
Layoffs Hit Gumroad as the E-Commerce Startup Restructures - ssclafani
http://techcrunch.com/2015/11/05/layoffs-hit-gumroad-as-the-payments-startup-restructures/
======
kwarner
Former Gumroad employee here. Since we didn't write about this, here's a
response from the other side-- we weren't blindsided by this. We knew there
was a chance we wouldn't get our series B, yet we believed in the product. The
numbers looked great (the best they had ever looked). And we wanted to see
this work, whether or not it meant being part of it in a few months.

This isn't some photo sharing app; many creators earn their living from
Gumroad. When the time came to make a decision whether to be acquired and have
the product die, or to downsize and have the product live on, this choice
involved a lot more than our 20 person team. It involved the thousands of
creators that rely on Gumroad. With or without me, I still believe in Gumroad.

~~~
tzier
It's refreshing to see employees who are this dedicated to the product. Kudos,
Gumroad team.

------
aaronbrethorst

        The company had 22 employees as of earlier
        this year, and it has been in the process
        of laying off all but what is expected to
        be around 3 of its staff.
    

Normally, when I hear the words "layoff" and "restructure", I think 15% of the
company, not 'basically everyone.' That's a bummer, and I expect this won't be
the last time we hear this story this year.

I hope the frontend engineers making $75,000-$125,000[1] for a shot at one day
accumulating up to 1% of Gumroad decide to pursue market wages at the next
company they join :-\ The economics of startups rarely offer a worthwhile
return to those who choose to play the game. For what it's worth, this is
something I've found out the hard way.

[1]
[https://web.archive.org/web/20130516103241/https://angel.co/...](https://web.archive.org/web/20130516103241/https://angel.co/gumroad)

~~~
onewaystreet
That's from 2013. No way they were paying sub $100k today.

~~~
aaronbrethorst
How about middle of 2014, then? "$95k-$125k"

[https://web.archive.org/web/20140707172338/https://angel.co/...](https://web.archive.org/web/20140707172338/https://angel.co/gumroad)

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Georgio_1999
I run a company called SendOwl, which is probably the biggest competitor to
Gumroad, and I must admit I'm sad to see this. We've been watching them over
the years and have been impressed with some of the work they've delivered.
I've also met a few of their employees and have liked their thinking around
selling digital goods and where it's going. You could see they wanted to make
a success of the company.

Their problems, in my opinion, have come from being VC backed. VCs ultimately
want thier money back and with this comes massive, often unrealistic growth
expectations. I've had a lot of offers of VC money for SendOwl over the years
but I've never once considered taking it. I've bootstrapped SendOwl because I
wanted complete control of the company, to direct where I thought it should
go, to create the company where I wanted to work at (we work a sensible 9-5, I
spend lunchtimes hitting the gym...), but most importantly to serve our
customers and build something for the long term. This last part is something
I've always seen as uncompatabile with the VC model.

The VC model is alluring though - VC money makes growing quickly easier, it
makes getting PR easier and it makes bringing in lots of staff early on an
easy decision. I'm not saying it's right or wrong per say, it's just not the
path I wanted to go down. Bootstrapping isn't as sexy as VC money, but as long
as we're growing, getting great customer feedback, and innovating with new
features I know we're on the right path. Focus on those three things with
Boostrapping and it's hard to go far wrong to be honest.

Interestingly we're getting more and more people asking about us as a company
and whether we'll be around long term, so maybe the tide is starting to turn.
Anyway I wish everyone leaving Gumroad all the best for the future. And any
sellers out there who are interested in alternatives please check us out at:
[https://www.sendowl.com](https://www.sendowl.com) Happy to also answers
questions in the thread below!

~~~
baobaba
I just read your blog post on the topic. We need more voices like yours.

~~~
Georgio_1999
Thanks so much - we're going to be talking about this much more in the future

------
mattjaynes
Interesting. I've been a customer of theirs for ~2 years. It's been really
great until a couple months ago. Then something seemed to change. Rather than
just being a great payment provider, they seemed to change direction in order
to become a "platform".

In emailing with Sahil about my concerns about Gumroad's new direction, he
said "We want Gumroad to be the core channel for everything. We started with
sales, and are moving into audience/list management."

He made it clear that they want me to import my audience lists to Gumroad and
that they don't plan to support future integrations with CampaignMonitor,
Mailchimp, etc. That makes sense, since those email platforms are now the
competition I guess. It's bad news for me though - if I wanted to stay with
Gumroad, I'd now have a project on my hands to move everything over to a
(currently) much less powerful email platform.

I imagine this will work for many of their customers, but there are customers
like myself that don't want to be pushed in this direction. I prefer to keep
my audience management separate from my payment provider. I don't want my
payment provider deciding that my customers are now their customers that they
can now spam and upsell them in order to grow their platform. I'm not saying
that that is Gumroad's plan - but I'm increasingly worried that it might be.
Particularly if they get in a "desperate for growth" situation like this
article hints at.

Again, they've been great for years and I really appreciate that. The new
direction just seems too risky and not a good fit for folks like me who don't
want their payment provider as the middle-man for communicating with their
audience.

I guess there's an argument that they're not a payment provider, but a "sales
platform" or something.

Currently I'm looking for a replacement payment provider (or whatever they
should be called) to use. SendOwl looks promising. If you've used them, or
have another provider you'd recommend, please let me know!

~~~
jerrell
I've been using SendOwl for a few years now to sell music education eBooks and
albums directly through my website.

I can't recommend it highly enough.

Here are a few things I like:

\- It works 100% reliably, has never let me down

\- The checkout process is easy and neat from the customer's perspective

\- Supports PayPal and Stripe which is the ideal imho

\- Integrates with all popular email providers so you can do product-specific
followup sequences with bonus gifts, etc. after purchase

\- Provides simple support for running an affiliate program

\- Support it absolutely superb: personal, swift and effective

\- They handled the EU VAT mess better than anyone else I saw

\- Monthly fees are very reasonable, I think I pay just $20-30/month

\- It's easy to issue refunds and/or re-issue download link emails if you need
to, so customer support can be handled quickly for those things

\- You can create product bundles to support multiple products or discounted
versions of products. After trying e-junkie and Clickbank before SendOwl, I
can't tell you how much easier this feature alone made my life!

\- You can do upsells/cross-sells during (or after) checkout

\- They've been continually improving and extending the features offered in
substantial ways - but without making a total mess of things.

\- The reporting/analytics is simple but effective.

\- In integrates effortlessly with e-commerce in Google Analytics so your
sales (including dollar amounts) just show up in GA automatically.

Okay, that turned out to be more than a few things. I love SendOwl.

~~~
sampotts
So you... work for them?

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porsupah
> has been in the process of laying off most of its staff in an effort to run
> more efficiently

Is that meant to sound quite as much of a death knell as it does to me? I hope
not.

I've made a few comics purchases through Gumroad (Skin Horse, Narbonic, and
Inhuman Relations, amongst others), and found the process quite delightfully
straightforward. I do hope this isn't their end - they deserve better.

------
prawn
I remember when Gumroad was announced on Hacker News 4-5 years ago as a little
weekend project.

"Over this past weekend I had the idea to build a sort of link shortener but
with a payment system built-in... I think it has some potential. What do you
guys think?"

[https://news.ycombinator.com/item?id=2406614](https://news.ycombinator.com/item?id=2406614)

~~~
jrbedard
It was April 4th 2011. There's an entertaining sub-thread about Bitcoin in
that discussion
[https://news.ycombinator.com/item?id=2407053](https://news.ycombinator.com/item?id=2407053)

 _At the current ~$0.70 / bitcoin..._

 _I can 't imagine bitcoins in their current implementation gaining traction
as a form of payment with 'regular folks'..._

~~~
necubi
And four years later at $400/bitcoin, that's still true.

~~~
cookiecaper
Yep. One of the main allures of credit card processing is that it's
instantaneous. Bitcoin's confirmation system is a non-starter as a competitor
against credit cards unless you have special circumstances that make it the
only practical option (can't trust customers to refrain from filing
chargebacks and/or conventional financial institutions won't have anything to
do with your business). Ultimately, while Bitcoin may maintain some value,
it's not very convenient as an everyday payment instrument (just like gold,
actually).

------
dkarapetyan
Huh? I thought Gumroad was one of the better services out there for selling
stuff. Too bad "hypergrowth" mania devalues companies like Gumroad because
they look like a pretty awesome and sustainable business.

------
quest88
I've wondered why a company like this needs to be present in the bay area
paying bay area salaries and bay area office space prices.

~~~
angelbob
For anybody doing the VC thing, they need to be able to plausibly promise
their VCs to grow really, really fast.

That means hiring a lot of engineers, designers, etc., really fast.

That's much harder outside the Bay Area, and especially outside really
expensive areas generally -- Seattle isn't that much cheaper than the Bay
Area, for instance.

------
anon8418
That's pretty surprising...

You would think with 15K creators and their traffic they would be able to
monetize better... having to cut down to only _three_ employees suggests they
aren't making much revenue at all...

~~~
cookiecaper
That's the unicorn way. Tech companies are encouraged, practically forced, to
overspend in an attempt to show "hockey stick growth". This strategy has two
positive properties for the investor: it ensures that the entrepreneur will be
back before the VC to grovel for more cash in the next 24-36 months, and it
gives the VC a way to kill investments he doesn't believe in anymore, despite
what is a conventionally respectable and sustainable growth rate, by refusing
to provide that infusion. Since most founders are naive 20-somethings, this
trick works.

------
fasdf3asdf
The real question is, why did they have 22 employees? I think this would have
been an incredibly profitable one-man business (think TinyURL) but it tried to
be something that was very hard for it to be.

~~~
lucaspiller
This is what VC investment does to a company. The investors make you go for
hockey stick growth, which means instead of just having a good service for
selling content (that makes the owner a very handsome income), you need to
take on the likes of Facebook and Pinterest. DHH's article from yesterday is
right on:

> Part of the problem seems to be that nobody these days is content to merely
> put their dent in the universe. No, they have to fucking own the universe.
> It’s not enough to be in the market, they have to dominate it.

[https://signalvnoise.com/posts/3972-reconsider](https://signalvnoise.com/posts/3972-reconsider)

------
rloomba
Restructuring down to only 3 people? I think this will make the company way
more attractive for an acquisition.

------
alex_hirner
Intermediaries get disintermediated. Braintree is a tad bit closer to the iron
and maybe (if PoW conundrum finally overcome and after debt is introduced)
crypto will do it again.

------
niketdesai
SHL learns a ton from this, gets experience most executives don't have.
Optimistic in his future either way.

To the GR team, your work is not marginalized by this speed bump. GR is really
good and something people love.

I hope other people recognize that and snap up everyone into good places.

------
pbreit
You've gotta find some semblance of product/market fit or traction before
staffing up to 22 people.

