Birchbox trims 15% of staff in push for profitability this year
February 1, 2016 11:22 AM
(Bloomberg)—Birchbox Inc., an online retailer that sells subscriptions for personalized beauty samples, says it’s cutting 15% of staff and suspending operations in Canada. The cutbacks are the latest sign that technology startups are struggling to create sustainable businesses as venture funding begins to cool.
“The cuts made today will allow us to reinvest in our biggest opportunities and grow even more quickly in the future,” Birchbox co-founder and CEO Katia Beauchamp said in a statement. "Our vision for Birchbox has always been to build a standalone company, and today’s market demands that we reach profitability this year.” Birchbox is No. 254 in the Internet Retailer 2015 Top 500 Guide.
Birchbox in April 2014 raised $60 million in a Series B funding round and has raised $71.9 million total since its founding in 2010, according to CrunchBase.
The staff reduction at Birchbox was based more on a view of the broader technology and stock markets slide, not on the future of the company, Beauchamp told PandoDaily, which first reported on the job cuts. Birchbox expects to double its shop sales and is experiencing significant growth in subscriptions this year, Beauchamp said in the statement.
A slew of venture-backed tech companies have reduced staff in the past few months, including Evernote, Hootsuite, Jawbone and Snapchat. VarageSale, an online marketplace styled as a garage sale for hyperlocal communities, said Thursday it cut 26 employees.
“This decision was incredibly difficult, and we can’t thank these amazing people enough for their contribution,” VarageSale CEO Carl Mercier wrote in an email. “The result is ultimately what we believe we had to do to continue building towards our vision.”
Valuations of tech companies began to shift sideways toward the end of last year, and investors began to push for cost-cutting at some startups. The number of venture funding rounds in the U.S. fell in the fourth quarter for the second straight period to 981, its lowest total since the fourth quarter of 2011, according to research firm CB Insights.