Update Jan 23, 12:48 p.m.: Gilt’s spokesperson has confirmed the number of layoffs, writing in an e-mail, “We let go of about 80-90 across the businesses and that process is now complete.”
Update Jan. 22, 7 pm.: A Gilt spokesperson tells us the number of layoffs is lower than the “more than a hundred” reported in this article but declined to provide a number or comment further on the situation.
Earlier this month Gilt Groupe CEO Kevin Ryan responded to rumors that the company would lay off 170 employees by claiming he only had plans to “selectively trim” the staff by 50 people over the next couple of months. But a source tells us today that the company laid off more than a hundred people, and the canned employees might include John Auerbach, who headed the men’s division and spearheaded the launch of the full-price Park and Bond site, and Nate Richardson, who headed Gilt City. “Apparently people are terrified,” the source said. “It seems like all of middle management — they’re the ones who are most scared.” Of Gilt’s three offices around the city, the aura is thought to be the worst at Gilt City’s HQ.
Signs of leaner times at Gilt, which expanded very rapidly to around 900 employees, are evident in the kitchen, which is known for supplying staffers with a vast array of tantalizing snacks. A refrigerator in one office is said to bear a sign that reads, “Gilt has made a New Year’s Resolution to cut the following items from our purchasing diet across all locations: all fruits, all yogurt, all cheeses, Thomas’ English muffins, granola and health bars, Rice Krispie treats, Poptarts, and Pellegrino.”
Ryan, who said the company would have more employees by the end of March than they had before today’s layoffs, wrote an article about “Building a Team of Players” for the latest edition of Harvard Business Review:
Every company thinks it’s doing a good job of managing its people. They all say, “People are our most important asset.” But most companies don’t really act that way. Here’s a simple test: Ask the CEO if he or she spends more time on recruiting and managing people than on any other activity. For me, the answer has always been yes.
…But at businesses that employ more than 50 people, the best use of a CEO’s time is to bring in unbelievable people, manage them well, and make sure the company builds and maintains an A-caliber team.
He adds, “ I am evaluating talent all the time,” and writes under a section sub-headed “Addition by Subraction”:
Part of building a great team is learning to recognize when individuals aren’t working out and then letting them go. In general, managers are not rigorous enough about this. That’s a problem, because often the only way to make room for better players is to get the weaker players to leave the organization.
Gilt falls under the umbrella of AlleyCorp, of which Ryan is a founder. Also in the AlleyCorp family is Business Insider, which has reported via a “source” that Gilt’s layoffs would only total 5 to 6 percent.
Our source explained that it takes more people to set up new departments than it does to keep them running. Now that Gilt has established a number of businesses, like Park & Bond and Gilt Man, the hard work is complete. Also, the recently-acquired BuyWithMe has now been fully incorporated with Gilt City, Gilt’s high-end Groupon-like coupon business; that business can now be sustained with fewer people.
That article ends with this line: “Disclosure: Gilt Groupe’s CEO and founder, Kevin Ryan, is also the chairman of Business Insider.” It certainly seems to foreshadow the reported layoffs today in the City and men’s divisions.
This post has been updated to remove a reference to Kevin Ryan in Business Insider that is not the same Kevin Ryan that heads Gilt.