Blue Apron Plans to Cut 24% of Staff Barely a Month After IPO
bloomberg.com
bloomberg.com
Questions I want answered in an article like this:
* What is Blue Apron's reason for the job cuts?
* What are Blue Apron's plans for the future? Focusing on core markets, expansions, grocery store partnerships, more product offerings?
* What do their finances look like? Things like customer acquisition, subscription length, service costs? How did the job cuts affect them?
* What is the author's analysis of the situation?
* How's the meal-prep market doing overall?
* Is there a downward trend in these kinds of convenience services?
* Was this going to happen anyway or was there increased pressure from the IPO?
* Is this typical for companies that IPO?
I don't really agree. This is breaking news and it is unlikely that the distributor has any of the answers to the questions you've asked. Readers of a new distributor (here, Bloomberg) get the convenience of having to only follow one source to get a variety of breaking news.
From the context, I don’t think that’s the reason, but the article should probably say.
The second sentence explains that the laid off employees chose not to relocate to the new, larger facility in a different city, which answers a few of your other questions.
Now we see some of the future details coming in:
> Blue Apron Holdings Inc. is closing a New Jersey facility and moving 1,270 jobs to a bigger site opening in the state later this year.
> More than half of the employees at the Jersey City facility have decided to move to Linden, New Jersey, a company spokeswoman said. According to a public notice, the original Jersey City fulfillment center will close by October. Workers notified Friday of the changes will still have the opportunity to relocate to the new warehouse, the spokeswoman said. The move affects 24 percent of Blue Apron’s workforce.
> Opening new site in Linden that will need 2,000 or more staff
They're growing and relocating, this isn't a massive downsizing as the headline would have you believe, unless it's PR spin on something I don't fully understand.
The stock is definitely down 5%, so if you figure it out feel free to let me know and I'll buy some options :)
Fun fact if you haven't experienced it before. A company will close a facility, and say you can have the same job elsewhere usually requiring drastically different travel time. If you refuse you can't draw unemployment or get any benefits because you turned down the job.
It's not all roses.
That makes sense, and explains why the stock is down. It's actually a nastier form of layoffs. Thanks!
Edit: Actually it looks like it's a net increase in employment. This is insanity.
buying blue apron calls. It's trading at $5.78
In London that's about the same as moving an office from West London to East London (which is happening all the time).
The algorithmic trading hasn't picked up on that yet.
Companies sometimes increase headcount before a fundraising event to create a signal that growth is occurring, or to maximize one area of visible growth as much as possible. This headcount is not always needed after the raise.
> * Was this going to happen anyway or was there increased pressure from the IPO?
After funding the company can focus on essential expenditures and focus its growth and revenue targets on what matters most to investors. It's a good thing for shareholders to cut costs, since headcount can always be increased again when necessary.
Due to regulations about advertising on publicly owned wavelengths, one cannot place a 'direct response' ad on a public radio station (think of your local NPR station here). Instead, there is an 'underwriting message' allowed– typically shorter than a traditional ad, and with no direct sales pitch.
Usually somebody that buys podcast ads is also buying radio ads, and sometimes the terms they use get muddy. 'Underwrite' is probably the wrong term to use for podcast advertising, but since it's frequently used for public radio the meaning would be clear if you were in the industry.
The key distinctions are that underwriting has to be short (15 seconds each, 60 seconds total), non-competitive (you have to mention them all underwriters of a program), only at the beginning/end, and can't include a call to action. In other words, an underwriting message can say "This program brought to you by Crazy Eddie's Autos, purveyors of new and antique European cars" but not "COME ON DOWN to CRAZY EDDIE'S AUTO'S. WE'RE HAVING A BLOW-OUT SALE THIS WEEKEND ONLY blah blah"
Privately-owned stations can and do run either kind, however.
Will be very interesting to see this open doors for other companies who may have been outbid for advertising slots.
"The company's employees were given the option to transfer to the new facility located in Linden, New Jersey. The 1,270 cut jobs indicate those who decided not to transfer, the company said."
https://www.cnbc.com/2017/08/04/blue-apron-to-cut-more-than-...
Sucks for employees who can't make the move, but from the company's perspective, this just precedes growth, no?
Doesnt that seem like a lot of employees?
I know an average walmart non supercenter store has around 210 total employees.
There tasks must be very labor intensive
If these are the folks doing the food prep, almost certainly. Have you ever used something like Blue Apron? All the ingredients have to look good, and be packaged into little individual servings - think two cloves of garlic in a vacuum sealed bag.
Times six for the five other ingredients in the bag, many of which are probably more fiddly than "put two cloves of garlic into bag, and place into vacuum sealer."
Times, say, five thousand packages that have to go out and get delivered tonight so people can make their dinner.
The remaining employees will have to work faster and harder.
Normally this IPO would not have been that big of a deal. But since the tech IPO pipeline is largely frozen at the moment, APRN was widely seen as a canary in the coalmine for the sector. The fact that it was this poorly received, only underlines the fact that there is currently sector rotation out of tech going on.
Food. Moving from traditional livestock to other more efficient sources of protein (plant and insect).
1. You interact with them almost entirely through the web.
2. Significant logistics around recipe design, ingredient acquisition, and delivery.
If neither of those qualifies them as a tech IPO, then what makes Uber a tech company?
Nothing. They are a transportation/logistics provider.
> Uber is a tech company because that's what we do. We create a service that powers a marketplace through technology, and we provide apps that let people participate to this marketplace. Specifically, that marketplace lets individual users or businesses buy transportation services from partners.
> We are not a transportation company because we don't transport goods or people - our partners do. We just facilitate that. And we are not a cab company for the same reasons, and on top of this, we don't own a fleet of vehicles.
1: https://www.quora.com/Why-is-Uber-considered-a-technology-co...
*there's actually no such thing as a tech company at all
Increasingly, successful companies require ownership of proprietary technology, rather than purchase of commodity technology from third parties, and in that way more and more companies - even those in "traditional" fields - have invested in in-house tech R&D.
More importantly, software engineering has become a critical part of companies' success, even if the company doesn't ship software to end users (see: UPS, FedEx, Visa, MasterCard).
It certainly seems like the old definitions of "tech company" is increasingly archaic - is Amazon a tech company? Or are they just a retailer that uses technology? Is Grubhub a tech company, or just a delivery service with a frontend?
> "Every company uses technology, at which point saying anything like "tech company" is a useless modifier compared to just "company"."
I think that's exactly the point. Software has become so critical to almost every field (and more importantly: in-house developed software) that many companies have become tech companies, and those that haven't are either getting on the bandwagon shortly, or will perish soon after.
There may come a point where "company" vs. "tech company" loses its distinction, but for now it seems like "companies" are becoming "tech companies" rather quickly.
For example, an app that is running on a few servers can gain users more quickly than it needs to hire additional workers. A company like Blue Apron has to grow its warehouse staff as it gains new subscribers, effectively meaning that its SG&A and overhead costs scale fairly evenly with growth.
Just because you use technology to improve productivity and output compared to a competitor does not mean you are a "tech" company - it means you're better at doing whatever your business is.
I was trying to offer an explanation of what separates out "tech" companies and not trying to get into the nitty gritty of the fact that many companies use technologies. I would argue that a manufacturing company whose innovation is a more streamlined assembly line to product some widget is not a "tech" company in the sense that many people on hacker news use the word.
I don't consider a frying pan manufacturer a tech company just because they have managed to grow by optimizing their supply chain and productivity.
Alternatively I also think a company that makes brand new technology year after year even if they scaling one for one with hiring is still a tech comapny
I think what you describe might just be a general guideline for identifying a financially successful company not necessarily a tech company. People hear VC funding or IPO and often automatically think it must be a tech company by conflating technology and financial success.
I think you are getting caught up in definitions for the concept in a vacuum. I was just trying to help explore "tech" when it comes to hacker news and the VC landscape, whether or not I agree with the definition.
Do you make/sell Software
Do you make/sell computerized hardware
*Do you have a platform that fundamentally solves what would otherwise be a technology problem for other people, ie expose your technology so others can leverage it(via API/SDK, SaaS or other such on-boarding method).
None of this is clear cut as there are many grey areas but in general if you are creating technology for others to use and that is your core operation then you're a technology company.
Selling packaged food while using an App or Website does not make you a technology company. Blue Apron could completely outsource their technology work and I doubt it would fundamentally change the makeup of the company, you couldn't do that with a technology company.
If they're selling hardware then it's a hardware company. Likewise if it's software. There is no way to sell technology, you sell the end product or service.
> you couldn't do that with a technology company.
Yes you can, it's just building software or other work. Don't buy into this special Silicon Valley hipster thinking, getting things done and making (and selling) a product the market wants is all that matters. How you get there doesnt. And none of it makes you a tech company.
Google and SpaceX (like every other person and company on the planet) uses technology to create these products and services, but that's it.
Some are more cutting edge with newer tech, but that's making the process and operations better, with their end goal still being the same (whether it's selling software or groceries).
Same goes for Casper, which dubs itself a "sleep startup" (whatever the hell that means). They sell and deliver mattresses.
For example, during the last 12 months at Blue Apron they spent $178 million on marketing, and acquired 387,000 customers (these figures are from their IPO). That's $460 per customer. Getting hold of customers is not cheap, and many of these customers are not loyal or are stopping the service after only a few deliveries.
Historically, companies that IPO are in growth mode; they use the IPO to raise more money to fund more investment in growth opportunities.
Think of it this way: in an IPO (initial public offering), a typically young company offers newly issued shares to public-market investors in exchange for fresh money. The investors buy those newly-issued shares if they believe the company can put the money to good use, for example by investing in growth opportunities. If investors believe the company has no growth opportunities or is in retreat, an IPO is unlikely to be successful.
Yet here is a company that consummated its IPO only a month ago and now is firing a quarter of its employees!
No company IPOs if they don't absolutely have to. It's like conceding that you can't make enough profit privately to recoup your investment on any kind of reasonable timescale.
These investors are not going to buy your initial stock and then turn around and dump it because that would kill the value of any stock. Instead they have to believe that they can buy your stock and hold it for 12 - 36 months and it will become more valuable so that if they chose to they could sell it into the market over enough months to not disrupt the price and make a return on the money they invested. They need that return because the people who pay them to manage the fund demand a certain standard of performance or they get fired.
If the goal was to just 'cash out' you have to convince all of these people that you're not really going to cash out in order for them to buy into your IPO. That is hard to do with dozens of new investors.
http://www.rollingstone.com/politics/news/the-great-american...
More to the point in the comments here about Blue Apron and other underperforming IPOs, and the sense of IPOs being cash-out schemes for VCs and founders: Is there a growing climate of such IPOs that would elicit a feeling that tech IPOs are a means to extract money from the public/an exchange by IPO'ing high and letting the share price slide to something real?