After realizing that it stood a better chance selling its customer-support software as part of larger deals, rather than generating a lot of smaller deals, Usermind laid off an undisclosed number of employees last week.
A source familiar with the layoffs suggested that as many as 15 percent to 20 percent of Usermind’s workforce was affected by the move last Friday, but Usermind CEO Michel Feaster said the actual number was “materially below” those figures. The Seattle startup has changed its sales strategy over the last year or so, shifting from an organization built around high-volume low-price deals to one that chases bigger deals with longer sales cycles, Feaster said in an interview with GeekWire.
“It’s always challenging to have to lay folks off,” Feaster said. “For me, it’s very much about positioning the company for success.”
Usermind sells marketing software as a service that helps companies manage their own sales cycles, which can be a pretty complicated endeavor in the business-to-business world. At one point, Usermind thought its business model would resemble that of a company like Zendesk, which offers several low-cost starter packages that ramp up as more employees use the service. But it now thinks it will have more success chasing bigger clients, which requires a different set of skills.
Feaster emphasized that the company still has nearly two years left of runway off the $23.5 million round it raised earlier this year, and that the cuts were not being made for cost-saving purposes. By the end of this year, the company plans to grow its overall headcount, which stands at a little more than 50 employees after the cuts, she said.
The company is making a few other changes: it recently hired Derek Yammarino to lead its sales efforts after former Chief Revenue Officer Forrest Hobbes departed earlier this year. And this weekend it plans to move out of the “Darth Vader” building at 4th and Blanchard in downtown Seattle in favor of a new Pioneer Square address, at 83 Columbia St, expanding into 9,600 square feet of space that’s about 25 percent larger than its current space and cheaper per square foot, Feaster said.
Feaster was part of a CEO panel at our GeekWire Cloud Tech Summit last month that discussed, in part, the challenges inherent in growing a startup company in a crowded market. A video of that panel discussion with Geeman Yip of BitTitan and Joe Duffy of Pulumi follows below.