The Derek Jeter-backed startup BlueJeans Network, last valued at over $700 million, just cut 40% of its workforce as Silicon Valley's focus on profitability grows
- BlueJeans Network, a video-conferencing software maker, laid off 40% of its staff, or roughly 200 people, on Wednesday, Business Insider has learned.
- The cuts are aimed at getting the company to profitability faster than expected, according to people familiar with the matter.
- The change at BlueJeans shows how Silicon Valley's growing focus on profitability is now trickling down to smaller startups too.
BlueJeans Network, a video-conferencing software maker that's raised over $175 million, just laid off 40% of its workforce, or roughly 200 people, including some of its c-suite members, Business Insider has learned.
The move is a cost-saving measure, aimed at getting the company to profitability faster than expected, according to people familiar with the matter, who asked not to be named because they're not authorized to speak on behalf of the company. In a meeting held on Wednesday, the leadership team told employees that it's making the job cuts because the company moved up its timeline to reach profitability by a year to the fiscal year that ends on January 31, 2020, these people said.
A representative from BlueJeans declined to comment, instead pointing to a blog post by BlueJeans CEO Quentin Gallivan published on Thursday that said the company will become "profitable and operating cash flow positive over the next few months."
The change at BlueJeans shows how Silicon Valley's growing focus on profitability is now trickling down to smaller startups too. After a number of high-profile startups, like Uber and Lyft, struggled post-IPO, and WeWork's attempt to go public failed amid spiraling losses, investors are shifting their attention towards profitability over growth.
Just this week, CNBC reported delivery startup Postmates cut dozens of jobs, while The Information reported home-buying startup Opendoor and the mattress maker Casper both made moves to slow their expansions. That follows recent layoffs at car-subscription company Fair and software maker UiPath, according to the The Wall Street Journal.
Seeking a sale
BlueJeans has raised over $175 million since its founding in 2009 from investors including big VC firms like NEA and Accel, as well as former baseball player and Miami Marlins CEO and part owner Derek Jeter. The bulk of the investments came in the three-year period between 2012 and 2015, when BlueJeans amassed over $150 million in funding and saw its valuation more than triple to approximately $727 million, according to Pitchbook.
But more recently, the company was rumored to be positioning itself to be acquired. Bloomberg reported in June that it was "exploring a sale," following the breakout success of competitor Zoom. In 2017, the company named Gallivan as its new CEO, replacing cofounder Krish Ramakrishnan. In April, it said it's passed $100 million in annual recurring revenue.
For BlueJeans, the workforce reduction will likely lead to more static growth going forward. The layoffs largely affect sales and marketing roles, with some of the top sales executives let go as well, sources familiar with the matter told Business Insider. Without a large enterprise sales force to help grow the business, BlueJeans is likely to focus on keeping its existing customers, like Facebook and Starbucks. Multiple c-suite roles were included in the job cuts, these people said.
During Wednesday's meeting, BlueJeans leaders told employees that they felt "horrible" about the layoffs and apologized for announcing it during the holiday season, according to sources familiar with matter. Ramakrishnan offered to be a reference for those affected by the move, the people said.