“We moved into a house we couldn’t afford” writes Buffer founder and CEO Joel Gascoigne on his company’s decision to fire ten of their 94 staff as revenues miss targets and the venture’s cash burn accelerates.
A few years ago we wrote about Gascoigne’s commitment to being an open company and his post today is a brutal, but honest, reflection of that.
Buffer’s problem is one familiar to many business owners when revenue projections aren’t being met and the tough reality of making unexpected cuts becomes apparent.
Making Buffer even more unusual among tech and social media startups is how the company doesn’t depend up venture capital funding – an advantage for its owners but also a downside in situations like this where being able to raise more money for equity would give the business room to move.
At present however companies following the VC model are in trouble as they are finding investors aren’t so willing to write cheques to loss making ventures unless there’s a clear path to profits.
That reluctance to fund businesses is going to see more layoffs for companies dependent upon VC funding, some startups will fail because of it. The really fascinating part is how many of the tech unicorns will be amongst the failed business.
One hopes though Buffer won’t be among the casualties, Gascoigne and his team deserve to be rewarded for their candour.