One Kings Lane cuts 25% of staff; will it be the next Fab?

This is the second time that the flash-sales company has made deep cuts in less than two years

Financial trends and news by Steven Loeb
December 14, 2015
Short URL: http://vator.tv/n/4205

It's hard to remember when being a flash sale site seemed like a good business model. Sites like Groupon, LivingSocial and Fab were living it up, raising lots of money, even going public. Then the bubble burst, and they either had to change their model or, in the case of Fab, get swallowed up entirely.

One Kings Lane, the flash-sales site focused on home good, has tried to avoid that same fate. It attempted to into peer-to-peer sales, with the launch of Hunter's Alley. But that effort failed and since then it seems to have been trying its best to stay alive the only way it can: by cutting big portions of its staff.

The company is laying off 25 percent of its staff, according to a report from Re/Code. The news was revealed by CEO Dinesh Lathi, who broke the news to the company's employees in an email on Monday.

The reason for the cuts, he said, was that the company needs to be leaner in order to succeed going forward.

Over the past 6 weeks, the leadership team has been working to determine how we can further accelerate the pace at which we innovate and execute on behalf of our customers and vendors while continuing to meet our financial goals,” Lathi wrote.

The plan the team has landed on envisions a leaner organizational structure than the one we have today. While we believe this new structure positions us well to execute our plan, it unfortunately also contemplates the elimination of approximately 25% of the positions in the company.”

In all, 94 people will be exiting. That includes eighty-nine employees who will be laid off, along with five executives who will be leaving, though there was apparently no mention of who those executives will be.

This is the second time in a year and a half that One King's Lane has slashed its workforce. The last cuts came in June of 2014, around the same time that Hunter's Alley was shut down. That time it was 15 percent.

That was also almost the exact same time that Lathi, who was One Kings Lane CFO and COO, became CEO, replacing long-time CEO, Doug Mack, who announced he was leaving in April of last year in order to run sports e-commerce company Fanatics instead.

Ironically, all this turmoil happened right after One Kings Lane raised a big new funding round of $112 million in January of 2014, which valued the company at $900 million. That gave the company over $220 million in total funding.

Now it looks like it is going to have to eliminate a lot of people if it wants to survive.

It's a little hard not to look at what is happening at One King's Lane and not see parallels to another high-flying flash sales site that was worth $1 billion then fell like a rock. I am speaking, of course, of Fab.

Fab, too, started eliminating a big chunk of workers, with more than a third of it entire workforce laid off  in 2013, followed by fours round of layoffs in the next year.

That included 100 employees at Fab’sBerlin office, in order to consolidate operations in New York. That was followed by another round of layoffs, with 101 people, including 84 members of its New York team. Another 50 were then axed in November. It when laid off another 80 to 90 workers in May.

Fab’s workforce was whittled down to around 200 people from a peak of 700. Ultimately Fab was sold to PCH International for a measly $15 million earlier this year. An ignoble end to a once mighty company.

Whatever happens, all One Kings Lane employees have to be hoping that this does not turn into another Fab situation.

VatorNews has reached out to One Kings Lane for confirmation and comment. We will update this story if we learn more. 

(Image source: glassdoor.com)

Related companies, investors and entrepreneurs

One Kings Lane
Description: One Kings Lane is the only private online sales site solely dedicated to designer home décor. Each day (Monday – Friday) th...

Related news