metafiera marketplace for video game coaching, laid off 23% of its staff last week, primarily impacting the product, design and engineering teams, founder Joshua Fabien confirmed in an email to TechCrunch. The layoff affected 12 full-time employees. A Notion page has been created for those looking for their next job.
Metafy has raised over $30 million in known funding from Tiger Global, Seven Seven Six, Forerunner, DCM and others. The layoffs were preceded by pay cuts for the management team, Fabian said.
“I’m not crazy about the Ivory Tower bullshit. The cuts have impacted roles that once made sense for the company, but are now difficult to justify. No one fired did anything wrong, and this is not a reflection of their work ethic,” Fabian wrote in an email to TechCrunch. “The needs of the business have simply changed as it has grown and evolved over the past two years.”
All those affected, Fabian says, were offered three months of severance pay and extended health care, regardless of tenure. For people who had been with Metafy for less than a year, the equity cliffs were lifted. The startup also provided a LinkedIn pro subscription.
Metafy’s mobile teams (iOS and Android) have been hit hardest by the downsizing, as the company says it now wants to rely on React Native, a single codebase that doesn’t require two separate iOS and Android teams. .
As for what went wrong, it’s a similar story for many startups adjusting to the “new normal” of a more disciplined environment. Metafy last raised its Series A round in February 2022, “when things were rosy,” according to Fabian, who planned to raise a Series B round months later.
“If you were fundraising last year, the priorities were GMV and growth, not the economy or unit revenue. There’s a new normal, if you want to stay alive, there’s no have no choice but to become more disciplined not only with spending but also with product vision and direction,” Fabian said. “My regret is that I waited as long as we did. It caused unnecessary pain. We learned a valuable lesson, but we did it the hard way.
The founder, who opted for a more transparent explanation of the layoffs compared to some of his fellow entrepreneurs, added that “it’s my fault.” Fabian also released a public update for investorsincluding most recent cash burn, active students and coaches, and cash on hand (it’s now $18.4 million).
There’s an excerpt from the Investor Update that specifically addresses the company’s finances:
Q2 has come to an end and I’m happy to say we had a hell of a quarter. June was our best month already on GMV, AOV, game distribution and total number of active coaches. The market looks like a bloodbath, but thanks to a weirdly specific fortune cookie, I never swim without my floaties. You are in good hands.
In response to the market, we have made it a priority to be much smarter about the economics of our units. More to come soon. Thanks to the work of our team of success experts, our experts continue to get smarter in running their businesses. Our Outreach team also found a reproducible model of linear growth. We cook with gas now.
Speaking of which, let’s get to the point.
Active coaches: 570 -> 686 (+20.4%)
Active students: 1812 -> 3337 (+84.2%)
Reserved sessions: 2549 -> 5733 (+124.9%)
Monthly GMV / Revenue: $185,975 -> $375,971 (+102.2%)
monthly burn: ~$1.3m (does not reflect Q3 layoffs)
In other words, in the last quarter, the company increased the number of active coaches and active students, resulting in over 100% growth in GMV and monthly revenue. The shift to layoffs seems like a step toward operating a leaner business, especially given the time cost associated with one-on-one video game advice.
The layoffs help Metafy reduce personnel costs by 19%, from $746,000 per month to $607,000. Operational costs were reduced by 70%, from $306,000 to $100,000 per month. With these trimmings, Fabian reckons Metafy has just over two years of trail if it stops generating revenue. Or to be more specific, he said Metafy had a lead until February 2024.
The founder said Metafy has the bulk of the team needed to build over the next two years, but will hire critical positions in the future.