Correction: Earlier reports stated that FarEye laid off 250 employees — the actual number is slightly under 100. This story has been updated accordingly.
Two logistics technology firms just pulled the rug out from under their employees.
Atlanta-based logistics software-as-a-service provider Stord and New Delhi-based delivery management platform FarEye, which runs its U.S. operations out of a Chicago office, laid off significant chunks of their workforces at a time when employees reportedly were feeling particularly safe.
Stord cut 59 employees, or about 8% of its workforce, at the start of June, just a month after securing $120 million in funding and a $1.3 billion valuation. FarEye’s layoffs were even more extensive. The firm told Modern Shipper it axed slightly less than 100 employees last week, or around 6-7% of its headcount, during what was thought to be an appraisal period for employees.
In the wake of the layoffs, fired workers have questions.
“Our CEO specifically came out and said this is our war chest — this is going to hold us through any tough times,” a laid-off Stord employee anonymously told Insider, referring to the company’s recent funding raise.
Two more workers said that Stord’s co-founders, Sean Henry and Jacob Boudreau, told laid-off employees in a 15-minute Zoom meeting that the company had hired too quickly. Stord had said previously that it expected to reach 1,000 employees by the end of 2022. At the time of the layoffs, Stord’s workforce was around 700 strong.
“We all got off the phone very confused because they had just raised all that money a few weeks ago and had a $1.3 billion valuation,” another anonymous laid-off employee told Insider.
In the six months leading up to the funding raise, Stord grew its headcount from 400 to 700. It looked to be in a comfortable position, with over 1,000 facilities in its network and a ticket to the unicorn club. However, layoffs are rarely — if ever — a good sign for a business.
A Stord spokesperson defended the firm’s decision in an email statement to Modern Shipper: “While this was a challenging decision, the company remains in an incredibly strong position as brands continue to invest in the technology and logistics solutions they need to meet customer expectations and fuel growth.”
“Stord has achieved record revenue growth, is on pace for greater growth in Q2, and has an extremely strong balance sheet with the additional capital raised in May. We’re also continuing to hire strategically across the company to ensure our continued growth trajectory,” the spokesperson added.
The spokesperson wasn’t wrong about Stord’s growth. The firm has made huge gains since the start of the pandemic, turning less than $20 million in funding into a $300 million war chest by the start of 2022. Flexible warehousing solutions like Stord’s saw an uptick in adoption during COVID-19 as facilities contended with a flood of new e-commerce orders.
FarEye too had seen explosive growth prior to the layoffs this month. It had raised around $50 million prior to a major funding round in May 2021, when it brought in another $100 million. In December, the company said it expects to reach the $1 billion valuation milestone this year.
Going into a performance review period, all seemed well and good at FarEye — until it wasn’t.
Sources within the company told Inc42 that employees were called into one-on-one meetings with their managers, expecting appraisals of their job performance. However, once they began, the meetings took a very different turn.
Watch: Why supply chains are still a puzzle
Employees reportedly were informed that they were laid off due to organizational restructuring rather than their performance and were then asked to leave the office premises. The affected workers came from a wide range of departments including product and engineering, professional services, talent acquisition, quality analysts, sales and product development.
All told, a little under 100 employees were cut from FarEye’s workforce of over 900.
“This strategic realignment has resulted in the need to restructure a part of our team,” CEO Kushal Nahata explained in a statement. “For a company like FarEye that has always kept its people at the core and believes that our people are our strongest asset, it has been a difficult period. We had to make some hard decisions to reduce our team across operations and services.”
Nahata cited softening market conditions as one of the catalysts for the headcount reduction. He added that in the short term, the company would be focused on strengthening core competencies, differentiating its product, investing in automation and “optimizing the effort” needed to run the business.
“In the year ahead, we are focusing our efforts and aligning resources in areas that drive maximum value for our customers while addressing their key challenges around operational efficiencies, cost optimization and delivery experience,” Nahata said.
Things appeared to be going swimmingly for FarEye until now. In April 2021, the firm was named to the Gartner Magic Quadrant for Real-Time Transportation Visibility Platforms. Gartner listed FarEye as a “challenger” in the space alongside other familiar names like C.H. Robinson, Descartes and Shippeo.
One of Gartner’s criticisms of FarEye was that it lacked a global footprint, particularly in North America and Europe. In February, the company tried to remedy that by opening a U.S. hub in Chicago. But this month’s cuts put a damper on FarEye’s expansion efforts — per Inc42, layoffs impacted employees beyond the company’s India office in both North America and Europe.
Headcount reductions at Stord and FarEye come during a historic slump in the tech industry that’s beginning to impact the logistics space. Last Friday, global logistics provider Neovia cut nearly 100 jobs at its Pennsylvania office. That same day, digital FreightTech startup Convoy laid off 7% of its workforce.
Note: Updated with a statement from a Stord company spokesperson.