting the same guidebook as the current situation.
They must. In both cases, the founders looked intelligent and compassionate overall. Their handling of bad situations is also in sharp contrast to what some other startups have Layoffs handled – and how they will be remembered for it when all is said and done.