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Popular Austin startup lays off 84 staffers, would have been irresponsible not to

A popular startup has raised nearly $50M, but laid off dozens of staffers, so why was their move the smartest one they could make?

Austin startup lays off call center staff

SpareFoot is one of Austin’s most popular startups, frequently starring in the top places to work lists, but on Thursday, the company announced that 84 employees would be let go, leaving roughly 160 SpareFoot employees.

Rumors swirled, and we got endless emails objecting to the layoffs in light of the brand’s nearly $50M raised in five rounds, landing $33M as recently as March.

Didn’t they just get $33M in funding?

So why lay off a chunk of the team when you’ve gotten such a massive cash injection? Because they’re scaling back their call center.

Consider this: SpareFoot is a marketplace for people to find and reserve self-storage units online. That’s how the brand has described themselves since their 2008 inception, and the bottom line is that it doesn’t make sense to continue operating a large call center when online booking has caught on.

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How SpareFoot explained it to their team

SpareFoot told us that they were “extremely transparent with the entire company.”

How did they do that? “We walked the remaining employees through the exact data points we used to reach our conclusions and why the evolution of our online product is a truly positive development for the business:

  1. More of our customers transacting online means they are finding what they need faster and more easily and our cost to service them is substantially lower.
  2. People who reserve online have a substantially higher move-in rate which results directly in more revenue for our clients.
  3. And the shift to online transactions is also a big scalability win for the business that will allow us to invest more resources in making our product even better.”

The verdict: this move makes perfect sense

SpareFoot CEO, Chuck Gordon, told us that they evaluated many ways forward, but they simply didn’t need a large call center anymore. Regarding objections to the move in light of their recent round of funding, he noted, “People are booking online instead of calling, so it doesn’t make sense to have folks sitting around not getting calls – funding or not.”

To naysayers, it should be noted that online booking sites have been reducing call center staff numbers for years, so this move makes perfect sense and is a reflection of the brand’s ability to adapt and not waste investors’ money.

Looking to hire or be hired in the Austin tech industry? Check out the Austin Digital Jobs Group on Facebook. It is private, and all about connecting the best talent in the world with Austin employers.

#SpareFoot

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Lani is the COO and News Director at The American Genius, has co-authored a book, co-founded BASHH, Austin Digital Jobs, Remote Digital Jobs, and is a seasoned business writer and editorialist with a penchant for the irreverent.

4 Comments

4 Comments

  1. Chris

    August 12, 2015 at 5:45 pm

    Shocking. A business acting like a business and not a jobs program.

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