Look, I get that most people are just going to read the headline, hell most people who share this article will probably never open it, but that's really no excuse for writing an 'article' that has no more substance than the headline.
Questions I want answered in an article like this:
* What is Blue Apron's reason for the job cuts?
* What are Blue Apron's plans for the future? Focusing on core markets, expansions, grocery store partnerships, more product offerings?
* What do their finances look like? Things like customer acquisition, subscription length, service costs? How did the job cuts affect them?
* What is the author's analysis of the situation?
* How's the meal-prep market doing overall?
* Is there a downward trend in these kinds of convenience services?
* Was this going to happen anyway or was there increased pressure from the IPO?
It's Bloomberg - they specialize in getting info out quickly and filling in the details as they hear about it. Not thorough, but being first is what, you know, gets you to the top of Hacker News and lets you sell ridiculously expensive stock trading terminals.
Now we see some of the future details coming in:
> Blue Apron Holdings Inc. is closing a New Jersey facility and moving 1,270 jobs to a bigger site opening in the state later this year.
> More than half of the employees at the Jersey City facility have decided to move to Linden, New Jersey, a company spokeswoman said. According to a public notice, the original Jersey City fulfillment center will close by October. Workers notified Friday of the changes will still have the opportunity to relocate to the new warehouse, the spokeswoman said. The move affects 24 percent of Blue Apron’s workforce.
> Opening new site in Linden that will need 2,000 or more staff
They're growing and relocating, this isn't a massive downsizing as the headline would have you believe, unless it's PR spin on something I don't fully understand.
The stock is definitely down 5%, so if you figure it out feel free to let me know and I'll buy some options :)
> More than half of the employees at the Jersey City facility have decided to move to Linden, New Jersey
Fun fact if you haven't experienced it before. A company will close a facility, and say you can have the same job elsewhere usually requiring drastically different travel time. If you refuse you can't draw unemployment or get any benefits because you turned down the job.
This happened almost 10 yrs ago and I don't anyone who took the deal....I can't imagine anyone would accept such a package, even people who are from India...it was basically just a legal and PR cover, they knew no one was going to take it.
To be fair, it's only 12 miles away. While definitely a pain I don't think it's totally unreasonable especially considering there are almost certainly legitimate operational needs for a larger facility.
In London that's about the same as moving an office from West London to East London (which is happening all the time).
Ah, then that's the PR spin I was trying to be cautious of. It's hard to tell the math from the way they've written it here. What was the former number of employees and what will it be going forward?
That makes sense, and explains why the stock is down. It's actually a nastier form of layoffs. Thanks!
Edit: Actually it looks like it's a net increase in employment. This is insanity.
It looks like Blue Apron misspoke to the press and gave numbers that made it sound like massive layoffs, and Bloomberg wrote the initial version of this article based on the CNBC reporting, which was based on the bad numbers. See this Twitter thread: https://twitter.com/jowens510/status/893545938790363139
>that's really no excuse for writing an 'article' that has no more substance than the headline
I don't really agree. This is breaking news and it is unlikely that the distributor has any of the answers to the questions you've asked. Readers of a new distributor (here, Bloomberg) get the convenience of having to only follow one source to get a variety of breaking news.
Seems like there's an opportunity for a publishing platform that can pull up answers to rudimentary questions like these and include them in sidebar to breaking new like this.
Did you even read the article yourself? The first word in the article links to their stock info, which should answer most of your questions.
The second sentence explains that the laid off employees chose not to relocate to the new, larger facility in a different city, which answers a few of your other questions.
Companies sometimes increase headcount before a fundraising event to create a signal that growth is occurring, or to maximize one area of visible growth as much as possible. This headcount is not always needed after the raise.
> * Was this going to happen anyway or was there increased pressure from the IPO?
After funding the company can focus on essential expenditures and focus its growth and revenue targets on what matters most to investors. It's a good thing for shareholders to cut costs, since headcount can always be increased again when necessary.
Does any of that really matter though? Blue Apron is now accountable to the share holder, so they need to be profitable no matter what. The business doesn't matter, they are fast casual delivered to your house, it's a fragile and easily replaceable market to be in, so they need to be profitable to appear strong.
Didn't Blue Apron and Square Space alone underwrite like half the podcasts in the world last year? Wonder what this means for podcast advertising in Q4/Q1-18
I think it means that podcast advertising is an effective means of raising product awareness but the product itself needs to have value and staying power or else it won't result in a sustainable business model.
Due to regulations about advertising on publicly owned wavelengths, one cannot place a 'direct response' ad on a public radio station (think of your local NPR station here). Instead, there is an 'underwriting message' allowed– typically shorter than a traditional ad, and with no direct sales pitch.
Usually somebody that buys podcast ads is also buying radio ads, and sometimes the terms they use get muddy. 'Underwrite' is probably the wrong term to use for podcast advertising, but since it's frequently used for public radio the meaning would be clear if you were in the industry.
The restrictions @mkmk is talking about apply to public radio stations, like NPR (and maybe some college stations).
The key distinctions are that underwriting has to be short (15 seconds each, 60 seconds total), non-competitive (you have to mention them all underwriters of a program), only at the beginning/end, and can't include a call to action. In other words, an underwriting message can say "This program brought to you by Crazy Eddie's Autos, purveyors of new and antique European cars" but not "COME ON DOWN to CRAZY EDDIE'S AUTO'S. WE'RE HAVING A BLOW-OUT SALE THIS WEEKEND ONLY blah blah"
Privately-owned stations can and do run either kind, however.
That headline is misleading. CNBC is reporting this:
"The company's employees were given the option to transfer to the new facility located in Linden, New Jersey. The 1,270 cut jobs indicate those who decided not to transfer, the company said."
And now the Bloomberg headline for the same link changed to "Blue Apron Is Closing Jersey City Facility and Moving 1,270 Jobs". This is irresponsibly different from the original "Blue Apron Plans to Cut 24% of Staff Barely a Month After IPO" headline.
"... the meal-kit delivery company shifts operations to a bigger site opening in the state later this year...the cuts reflect employees who chose not to make the move."
Sucks for employees who can't make the move, but from the company's perspective, this just precedes growth, no?
If these are the folks doing the food prep, almost certainly. Have you ever used something like Blue Apron? All the ingredients have to look good, and be packaged into little individual servings - think two cloves of garlic in a vacuum sealed bag.
Times six for the five other ingredients in the bag, many of which are probably more fiddly than "put two cloves of garlic into bag, and place into vacuum sealer."
Times, say, five thousand packages that have to go out and get delivered tonight so people can make their dinner.
Garlic is simply too common in most cooking to eliminate, so the outcome will be extremely similar with obscure ingredients like lemongrass or papaya or thai chile paste.
This IPO has been a complete disaster: The initially lowered the price range, and then did the IPO at the low end of $10. Stock opened for trading at exactly that level, instead of higher, and has lost around 40% since then.
Normally this IPO would not have been that big of a deal. But since the tech IPO pipeline is largely frozen at the moment, APRN was widely seen as a canary in the coalmine for the sector. The fact that it was this poorly received, only underlines the fact that there is currently sector rotation out of tech going on.
The way that I think about a "tech" company is that it is able to scale its growth non-linearly with its staff (or human resources). This isn't a binary rule, and obviously many successful companies are in a gray area -- but I think that it serves as a good litmus test / starting point when thinking about companies.
For example, an app that is running on a few servers can gain users more quickly than it needs to hire additional workers. A company like Blue Apron has to grow its warehouse staff as it gains new subscribers, effectively meaning that its SG&A and overhead costs scale fairly evenly with growth.
Technology is strategy, techniques and general knowledge on applying science, engineering, and other disciplines to solve problems. It is not a thing in itself but a means to an end. That end describes the actual business.
Just because you use technology to improve productivity and output compared to a competitor does not mean you are a "tech" company - it means you're better at doing whatever your business is.
Agreed in general, but I am specifically not talking about technology used to improve processes or help a company move up the learning curve.
I was trying to offer an explanation of what separates out "tech" companies and not trying to get into the nitty gritty of the fact that many companies use technologies. I would argue that a manufacturing company whose innovation is a more streamlined assembly line to product some widget is not a "tech" company in the sense that many people on hacker news use the word.
*Do you have a platform that fundamentally solves what would otherwise be a technology problem for other people, ie expose your technology so others can leverage it(via API/SDK, SaaS or other such on-boarding method).
None of this is clear cut as there are many grey areas but in general if you are creating technology for others to use and that is your core operation then you're a technology company.
Selling packaged food while using an App or Website does not make you a technology company. Blue Apron could completely outsource their technology work and I doubt it would fundamentally change the makeup of the company, you couldn't do that with a technology company.
Some other ways I measure the "techiness" of a company; how much of the payroll is spent on engineers and if they're using software to replace value typically provided by people.
> if you are creating technology for others to use
If they're selling hardware then it's a hardware company. Likewise if it's software. There is no way to sell technology, you sell the end product or service.
> you couldn't do that with a technology company.
Yes you can, it's just building software or other work. Don't buy into this special Silicon Valley hipster thinking, getting things done and making (and selling) a product the market wants is all that matters. How you get there doesnt. And none of it makes you a tech company.
I would have to disagree with that definition. There are tons of companies that are scaling non-linearly without using any particularly new technologies.
I don't consider a frying pan manufacturer a tech company just because they have managed to grow by optimizing their supply chain and productivity.
Alternatively I also think a company that makes brand new technology year after year even if they scaling one for one with hiring is still a tech comapny
I think what you describe might just be a general guideline for identifying a financially successful company not necessarily a tech company. People hear VC funding or IPO and often automatically think it must be a tech company by conflating technology and financial success.
I think you are getting caught up in definitions for the concept in a vacuum. I was just trying to help explore "tech" when it comes to hacker news and the VC landscape, whether or not I agree with the definition.
I agree. While pinpointing the exact definition of a "tech company" is a game of semantics, I think it's pretty clear that they're simply a meal-prep delivery service.
Same goes for Casper, which dubs itself a "sleep startup" (whatever the hell that means). They sell and deliver mattresses.
having interviewed at Blue Apron, I can confirm that they very much view themselves as a tech company even though they are not really in the tech business space. The level of Google envy I saw at what is essentially an e-commerce grocery store was insane to me.
How is that more accurate? Every company uses technology, at which point saying anything like "tech company" is a useless modifier compared to just "company".
I think "every company is (nowadays) a tech company" is a relatively fair assessment, even if somewhat exaggerated.
Increasingly, successful companies require ownership of proprietary technology, rather than purchase of commodity technology from third parties, and in that way more and more companies - even those in "traditional" fields - have invested in in-house tech R&D.
More importantly, software engineering has become a critical part of companies' success, even if the company doesn't ship software to end users (see: UPS, FedEx, Visa, MasterCard).
It certainly seems like the old definitions of "tech company" is increasingly archaic - is Amazon a tech company? Or are they just a retailer that uses technology? Is Grubhub a tech company, or just a delivery service with a frontend?
> "Every company uses technology, at which point saying anything like "tech company" is a useless modifier compared to just "company"."
I think that's exactly the point. Software has become so critical to almost every field (and more importantly: in-house developed software) that many companies have become tech companies, and those that haven't are either getting on the bandwagon shortly, or will perish soon after.
There may come a point where "company" vs. "tech company" loses its distinction, but for now it seems like "companies" are becoming "tech companies" rather quickly.
A mistake on one end of the axis (BA is a tech company) doesn't need to be corrected by an outrageous statement on the other end of the axis (there is no such thing as a tech company).
There is no other end of the axis. You might as well say an electricity company because they use power to run.
Some are more cutting edge with newer tech, but that's making the process and operations better, with their end goal still being the same (whether it's selling software or groceries).
Google sells advertising software and people's attention. They also make search software and various other portals that they give away for free. SpaceX builds rockets and sells freight-to-space logistics. We have had rockets for decades, newer tech just make it possible to make better rockets.
Google and SpaceX (like every other person and company on the planet) uses technology to create these products and services, but that's it.
^ this. I think the bigger question becomes "why does it matter if something is a tech company?" Is it because that is what makes it easier to raise money today? If that's the case, then I wish more investors and analysts would go back to first principles and understand why slapping a "tech" label on a company does not necessarily mean it will scale well or succeed in the long run.
There's a Quora question[1] about this that has a different take than you:
> Uber is a tech company because that's what we do. We create a service that powers a marketplace through technology, and we provide apps that let people participate to this marketplace. Specifically, that marketplace lets individual users or businesses buy transportation services from partners.
> We are not a transportation company because we don't transport goods or people - our partners do. We just facilitate that. And we are not a cab company for the same reasons, and on top of this, we don't own a fleet of vehicles.
They're hitting the same problems that Groupon hit. Their margins are extremely low, the cost of acquiring and retaining customers is high, and there's no barrier to entry for competitors.
For example, during the last 12 months at Blue Apron they spent $178 million on marketing, and acquired 387,000 customers (these figures are from their IPO). That's $460 per customer. Getting hold of customers is not cheap, and many of these customers are not loyal or are stopping the service after only a few deliveries.
Well, a company can provide a good service but be a terrible business. See TWTR or SNAP as examples. Uber would be another. They're mostly burning cash without a clear path to profitability. Given their recent scandals, an IPO seems to be extremely far away.
They don't have a great moat (all recipes are available for free online for instance) and the meal kit market has gotten very, very crowded since they invented it 5 years ago.
Agreed. I also saw a talk by a PM from Blue Apron a while back, and it seems that another problem is that people subscribe with the hopes of cooking more but then discover that having the meal kit still involves enough time and friction to limit them from doing it. I think that many people love the idea of cooking more often but still wish it were more convenient. To Blue Apron's credit, they have made it fairly streamlined!
It takes me about half the time to make a Gobble meal as a Blue Apron meal. Blue Apron is streamlined relative to doing it completely from scratch, but it's still more work than I have time for.
I think that addresses it then lol. They aren't even delivering on their core promise, and competition has outperformed on a key product metric like effort and prep time!
Blue Apron sucks. This week was the first time we ordered from them. The garlic they sent was spoiled and rotten. It took quite sometime to make and the instructions are unclear. We will trying other services but never Blue Apron
We've been through most of them. I liked Hello Fresh but that wasn't amazing either. Even though ingredients are mostly prepped the preparation and cooking can be pretty time consuming. Lately we've been working on recipes with small ingredient lists that share ingredients. It's cheaper, easier and bigger portions. I like having leftovers to take to work the next day. We don't like grocery shopping but most of the stores near us are doing either at the door pickup or even delivery.
This is EXTREMELY unusual -- in fact, unheard of -- for a company that just consummated its IPO.
Historically, companies that IPO are in growth mode; they use the IPO to raise more money to fund more investment in growth opportunities.
Think of it this way: in an IPO (initial public offering), a typically young company offers newly issued shares to public-market investors in exchange for fresh money. The investors buy those newly-issued shares if they believe the company can put the money to good use, for example by investing in growth opportunities. If investors believe the company has no growth opportunities or is in retreat, an IPO is unlikely to be successful.
Yet here is a company that consummated its IPO only a month ago and now is firing a quarter of its employees!
From what I understand of the last 15 years, IPOs are now for cashing out when you've manufactured a solid enough filing to convince normal people that you're worth what the 10 VCs who gave you money say you're worth.
No company IPOs if they don't absolutely have to. It's like conceding that you can't make enough profit privately to recoup your investment on any kind of reasonable timescale.
In theory that can't be true. To IPO you don't need to convince "normal people" to IPO you need to convince institutional investors (those that run funds that are called on to fund retirement payouts, people who manage university endowments etc) on a road show that investing in your company will be a 'good thing' because the company is growing. The S-1 and prospectus should tell you all about the risks in clear detail and what is and is not known about the market. These people are not 'normal' people in that they analyze investment opportunities all the time. They usually ask detailed questions and want detailed answers. Usually a representative from the independent accounting firm that audited your financials is along to answer questions as well as the company's CFO to put the best possible spin on it.
These investors are not going to buy your initial stock and then turn around and dump it because that would kill the value of any stock. Instead they have to believe that they can buy your stock and hold it for 12 - 36 months and it will become more valuable so that if they chose to they could sell it into the market over enough months to not disrupt the price and make a return on the money they invested. They need that return because the people who pay them to manage the fund demand a certain standard of performance or they get fired.
If the goal was to just 'cash out' you have to convince all of these people that you're not really going to cash out in order for them to buy into your IPO. That is hard to do with dozens of new investors.
From the article, they purport to be gunning to automate the function of most of the folks who will be cut, but whether the cuts are based on some dire condition of Blue Apron or are just part of getting more efficient is obfuscated by the site move and clever explaining.
More to the point in the comments here about Blue Apron and other underperforming IPOs, and the sense of IPOs being cash-out schemes for VCs and founders: Is there a growing climate of such IPOs that would elicit a feeling that tech IPOs are a means to extract money from the public/an exchange by IPO'ing high and letting the share price slide to something real?
Questions I want answered in an article like this:
* What is Blue Apron's reason for the job cuts?
* What are Blue Apron's plans for the future? Focusing on core markets, expansions, grocery store partnerships, more product offerings?
* What do their finances look like? Things like customer acquisition, subscription length, service costs? How did the job cuts affect them?
* What is the author's analysis of the situation?
* How's the meal-prep market doing overall?
* Is there a downward trend in these kinds of convenience services?
* Was this going to happen anyway or was there increased pressure from the IPO?
* Is this typical for companies that IPO?