MainStreet cuts a third of its employees, citing market conditions

MainStreet cuts a third of its employees, citing market conditions

  • B2B finance startup MainStreet has laid off a third of its roughly 150 employees.
  • CEO Doug Ludlow cited “today’s incredibly tough market” and warned it could get worse.
  • The company has grown rapidly after raising a major Series A, but revenue has not kept pace.

In January 2022, B2B financial services startup MainStreet flew the entire company for a week-long working holiday to Maui.

About 150 employees stayed at the luxurious Grand Wailea hotel, attended meetings and enjoyed free buffets at the Hawaiian beachfront resort. Workers who questioned the expense were told the startup was aiming to land a major round of Series B funding that would secure an important lead.

But the funding that eventually materialized was smaller than originally anticipated, Insider learned, and on Tuesday the company laid off about 50 employees, or about a third of its workforce.

The layoffs highlight the risks of runaway start-up spending as financial markets grow increasingly turbulent and closely follows similar rounds of employee cuts at Robinhood and Cameo.

In an email to staff, MainStreet CEO Doug Ludlow cited tough market conditions and a push toward profitability. “We have taken this action because we believe there is a good chance that today’s incredibly difficult market will only get worse and will potentially remain so for months or even years,” he said. he writes.

“We need to ensure that as a business we are in control of our own destiny, not subject to the whims and waves of the market. This reorganization is one of the steps that puts us on the short-term path to profitability and of self-sustainability.”

MainStreet was founded in 2019 and has grown rapidly with a product that has helped startups and other businesses claim tax credits. In March 2021, it raised $60 million in a Series A funding round from investors including SignalFire, Tusk Venture Partners, and Sound Ventures.

Headcount and costs quickly exploded, a source said, but revenue growth has not kept pace. The company had been aiming for an equally high Series B – an effort known internally as “Baker Street” – but Russia’s invasion of Ukraine and growing uncertainty in the markets stalled. proved annoying.

The company’s chief marketing officer, Stacey Politi, shared a copy of Ludlow’s email with Insider staff and did not respond to further questions about the company.

The vice president of engineering, vice president of people, vice president of sales and vice president of design have all left the company, a source said, with some voluntarily leaving. Core layoffs came from across much of the company, including engineering, sales and marketing. The dismissed employees received two months’ salary, medical assistance and were allowed to keep their laptops.

Here’s the full email that CEO Doug Ludlow sent to employees:

This week, we took the difficult step of corporate reorganization and restructuring, and in doing so, we eliminated approximately 30% of positions at @MainStreet.

I know from first hand experience how painful it is to lose a job due to reorganization – it can be confusing, disorienting and scary – so I understand how difficult this week is for our affected team members .

We did not make this decision lightly and are doing everything in our power to provide as many transition supports (severance, healthcare, recruitment and placement assistance) as possible.

A big part of leadership is looking reality straight in the eye and then making the right choice, no matter how difficult that may seem.

We have taken this action because we believe there is a good chance that today’s incredibly raw market will only get worse and will potentially remain so for months or even years.

We need to ensure that as a company we are in control of our own destiny, not subject to the whims and waves of the market. This reorganization is one of the steps that puts us on the short-term path to profitability and autonomy.

We believe deeply in our mission to help small business founders and owners, and we are committed to doing whatever needs to be done to achieve that mission.

How can I help you? Please DM me and let me know if you are hiring. I’ll connect you with our internal recruitment team who are working to help place former MainStreet team members into new roles.

Thanks,

Doug

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