Amazon aggregator Thrasio begins layoffs and appoints new CEO

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The day of reckoning has come Trasio, one of the largest startups buying up and consolidating third-party Amazon sellers. TechCrunch has learned from sources that the company, which was valued between $5 billion and $10 billion last year, is set to lay off some of its employees this week. This news came at the same time as the Thrasio management change: today announced that Greg Greeley, former president of Airbnb and longtime Amazon executive, will join the board of directors this August and assume the role of CEO.

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He will replace Carlos Cashman, one of the company’s co-founders, who will remain on Thrasio’s board of directors as a director.

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The layoffs and the appointment of a new CEO are the latest in a series of ups and downs for Thrasio over the past six months that highlight some of the problems in the aggregator’s business model:

– In April 2021, when Thrasio announced a $100 million raise, co-founder Josh Silberstein, who at the time was co-CEO of the company with Cashman, told TechCrunch that Thrasio was eyeing a public listing to raise more money for expansion, either through a traditional IPO or a SPAC; he also appointed a new financial director to oversee the process.

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“The SPAC idea began to take shape over the summer, potentially valuing Thrasio at $10 billion. But then the new CFO left in July, just three months after joining; Silberstein subsequently left the company in September; and to the top Octoberthe SPAC option was shelved, reportedly due to issues that arose during the financial audit.

– Nevertheless, towards the end of the same month, Tracio announced another private fundraiser, colossal $1 billion deal led by Silver Lake when it hit its $5-10 billion valuation.

– But that’s not all: email makes the rounds allegedly looking for investors in the company through a special tool with a $2.7 billion valuation. We were unable to confirm if the email is legitimate or a hoax.

Unfortunately, layoffs are not a scam. TechCrunch confirmed the rumors within the company, and we were also shown an internal memo explaining how they will be carried out: people will receive information from their managers over the next two days (Tuesday and Wednesday).

In a memo, the company said it “has made the decision to downsize the Thrasio team,” but did not confirm how many employees would be affected.

We understand that layoffs will be part of a larger reorganization. In this memo to employees, Cashman and Thrasio President Danny Boukvar writes that in order to keep Thrasio on track, the company will need to make certain “strategic and operational changes.”

“This is not an easy decision – especially in a culture like ours that is built around community and sharing,” they added.

Employees who are laid off will receive “severance pay, medical care, job placement support and accelerated provision of some of your opportunities,” as well as job transition support and an alumni network for continued support, the memorandum says. Their last working day will be May 13th.

Tracio’s growth

Thrasio was founded in 2018 by Cashman and Silberstein to capitalize on economies of scale very similar to Amazon: Amazon Marketplace sells millions of companies and brands (nearly 2 million active sellers on one score) and there is a business to be built by combining some of them for more efficient production, marketing and analytics, as well as to fulfill them.

Enterprises will be picked up by Thrasio, which will invest in technology to better and more profitably manage them as e-commerce operations, both on Amazon and possibly beyond – a new look for Procter & Gamble for year 21. century.

The company has raised nearly $3.4 billion to grow its business by acquiring hundreds of brands with investors including Silver Lake, Advent International, Oaktree, Upper90, Harlan and more. When the company raised $1 billion last October, it was buying businesses at $1.5 a week and had several hundred brands in its portfolio.

Dozens of other aggregators have followed Thrasio — about 150, Thrasio estimates, raising about $15 billion in capital collectively to meet this ambition — eyeing the same opportunity as Thrasio. Thrasio itself is one of the top 5 sellers on Amazon.

Where is Trasio headed?

It’s not clear why a financial audit stopped SPAC Thrasio last year, but it speaks to some of the challenges of running a business and accounting for it when it’s growing at a fast pace and it’s based on the amalgamation of several other businesses. .

The concept of consolidating repetitive processes across multiple retailers sounds like a great idea in theory.

“What happens when you get into that price range is that it becomes difficult to grow and manage your business,” Silberstein told me last year, citing SEO, marketing, and supply chain management as some of the challenges. “This means that as you grow from $1M to $10M, margins will shrink and it will become even more difficult to make a profit. We just saw the reality that all these great companies have reached the point between not having access to capital and simply not being able to continue doing what they are doing. We thought that if we buy 10-20 of them, we will have the scale to create the best in the breed supply chain, marketing and so on. We will solve the problem.”

But in reality, Thrasio is building a business that spans a range of different consumer, geographic, and demographic groups. Integrating even similar businesses can be costly and difficult (and often goes wrong).

And aggregators usually position themselves as solving these problems with technology, but in some cases, aggregators don’t create as much technology as you think: they buy third-party tools to help with SEO, fulfillment, and more.

In that context, the move to Greeley, whose roles at Amazon included managing the global Prime program, suggests the company wanted a more experienced executive at the helm to keep its long-term strategy on track, especially given Greeley’s experience. and track record in the consumer market.

Cashman is also fighting another dispute outside of Trazio. He faces a criminal case has been opened against him Stacey Chang, an investor who left Founders Fund to join Cashman at a new venture capital firm called Arrowside Capital. She claims he fired her after he decided not to continue with the firm, and she is seeking damages, including for work she says she did for six months.

Tracio also hints at too much and too fast growth in a joint note to employees. “Now that we are evaluating our strategy for the future, we need to take the time to properly embrace and develop the business we have acquired, ensure we have strong processes and controls in place, and then try to resize our team going forward. optimal areas for growth.

They went on to say that some of these included “re-engineering” their M&A team to be able to process acquisitions and integrate them into the company’s processes, as well as “undergo our transformation through the pandemic, the war, the boom.” in inflation, supply chain disruptions and changing consumer behavior.”

This is unlikely to be the last chapter for Thrasio, which still owns hundreds of widely sold e-commerce brands. But the big question will be whether he will survive as a cohesive entity under Greeley and continue to grow as before; or he will take a course to “rationalize” some of the many investments and acquisitions made over the years.

“Just four years ago, the Thrasio innovation team created an entirely new way for this entrepreneurial community to achieve their business goals and expand their product reach—and Thrasio continues to lead the way,” Greeley said in a statement today. . “It was really great — and it’s still early in the market with nearly $400 billion in total third-party sales in 2021 and trillions more in the wider retail ecosystem.”

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