So, lemme get this straight? Slashes the workforce by 2/3rds “today” with no financial reason to. “Takes responsibility” and resigns (Needed a well earned break), probably keeps his sweet, sweet founder shares and gets a noice send off. Definitely keeps the board seat. What a hero!
I’m sure the departing staff will line up with their boxes to give him a guard of honour as they all leave the building together. It’s like a fairy tale really.
> However, TechCrunch confirmed with someone with knowledge of the situation that Pitch essentially returned all unspent cash to its investors pro rata, reducing the investors’ ownership stake in the process. This means that current and past employees (including all the founders) now own 80% of Pitch, while the company has enough cash to see it through a couple of years either to profitability, or to a point where it can sell at a lower price than its previous valuation (which was $600 million in 2021).
Interesting data point with regards to ownership interest and incentives.
Yeah, I had the same thought. I’m actually usually levelheaded about this stuff, sometimes bad things happen.
This post just set me off and I dunno why. The post itself felt really sanctimonious and self unaware, then the reactions were from bizarro world. Every one was congratulatory, with next to no consideration about the people that just got the unceremonious boot.
> "Pitch had raised north of $130 million in funding..."
I'm sure I'm not the only one baffled at how much they were able to raise for such a product.
I looked into Canva to compare valuations in that market. Canva is at US$ 25b [1], which is astounding to me (but down from $40b in 2021 [2]). So I guess they're looking to turn Pitch into something at 2b I guess.
IMHO the CEO acted correctly if he felt the company & product couldn't hypergrow. They didn't burn cash building a massive headcount. He worked at the product & market long enough to reasonably argue how much the company could grow. He returned money, downsized the company presumably to a point where it could self-sustain. He did good by their investors, the headcount wasn't sustainable I guess. And resign.
It's regrettable of course, so many lost their jobs but I don't see how his conduct is reprehensible.
Perhaps not canary in the coal mine so much as it's reflective of many startups being overvalued with overhyped revenue projections at the Series A/B stage a couple years back.
Add to that weird regulatory stuff dampening acquisition prospects, high interest rate environment, and the ability to cheaply accomplish more and more with AI, and I think we'll see meaningful changes to the nature of venture funding and expectations over the next couple years. Will also mean down rounds and cutbacks for companies that don't weather this stuff well.
It seems they do now. They returned cash to investors and got pro-rata shares back to founders and employees putting them at 80%. Not sure what order it all happened though.
I’m sure the departing staff will line up with their boxes to give him a guard of honour as they all leave the building together. It’s like a fairy tale really.