Metaphy, a marketplace for video game coaching, laid off 23% of its workforce last week, primarily affecting product, design and engineering teams, founder Joshua Fabian Confirmed in an e-mail to TechCrunch. The layoffs affected 12 full-time employees. A perception page has been created for those looking for their next job.
MetaFi has raised more than $30 million in known funding from Tiger Global, Seven Seven Six, Foreigner, DCM and others. Fabian said the layoffs were preceded by a cut in the salaries of the leadership team.
“I’m not crazy about the ivory tower crap. The cuts affected roles that once mattered to the business but are now hard to justify. “Anybody who has ever written,” Fabian wrote in an e-mail to TechCrunch. Didn’t do anything wrong, and it’s not a reflection of their work ethic.”
All affected, regardless of tenure, Fabian says, have been offered three months of severance pay and extended health care. For those who were at Metaphy for less than a year, Equity Cliff has been removed. The startup also offered a subscription to LinkedIn Pro.
Metafi’s mobile (iOS and Android) teams were most affected by the reduction in workforce, as the company says it now wants to build on React Native, a single code base that required two separate iOS and Android teams. Doesn’t happen.
As far as what went wrong, it’s a similar story for many startups adjusting to the ‘new normal’ of a more disciplined environment. Metafi last raised its Series A round in February 2022, “when things were rosy,” according to Fabian, who planned to raise the Series B months later.
“If you were fundraising last year, the priorities were GMV and growth, not unit economics or revenue. There is a new normal, if you want to survive, being more disciplined with not just spending but product vision and direction. There is no choice but to,” Fabian said. “My regret is waiting as long as we did to do it. That caused unnecessary pain. We learned a valuable lesson, but we did it the hard way.”
The founder, who opted for a more transparent explanation of layoffs than some of his fellow entrepreneurs, said: “It’s my fault.” Fabian also published a public investor update, showing the most recent cash burn, active students and coaches, and cash on hand (it’s now $18.4 million).
My latest letter to investors contains some exciting updates on the present and future of MetaFi, and it also addresses the best week of my career so far. https://t.co/Z8MDfa2HeR
— josh (@joshfabian) 13 September 2022
Here’s an excerpt from the investor update that goes specifically into the company’s financials:
Q2 has come to a close and, I’m happy to say, we had a hell of a quarter. June was our best month ever in GMV, AOV, game distribution and total active coaches. The market is something of a blood bath, but thanks to a strangely distinctive fortune cookie, I never shower without my floaties. You are in good hands.
In response to the market, we have made it a priority to learn more about our unit economics. Coming to that soon. Thanks to the work of our Expert Success Team, our experts are getting smarter about running their business. Our outreach team has also found a repeatable model for linear growth. Now we are cooking with gas.
Talking, let’s come to the point.
Active Coaches: 570 -> 686 (+20.4%) Active Students: 1812 -> 3337 (+84.2%) Sessions Booked: 2549 -> 5733 (+124.9%) Monthly GMV / Revenue: $185,975 -> $375,971 (+102.2) %) Cash on Hand: $18,388,055 Monthly Burn: ~$1.3M (does not reflect Q3 layoffs)
In other words, in the most recent quarter, the company has increased its active trainers and active students, increasing monthly GMV and revenue by over 100%. The shift toward layoffs appears to be a step toward operating a lean business, especially given the time costs associated with tailored video game consulting.
The layoffs help MetaFi reduce personnel costs by 19%, from $746,000 per month to $607,000. Operating costs have been cut by 70%, from $306,000 to $100,000 per month. With these trims, Fabian estimates it has a runway of more than 2 years if Metafi stops making revenue. Or to be more specific, he said that Metafi has a runway until February 2024.
The founder said MetaFi has most of the team it needs to build over the next two years, but will be working in key roles going forward.