A comment on one of Daily Deal Media’s articles earlier today stated that BuyWithMe was laying off as much as 75 percent of their workforce. UPDATE: BuyWithMe says it was less than 75 percent and closer to 50%.
This seemed like a strange move for the NYC-based company that recently raised $21.5 million and has been quickly grabbing up other daily deal sites, with six acquisitions in as many months, but the news was later confirmed through Betabeat anonymous sources, that BuyWithMe has actually laid off a massive number of employees.
I spoke with a BuyWithMe representative tonight who confirmed that they had a very rough day today and unfortunately had to let some staff go. They also added that they’re focusing on quality and profitability and that led to some of today’s layoffs. This new focus does not mean cutting back any markets, but will reduce the number of deals offered.
According to an updated article on Betabeat one employee that was laid off with what now looks to be approximately 55 percent of the BuyWithMe staff said the company simply got greedy.
“They were trying to raise a hundred million dollars at a $500 million valuation and there were no takers. If they had done a more conservative round, the company wouldn’t be in this kind of trouble.”
The source also added there is no hope of raising a round now and that the company is looking for a buyer. “They are hoping to just sell and get some of the value back.”
BuyWithMe had been on a buying spree itself, acquiring six companies in the last six months. “The only one they paid a lot for was Edhance. And that company is the only reason a buyer would be interested.”
The employee said people were expecting news around Thanksgiving, but today’s layoffs come as a big surprise. “We had no idea. They didn’t offer us severance or anything.”
Asked whether this was a reflection of conditions in the daily deal / group buying industry as a whole, our source demurred. “Nobody has figured out a profitable model yet, but if someone does, then maybe they could make it work.”
This morning I received a statement from BuyWithMe’s CEO, Jim Crowley saying:
“BuyWithMe did have a significant reduction in staffing this week. We did this so the company is in the best position to continue to serve its merchants and members. As an organization we’re continuing to pursue our business and to support our customers throughout the country.”
This follows last night’s conversation with a BuyWithMe representative who confirmed that yesterday the company did lay off some of its staff. It was added that BuyWithMe would be focusing on quality and profitability that initially led to some of the layoffs. This move does not mean cutting back on markets but will reduce the numbers of deals offered.