The FGB Digest brings you the latest news on the world’s fastest growing direct-to-consumer and challenger brands. In today’s edition: Airbnb halts marketing spend to save USD$800m; Ed-tech business Preply announces USD$10m round; and Thumbtack lays off 250 employees.
Airbnb halts marketing spend to save USD$800m
Airbnb has become the latest business to turn off the taps at its marketing division as the impact from the ongoing coronavirus crisis continues to wreak havoc on its operations.
In light of the global situation, a chastened Airbnb will suspend all marketing activities in a move which will save USD$800m a year. Meanwhile, company founders will forego salary for the next six months and top executives are to voluntarily accept a 50% pay cut as the business reels from an overnight collapse of the travel and tourism sector.
Reports from Reuters suggest that the home rental juggernaut is also closing its doors to new recruits save for a handful of mission-critical roles as it seeks to shore up its balance sheet for what is looking increasingly like a prolonged downturn.
Airbnb is far from alone in taking an axe to discretionary expenditure with retailers such as M&S among the hardest hit, while Coca-Cola, one of the biggest spenders of them all, to tighten its own purse strings.
The cumulative effect of this short, sharp shock to the advertising industry is expected to drive an acceleration in innovation, e-commerce and live-streaming as businesses and consumers reassess established behaviours.
Ed-tech business Preply announces USD$10m round
Preply, a 2013-founded tutoring marketplace, has announced a USD$10m Series A. It said the funding will be used to scale the business and beef up its focus on the US market, where it plans to open an office by the end of the year.
The Series A is led by London-based Hoxton Ventures. Online learning looks likely to be a key beneficiary of the social distancing and quarantine measures that are being applied around the world as countries grapple with the COVID-19 pandemic.
The startup said it has seen a record number of daily hours booked on its platform this week. It also reports a spike in the number of tutors registering in markets including the U.S., U.K., Germany, France, Italy and Spain — which are among the regions where schools have been closed as a coronavirus response measure.
Also this week Preply said some countries have seen the number of tutor registrations triple vs the same period in February, while it also reports a doubling of the number of hours students are booking on the platform in some markets.
Thumbtack lays off 250 employees
Zappacosta said the local services that Thumbtack showcases in its marketplace are also seeing anything from a “dramatic decline” to an “outright collapse.” Apparently the company’s business has fallen 61% in San Francisco, 55% in Detroit and 50% in New York City.
Thumbtack raised a USD$150m round of funding last year, but Zappacosta said, “No business operates with enough of a buffer to sustain prolonged revenue declines of 40%+ without making radical changes.”
Those changes include reduced marketing, a hiring freeze and 25% salary reductions for executives. (Zappacosta said he will not take any salary at all, starting today.) And it also includes big layoffs.
Laid off workers will receive a severance package with both “cash and equity components,” Zappacosta said. He also said Thumbtack is doing what it can to help its service providers, such as “building features that support more remote work with customers — like video consults for a sink replacement that would typically be done onsite.”
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