Pretty much everyone is getting socked by the Covid-19 shutdown. Among the latest to say so in a public way is Away, the trendy, five-year-old, New York-based travel brand that has raised roughly $180 million from investors over the years, including a $100 million round last year that pegged the company’s valuation at $1.4 billion — nearly three times where it was valued a year earlier.
With travel down nearly 100 percent as the coronavirus makes its way across the U.S. and world, the company has seen sales of its product fall off a cliff, say company founders Steph Korey and Jen Rubio in a new Medium post. Specifically, they disclosed today, sales of their luggage, bags, and interior organizers have fallen by more than 90 percent over the past few weeks.
The company, which began as a direct-to-consumer brand, first took steps to reduce its burn rate by shuttering its now ten retail stores, while paying its retail teams “during what we hoped would be short-term closures.”
Unsurprisingly, given that human capital is typically a company’s biggest cost center, that strategy go far enough, so the company is having to furlough “about half” of its team and it’s laying off another 10%, it says.
Say Korey and Rubio in their post, “This was a devastating decision and one we considered only as a last resort. The pride we once had in the creation of so many opportunities for people is now fear, frustration, and concern for a large number of people who didn’t deserve this outcome. Many of these are people we personally hired, and many more are friends.”
The founders are also suspending their own salaries, they add, and they say senior leadership at the company has agreed to reduced salaries.
Away is doing this exactly the right way, by the way.
Rubio and Korey say those laid off will receive a minimum of eight weeks of severance and will see their healthcare coverage through the end of June.
The company says it has also waived the vesting cliff on equity and extended the exercise period of stock options so affected employees don’t have to make decisions surrounding their equity while they are figuring out how next steps for themselves.
They also note that owing to government assistance, its furloughed employees — many of whom work in customer support — should continue to receive 100% of their wages and benefits until they can resume work full time.
Away was described by some former employees as having a toxic culture owing in part to CEO Korey’s management style in The Verge late last year. Korey apologized and stepped aside as a result, but weeks later she announced through the New York Times that, on second thought, she wasn’t going to give up her role at the company, a role she currently shares with Stuart Haselden, who joined the company from Lululemon Athletica.
Whether to two continue to share this role is another question and one that presumably depends on how long the current downturn lasts.
But Away is smart to do everything in its power for employees whom it can no longer pay and to get ahead of employee leaks about the layoffs by posting the news itself to Medium.
It’s not the first company to do so, of course. Last week, as one example, the CEO of the personalized stationery startup Minted, Mariam Naficy, also posted on Medium her letter to employees about layoffs at the company and precisely what former staffers could expect in the way of severance.
Still, it’s savvy, it’s compassionate in the whole, and it certainly stands in stark contrast to how some other startups have handled layoffs — and how they will be remembered for it when all is said and done.