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Spotahome performs a tough adjustment to cut overall spending by up to 80%

Spotahome performs a tough adjustment to cut overall spending by up to 80%

Spotahome performs a tough adjustment to cut overall spending by up to 80%

[email protected] (Jesús Martínez)

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And he took out the scissors again. This time, with a much harder cut. The Spanish startup Spotahome wants to lengthen its box as much as possible after the strong blow suffered by the coronavirus crisis and restrictions on mobility around the world. Therefore it carries out a adjustment that should result in overall cost savings of up to 80%. It prepares dozens of layoffs, for which an Employment Regulation File has already begun (ERE), and the closure of practically all open offices outside Spain. The company, today managed by Alejandro Artacho, has received the support of renowned investors at this time, such as the historic American megafund Kleiner Perkins, Silicon Valley executives and the former president of BBVA, Francisco González. Some shareholders They valued it at just under 150 million euros just two years ago. Spotahome was founded in 2014. And it aimed to digitize the entire process of renting homes for medium and long stays, aimed above all at the educational and business sector, to provide service to temporarily transferred workers or students of Erasmus or master’s degrees who can book the accommodation remotely and through the internet. That continues to be his focus today and the bulk of his business. The global confinement caused by the pandemic, started last March, brought a braking in the movement of people between countries. That led to a break in business. Despite the vetoes beginning to lift, the reality is that in the ‘new normal’ the business could be affected. And that’s why the team led by Artacho has put on the council table some drastic clipping measuresThe company started this year 2020 with capital needs. A year and a half after the last big round of more than 34 million – and after an unsuccessful approach to Softbank’s startup mega-fund – he got down to business to recapitalize. He achieved an injection ‘in extremis’ million euros, which has not been officially quantified nor yet reported to the UK commercial register, where its holding company is located. That gasoline was contributed, mainly, by the current shareholders. The objective now is to try to extend that money as much as possible. The consequence is a restructuring package that has already been presented to investors and which aims to cut overhead costs by up to 80%. It would be a full-fledged ‘reset’, with a series of measures beginning with an Employment Regulation File (ERE) for the template that will involve dozens of layoffs. For this, the entire legal process has already been started and employee representatives have been appointed to negotiate the terms, as confirmed by several knowledgeable sources. The total workforce, among all the venues, would exceed 250 positions, after adjustment that was already in February. This medium has contacted the management of the company, which did not want to make statements, among those layoffs that are already being negotiated would be some of the star signings that were announced after the Kleiner Perkins round in 2018. The CEO decided that the executive leadership, made up of the head of technology (CTO), finance (CFO), growth (CGO), product (CPO) and operations, had to be professionalized (COO). A handful of experienced managers landed on the roster to fill those positions and relieve several of the co-founders. They came from major companies like Amazon, Uber or Tripadvisor, from where they were recruited with a heavy investment. As Artacho himself clarified in an interview Recently, some of those hires did not work. Along with the downsizing, which is not yet fixed in number, there are other cuts linked to other expenses. The main ones have to do with international expansion. In recent years, Spotahome’s operations have grown to work in eleven countries. The approach now is close all these local offices to centralize all management from their headquarters in Madrid. Among those sites is London, the opening of which sparked some internal debate. Those star signings were located there, which led to a certain ‘bicephalia’ on a day-to-day basis, as confirmed by several knowledgeable sources to La Información. This aggressive growth, with strong associated spending, has had a cost. In the year 2018, last of which there are accounts available in the records, the company entered more than 6 million euros of the commissions charged both to the tenant for the reservation of the house, and to the owner of the asset for all the management. But the losses exceeded 12 million. Those for 2019 have not yet been presented, although several sources familiar with the numbers assure that the ‘red numbers’ would be significantly higher than that amount. The turning point was the emergence of Kleiner Perkins. The Silicon Valley mega-fund, one of the oldest in the sector and which was present in the main technological giants such as Google or Amazon, contributed a large part of the 34 million euros in the round, which is now two years old. To get an idea of ​​what this investment represents for the manager, it must be remembered that in the last four years alone, it has raised $ 2.3 billion in three different vehicles. The objective he set for the management team was to significantly accelerate growthAlong with Kleiner Perkins, Spotahome has a shareholding full of prominent names in the technological ecosystem. In that last transaction, some relevant Silicon Valley executives entered as the controversial co-founder and exCEO of Uber, Travis Kalanick; the creator of the cloud giant Dropbox, Drew Houston, or the co-founder of Yelp, Jeremy Stoppelman. To these must be added outstanding national funds such as the case of Seaya Ventures, also a shareholder in other renowned startups such as Cabify or Glovo) or All Iron Ventures, led by the two Ticketbis entrepreneurs. There is also the former president of BBVA, Francisco González, or the internet veteran Javier Otegi Etxebeste, former CEO of Yahoo Europe.

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