A startup that's like Airbnb for childcare cut 25% of its staff, and some employees say it's a 'desperate' attempt to juice its business for investors

• Wonderschool, a startup that helps parents find day care, has laid off about 25% of its staff in a "desperate" attempt to cut costs and increase revenue, according to several employees who were recently let go.
• The Andreessen Horowitz-backed startup is downsizing at the same time it plans for a major expansion in 2020.
• Some former employees said they're worried about how a smaller team will maintain the quality of the service. The company has scaled back its hands-on approach of having employees visit day care centers in person, and instead has them vet providers remotely, they said.
• However, the team responsible for setting standards and evaluating the childcare providers on the app remains intact, and the company says that it's working to maintain the standard of quality.
• "Quality is our top priority. We are actively working every day to determine the best combination of in-person support versus remote support," Wonderschool CEO Chris Bennett told Business Insider, in part.
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Wonderschool, a startup that's most easily described as Airbnb for childcare, has laid off about 25% of its workforce as it fixates on increasing revenue growth, according to several employees who were let go.

The job cuts affected 18 employees, our sources say, and about half of them worked in operations - an umbrella organization that's tasked with adding new childcare providers as partners, offering customer support to parents, and growing the company in new markets.

Several sources said they were told the reason for the layoffs was a change in strategy, though they felt the explanation was vague. It was clear to most of these now-former Wonderschool employees that the company wanted to cut costs and increase revenue before it tried to raise a Series B funding round early next year.

Wonderschool is working to change the economics of the profession for hundreds of childcare providers in California, New York, and Colorado. The company helps them fill capacity by listing their centers on its website and mobile app and letting parents book tours and apply. It also has services to assist with other parts of running a small childcare business, including accounting, licensing, and marketing. It takes a cut on every tuition payment on the app.

The startup has raised $24 million in funding from Andreessen Horowitz, Lerer Hippeau, Omidyar Network, and First Round Capital, among others. Last year's cash infusion, a round led by Andreessen Horowitz, gave it the ability to hire more engineers and build its mobile app, founder and chief executive Chris Bennett recently told Business Insider.

Now, the operations team and others are shrinking. Some of the employees who were let go described the layoffs as a "desperate" attempt to make the business appear stronger by cutting costs. They had been told that investors wanted to see higher revenue growth before the company's next fundraise, and that reaching that goal would require consolidating its workforce and combining positions.

The hands-on approach

The move has some former employees worried.

Wonderschool's promise to families is that it admits only high-quality day care centers to its service. The company surveys parents, inspects the facilities, and provides feedback to the childcare providers on a regular basis.

And Wonderschool employees had close relationships with the providers on the app. It was typical for them to attend open houses on the weekend or give tech support over text message, some former employees said.

In recent months, the company had a change in strategy: Wonderschool would centralize its operation. It started hiring part-time contractors to help support childcare providers in remote locations.

Several sources said they were told to use video calls to inspect facilities, rather than visit in person, with the goal of saving time and money on travel. The company prepared to unveil plans for an expansion in four new markets - Boston, Chicago, Houston, and the Dallas-Fort Worth, Texas, metro area - using these cost-saving measures.

The change was startling for some. They believed that the company's biggest asset was its hands-on approach. They asked if childcare providers would still want to pay a commission on every child they enrolled through Wonderschool if the company's service became less personal. And monitoring quality from afar could mean that the general quality of day care centers on the service might go down, they said.

However, the early care and education team at Wonderschool - responsible for creating standards and determining that a program meets expectations - remains completely intact. That same team also provides professional development to childcare providers and will remove a center from the app that fails to pass quality checks.

"Quality is our top priority," Bennett, Wonderschool's chief executive, said in part, in an email to Business Insider. You can read his full comment below.

He said the company is still figuring out "the best combination of in-person support versus remote support," and Wonderschool is working with early childhood education professionals and organizations like the Nebraska Early Childhood Education, through a partnership program in the state, to deliver on its quality promise.

"You can expect this to stay consistent as we continue to grow into new markets," Bennett said.

Some former employees said there was no indication they would lose their jobs as part of the change in strategy. Wonderschool had just moved into a much bigger office in San Francisco, and employees joked that they would outgrow it in a year. However, several sources said that on November 7th, employees were called into meetings with their managers and the company's vice president of people, who was hired only a month before, to learn they were being let go.

Meanwhile, six Wonderschool employees based in Los Angeles and Denver, where the company just started operating in August, changed their LinkedIn profiles to say they were no longer working there as of November.

Read Wonderschool CEO Chris Bennett's full comment below:

"Quality is our top priority. We are actively working every day to determine the best combination of in-person support versus remote support and this includes working with experienced ECE professionals and partnering with community based organizations such as NECC to deliver on the Wonderschool quality promise. You can expect this to stay consistent as we continue to grow into new markets."