Silicon Slopes Faces First Round Of Layoffs: Utah CEOs grapple with the reality of layoffs as venture-backed startups mature.

Author:Penrod, Emma
 
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Let's just say that 2016 was not Brandon Rodman's year.

On the surface, things were going great. The CEO and cofounder of rising health communications platform Weave, Mr. Rodman had successfully raised multiple rounds of funding and built his company from the ground to more than 100 employees. Behind the scenes, however, the picture was less rosy-four years beyond their first round of funding, Weave was still losing money most months. They needed to raise more capital to keep the company afloat, but investors were increasingly wary of a company that was struggling to compete on metrics outside of top-line growth.

"It wasn't that we were running the company differently than others ran their companies. Essentially, all startups are running their company that way," Mr. Rodman recalled to me earlier this summer. But simply posting growth, and not meeting profit targets, was no longer enough.

Realizing that future investors would keep Weave on an increasingly tighter leash, Mr. Rodman decided it was time for Weave to leave its startup stage behind and begin behaving like a mature, grown-up business. That summer, instead of raising another round of funding as expected, Mr. Rodman laid off 35 employees.

"We intentionally said, we're going to slow down on that top-line growth," Mr. Rodman says. "So a lot of people that we had to let go of were in marketing and sales, because we wanted to make sure the other metrics in the company were healthy."

Three years later, Weave is no longer alone. A half-dozen, high-profile players in Utah's tech scene, including Canopy, Younique, Upwell Health, and even established companies such as Overstock made waves earlier this year when they laid off considerable chunks of their staffs.

Although the news spread rumors of mismanagement and instability, the turn of events is to be expected, according to Chad Packard, a partner at Pelion Venture Partners in Cottonwood Heights. While each of the layoffs involved unique circumstances, Mr. Packard says the overall trend is likely a symptom of a "maturing phase" in Utah's tech industry.

Using venture capital as the wrong kind of drug

Utah tech companies, Mr. Packard says, have enjoyed a decade-long sellers' market, in which there's more venture capital in the state than there are startups in which to invest it. And though most Utah companies have done relatively well, most are still in their infancy.

Unlike more mature companies, he says, these young companies aren't...

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