Learning: The Hard Way
Last week was a long dive into a deep bucket of shit.
We laid off 12 people.
Great people. Incredibly talented people. Individuals who helped make Metafy what it is today. Not just the business, but the moments and magic that made you feel you were a part of something important. It was genuinely the worst day of my career to date. This isn't one of those everybody-feel-bad-for-me type letters. Layoffs are infinitely harder for those who poured their blood, sweat and tears into this only to be told they're 'redundant' or 'non-critical'.
There's not going to be a picture of me teary-eyed on Linkedin today. Maybe Techcrunch. I've heard they're working on a story.
If you're interested in hiring some of those people, please have a look at this list.
"reminder that at the end of the day, as an employee you're always disposable to your company, so don't ever get too attached or invested.
A company can talk all they want about how they're different from the rest, but when it comes down to it, they're a business looking out for themselves, and they'll throw you under the bus just as quickly as any other. i'm not sure why i thought it was any different this time."
That's a tweet from a member of our team, someone I care very much about. He wasn't laid off, but I understand entirely why he feels the way he does. I’d be furious and hurt too. This tweet has haunted me for days now, it's honest and raw, there's a lot of pain here. It's no small thing to say goodbye to friends you've shared trenches with.
As cold as it may sound, startups often demand that we separate our emotional responses from our rational minds. The rational mind knows that companies need to make cuts to survive all the time. The emotional response is you can’t believe your company did.
Everyone impacted was offered 3 months of severance pay and extended healthcare, including the folks that had only been here for 2-3 months. For those with us less than a year, we lifted their equity cliffs, so that they can walk away truly owning a piece of what they helped create. We've also provided job search support and a subscription to Linkedin Pro.
I think a successful layoff helps the team lean into the rational. Not to deny their grief, but rather put into perspective what seems to be most true: this is a company that gives a shit, but we're not without our missteps.
We did an OK job, but not a great job. We let everyone at the company know whether they were affected at the same time, via email. This was the wrong call - we should have told people one on one, live, because we’re small enough to pull that off. It didn’t feel like Metafy and that sucks. The actions felt right on paper and buttoned us up legally, but hurt the culture and values we've worked so hard to build.
I'm grateful the team stills feels comfortable enough to speak honestly and openly. It helps me keep my soul.
How we got here
We were born in peak what-are-unit-economics season. Over the last two years, we've grown at an absurd pace. We raised over $30 million in funding. As our bank balance grew, so too did our ambition. We bought a company! We assembled a continually growing team of brilliant individuals. Unfortunately, some of the roles that made sense in the past can't be justified today. We planned on a B in late Q4 this year or early Q1 of next year. If you were fundraising last year, priorities were GMV and growth, not unit economics or revenue. There's a new normal, and if you want to stay alive, there's no choice but to become more disciplined with spending, vision and roadmap.
My regret is waiting as long as we did to do it. We learned a valuable lesson, but we did it the hard way.
Embracing the new normal
- Personnel costs reduced ~19% from ($746k) to ($607k) per month
- Operational costs reduced ~70% from an avg of ($306k) to ($100k) per month
- Marketing costs reduced ~35% until we have sound economics to scale from.
- Expect EBITDA to stabilize at ($919k) a month without including revenue. We have runway until February 2024.
Our closely guarded master plan remains a few years out. It's a pants shittingly big vision. If any team can pull it off, I like to think it's the team we have today. We're planning for the worst so we can navigate through any environment or downturn. Given the current turbulence in the world, I'd be failing in my role if we didn't prioritize clarity of vision and business efficiency while we have both the momentum and resources to pull off such an adjustment.
Looking at Q2
Q2 has come to a close and, I'm happy to say, we had hell of a quarter. June was our best month ever across GMV, AOV, game distribution and total active coaches. The market is something of a blood bath, but thanks to a weirdly specific fortune cookie, I never bathe without my floaties. You're in good hands.
In response to the market, we’ve made it a priority to get a lot smarter about our unit economics. More to come on that soon. Thanks to the work of our Expert Success Team, our experts continue to get smarter about running their business. Our Outreach team has also found a repeatable model for linear growth. We’re cooking with gas now.
Speaking of, let's get to the point.
- Active Coaches: 570 -> 686 (+20.4%)
- Active Students: 1812 -> 3337 (+84.2%)
- Sessions Booked: 2549 -> 5733 (+124.9%)
- Monthly GMV / Revenue: $185,975 -> $375,971 (+102.2%)
- Cash on hand: $18,388,055
- Monthly burn: ~$1.3M (does not reflect Q3 layoffs)
Q2 was a significant one for Metafy. Not just because we shipped loads of new features, but because we truly started down the path of the ecosystem-play we've been planning since our inception. The GamerzClass acquisition was our first step towards becoming the glue that connects culture in gaming. It’s not just educational courses. It’s so much more than that.
Since the acquisition at the start of Q2, we've been concepting, designing, and building. This has been a massive effort from all members of the team as we refactor big chunks of the platform to “make room” for content in a way that will feel more natural to the end user. We’re reaching the end of the Product team’s efforts now and will be handing things over to the Content team to prepare for the release this year (early designs below)
Here are some other initiatives shipped in Q2:
We built what we call the Expert Onboarding Experience, a productized onboarding process to help our Outreach and Success teams bring on more Experts and activate them faster and more successfully. We saw activation, the time from becoming accepted to the platform until their first booking, plummet over 50% in addition to other key metric improvements. A good sign of things to come.
We introduced tipping during the checkout process. You see this in many other service industries, so we decided to give it a test run ourselves. Turns out students feel compelled to add a few bucks even without an iPad with a 25% pre-selected tip staring them in the face, and our Experts are reaping the benefits! Tipping has grown over 600% since we launched the feature and now represents a 5% increase in the overall money Experts are taking home.
We've given Experts new data insights into their business, with a goal of giving more visibility into where they're doing well and where they may need improvement.
Finally, we gave Experts some other new tools to manage their business. These are things they've been asking for, including more control over their lesson availability as well as stronger protection against last-minute cancelation and reschedules from their students (which has been universally praised)
Wrapping up, we're brimming with excitement around everything we've been building towards in the last quarter. While undertaking that initiative, we’ve continued to ship features to help our experts maximize their business and have helped our internal teams become more efficient in our operations.
How you can help
We'll continue to hire outstanding talent in critical roles as we move forward. We have most of the team needed to build and grow over the next two years. That said, our standards are very high. I want individuals on our team who light up when they see an incredible solution to a hard problem. Our highest priority hire atm is a lead React Native engineer. If you're that someone, or you know someone, say something. I'll make it worth your time.
Until next time friends
Thanks for taking the time to read this. If you enjoyed it, please send me a tweet at @joshfabian so I know it’s worth continuing to do this. Okay, yes, subscribing would be more meaningful but I really need this validation, okay? Your undivided attention is the only thing that makes the feel-good juice in my brain activate.
From the community
Some of our favorite tweets from Apr - Aug, in no particular order.