Metafy, a video game training marketplace, last week laid off 23% of its employees, mainly in product, design and engineering teams, affecting the founder. Joshua Fabian Confirmed via email to TechCrunch. The fine affects 12 full-time employees. A Notion page has been created for those looking for their next job.
Metafi has raised over $30 million in known funding from Tiger Global, Seven Seven Six, Forerunner, DCM and others. Prior to the layoffs, there were pay cuts to the management team, Fabian said.
“I’m not crazy about the ivory tower bullshit. The cuts have affected roles that once made sense for the business, but are now difficult to explain. No one fired has done anything wrong, and this is not a reflection on their work ethic,” Fabian wrote in an email to TechCrunch. As it has grown and evolved over the past two years, the needs of the business have easily changed.
All those affected, regardless of length of service, were given three months’ severance pay and extended health care, Fabian said. For those less than a year old at Metaphy, the rocks of fairness have risen. The launch also offered a subscription to LinkedIn Pro.
Metafy’s mobile (iOS and Android) teams were the hardest hit by the manpower cuts, as the company now wants to build on React Native, a single codebase that doesn’t require two separate iOS and Android teams.
As for what’s wrong, it’s a similar story for many startups as they adjust to the more disciplined ‘new normal’. Metafy last raised its Series A round in February 2022, “when things get decent,” said Fabian, who plans to raise a Series B several months later.
“If they were raising money last year, their priorities were GMV and growth, not unit economics or revenue. There is a new normal, if you want to stay alive there is no choice but to be more disciplined not only in spending but also in product vision and direction,” said Fabian. “My only regret is that we waited as long as we did. It caused unnecessary pain. We learned valuable lessons, but we did it the hard way.”
“It’s my fault,” added the founder, who preferred a more transparent explanation of the cuts compared to his colleagues. Fabian also published an update on public investors, including recent cash burn, active students and coaches, and cash on hand (now $18.4 million).
Here’s an excerpt from Investor Update, which goes specifically to the company’s financials:
Q2 is almost here and, to my delight, we had one hell of a quarter. June was our best month. hardly ever Across GMV, AOV, game distribution and overall active coaches. The market is a bloody thing to bathe in, but thanks to an incredibly special fortune cookie, I never bathe without my floats. You are in good hands.
In response to the market, we’ve made it a priority to get smarter about unit economics. More to come soon. Thanks to the work of our expert success team, our professionals continue to grow smarter about managing their work. Our outreach team has found a repeatable model for linear growth. We are now cooking with gas.
Let’s get to the point as we speak.
Q2 Separation:
- Active coaches: 570 -> 686 (+20.4%)
- Active students: 1812 -> 3337 (+84.2%)
- Sessions are booked: 2549 -> 5733 (+124.9%)
- Monthly GMV / Revenue: $185,975 -> $375,971 (+102.2%)
- Money in hand: 18,388,055 dollars
- Monthly burn~$1.3M (does not reflect Q3 cuts)
Specifically, in the most recent quarter, the company grew its active coaches and active students, resulting in over 100% growth in monthly GMV and revenue. Especially considering the time costs associated with personalized video game advice, the move to outsourcing seems like a step towards a simpler business.
The cuts helped Metafy reduce staff costs by 19%, from $746,000 to $607,000 per month. Operating expenses decreased by 70% from $306,000 to $100,000 per month. With these trims, Fabian estimates Metafi has a quarter-way to last more than 2 years after it stops earning. Or to be more specific, Metafy says it has a runway until February 2024.
The founder says Metafi has most of the team it needs to build over the next two years, but will be hiring in key roles going forward.
