Vancouver social-media management company Hootsuite Inc. laid off nearly 10 per cent of its work force Tuesday, sources said, as it seeks to cut costs following an abandoned plan to sell the company.
The Globe and Mail reported in January that Hootsuite had given up on an attempt to be acquired last December after preliminary offers came in below expectations. Hootsuite has now laid off around 100 people worldwide to boost its cash flow to make the company attractive for another attempt at a sale or initial public offering, said three sources familiar with the company who were not authorized to speak on the record.
The company acknowledged that it had made staff reductions to adapt to the “growing company’s strategic priorities,” though it neither confirmed nor denied whether it was in the range of 100 people; that figure was first reported by CTV News. The company had about 1,000 employees in January.
“We remain committed to helping employees affected by today’s announcement through these times of transition,” spokesperson Naomi Hurley said in an e-mailed statement. She did not say which divisions would be affected. One source said the layoffs were global, with cuts across Europe and the Singapore office entirely shuttered; in Vancouver, layoffs affected sales and customer-success staff.
“Over the past several months, we have undertaken a review of our organization,” Hootsuite CEO Ryan Holmes wrote in an email sent to staff Tuesday morning. “It has since become clear that we need to make some changes to increase operational efficiency and continue to drive the business for long-term strategic growth. As a result, we have made the difficult decision to restructure the organization, which involves eliminating roles, and letting some people go.”
Born last decade from Mr. Holmes’s internet-services and marketing-consulting company, Invoke Media, Hootsuite became a Canadian tech darling earlier this decade, helping corporate customers manage social media and communicate with customers. It generated $1-million in monthly revenue by 2011, rapidly growing as social media integrated itself into daily life. By 2014, it had raised about $250-million in venture financing from American and Canadian firms such as Fidelity Investments Inc. and OMERS Ventures.
After years of speculation about an IPO, the company instead quietly began examining options for a sale. The company hired Goldman Sachs Group Inc. in October, with hopes to get a large valuation; a month earlier, Adobe Systems Inc. had bought marketing software firm Marketo Inc. for US$4.75-billion. Hootsuite spoke with dozens of private-equity firms, with several going so far as to indicate their own asking prices.
Those offers, however, capped at about US$650-million to US$700-million, while the company had hoped for a valuation of US$750-million, sources said in January. At the time, Greg Perotto, its vice-president of marketing, said, “To date there has not been a compelling offer that would change our desire to grow as a private business.” He also said then that the company had plans to hire sales and technical staff.
One source said Tuesday that Hootsuite was cash flow positive and did not make the layoffs out of panic; rather, the source said the company needed to strengthen its financials ahead of a potential sale or initial public offering.
Senior leaders flocked from the company at roughly the same time as the sales process was abandoned, including senior vice-president of sales Bob Elliott, sales vice-presidents Chris Saniga and Phil Edgell, and key tech executives Mik Lernout, vice-president of product, and André Viljoen, vice-president of technology.