Two logistics technology companies have recently yanked the rug out from under their employees.
Stord, an Atlanta-based logistics software-as-a-service business, and FarEye, a New Delhi-based delivery management platform with a Chicago headquarters, both lay off major portions of their workforces at a time when employees allegedly felt particularly safe.
Stord let off 59 workers, or around 8% of the workforce, in early June, just a month after getting $120 million in capital and a $1.3 billion value. FarEye laid off even more employees. According to Inc42, the company laid off over 250 employees last week, accounting for nearly 30 percent of its total workforce, during what was intended to be an employee appraisal time.
Fired employees have questions in the aftermath of the layoffs.
“Our CEO clearly stated that this is our war chest — this is going to hold us through any terrible times,” a laid-off Stord employee told Insider anonymously, referring to the company’s recent funding boost.
Two other employees said that in a 15-minute Zoom discussion, Stord’s co-founders, Sean Henry and Jacob Boudreau, told laid-off employees that the company had hired too quickly. Stord previously stated that the company hoped to reach 1,000 employees by the end of 2022. Stord’s staff was roughly 700 people at the time of the layoffs.
“We were all extremely confused because they had just raised all that money a few weeks before and had a $1.3 billion valuation,” said another anonymous laid-off employee to Insider.
Stord increased its headcount from 400 to 700 in the six months leading up to the investment round. It appeared to be in a good position, with over 1,000 facilities in its network and a unicorn club membership. However, layoffs are almost never a healthy indicator for a company.
In an email statement to Modern Shipper, a Stord spokesperson defended the company’s decision, saying, “While this was a difficult 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.”
“With the additional capital received in May, Stord has achieved record revenue growth, is on track for even greater growth in Q2, and has an incredibly strong balance sheet.” We’re also hiring strategically across the organization to ensure our continued growth trajectory,” the official stated.
The spokesman was correct about Stord’s development. Since the beginning of the epidemic, the company has grown dramatically, turning less than $20 million in investment into a $300 million war chest by the beginning of 2022. Flexible warehouse solutions, such as Stord’s, witnessed an increase in popularity during COVID-19 as facilities dealt with an influx of new e-commerce orders.
FarEye had also experienced rapid growth prior to the layoffs this month. It has raised approximately $50 million prior to a significant investment round in May 2021, when it raised an additional $100 million. The company started in December that it intends to hit the $1 billion valuation mark this year.
All appeared well and good at FarEye as the company entered a performance assessment period — until it didn’t.
Employees were called into one-on-one sessions with their bosses, according to sources within the organization, expecting reviews of their job performance. However, once they began, the meetings took an unexpected turn.
Employees were reportedly told that they had been laid off due to organizational restructuring rather than poor performance and were then requested to leave the office. Employees from a variety of areas were affected, including product and engineering, professional services, talent acquisition, quality analysts, sales, and product development.
FarEye’s employment of about 750 people was reduced by about 250 people.
“This strategic realignment has necessitated the necessity to restructure a portion of our staff,” said CEO Kushal Nahata in a statement. “It has been a challenging era for a firm like FarEye, which has always put its employees first and thinks that our people are our most valuable asset.” We had to make some difficult decisions to decrease our operations and services teams.”
One of the motivators for the staff decrease, according to Nahata, was softening market conditions. He went on to say that the company’s short-term priorities will be to reinforce core competencies, differentiate its product, invest in automation, and “optimize the effort” required to manage the firm.
“We are focusing our efforts and aligning resources in areas that provide maximum value for our clients while solving their core problems regarding operational efficiencies, cost minimization, and delivery experience in the coming year,” Nahata added.
FarEye’s life seemed to be going swimmingly until now. The company was named to the Gartner Magic Quadrant for Real-Time Transportation Visibility Platforms in April 2021. Gartner identified FarEye as a “challenger” in the field, alongside well-known brands such as C.H. Robinson, Descartes, and Shippeo.
Gartner criticized FarEye for lacking a global footprint, notably in North America and Europe. In February, the business attempted to address this by establishing a U.S. center in Chicago. However, FarEye’s expansion plans were hampered by this month’s layoffs, which affected personnel in both North America and Europe, according to Inc42.
The layoffs at Stord and FarEye come at a time when the tech industry is experiencing a historic decline, which is beginning to affect the logistics industry. Neovia, a worldwide logistics service, laid off almost 100 employees at its Pennsylvania facility last Friday. Convoy, a digital FreightTech business, laid off 7% of its workers the same day.
