At the end of June modsyabout launching an online interior design service, suddenly stopped offering design services, fired its designers and left clients with unfinished renovations and project orders. The company refunded a portion of the cost of the service order and promised to refund furniture shipping costs to those who filled out the form. But more than two weeks later, the show’s tweets that many Modsy clients are still waiting for updates.
Unfortunately for them, Maudsy made it difficult for them to contact them. Although the company’s website continues to operate, Modsy recently deleted its Twitter and Facebook pages and made its Instagram account private.
The reason is that Modsy quietly shut down in early July, founder and CEO Shanna Tellerman said in an email to TechCrunch. Home business first informed in June, this management intended to liquidate the “corporate and legal entity of Modsy” and that most of the employees of the e-commerce department, engineers and management of the company were laid off. But Tellerman refused to confirm this at the time.
“Capital constraints and uncertain market conditions forced the company to close operations on July 6 and lay off all employees,” Tellerman told TechCrunch. She added that Modsy’s assets were acquired by a “new entity” in insolvency proceedings and some former employees were hired by the entity to develop the business in a “new direction.”
“Customers will be notified of the next steps to meet their needs,” Tellerman said.
The legal entity is Pencil, LLC, legally classified as a “general assignment for the benefit of creditors” – or ABC. (“Pencil” is a reference to Modsy’s official name Pencil & Pixel, Inc.). To form an ABC, a business—in this case, Modsy—enters into an agreement to transfer its assets to an unaffiliated third party (such as Pencil) responsible for conducting the liquidation of the business. This is not an untested strategy in the technology industry. Pebble Electronic Ink Smartwatch Manufacturer went the way of ABC when it ceased operations in December 2016. The ill-fated game streaming service OnLive also formed ABC in 2015 to sell its technology to Sony.
ABCs have the advantage of being able to quickly sell assets either for cash (to pay off creditors) or sell the company to a new owner and keep services running. The downside is that the capital of the original company, including all founders, investors, and employees, is destroyed. A former Modsy employee, speaking to TechCrunch on condition of anonymity, said they were told their stock options were now worth nothing.
A link emailed to some Modsy customers leads to the form on claims “outside [refunds]”, including equity, salaries, salaries, bonuses, severance pay, commissions and employee benefit plan contributions. The wording suggests a process for reclaiming money and benefits that employees believe are due to them, but it is not clear what claims, if any, will be honored.
Lennar, a property developer in Fontainebleau, Fla., may be partially funding Pencil, according to a former employee. TechCrunch was unable to independently confirm this, and Tellerman declined to comment, but it’s true that Lennar was Modsy’s main partner. In May 2021, companies announced joint work on the creation of “walking” 3D tours of house models using Modsy technology. And Lennar’s corporate venture arm, Len X, on its Web site lists Modsy as one of its portfolio companies.
“Together with Modsy, we are helping Lennar clients envision their future homes,” the post reads. mail on Len X’s blog. “With Modsy’s realistic designs, clients can visualize what their future floor plan will look like before it’s built, work with the designer to customize the interior design to suit their needs and style, and Easily purchase furniture and decor for your new home.”
While the shell of the former Modsy team is charting the way forward, several customers say they’ve been locked out by Modsy’s support team – or what’s left of it. Five of the seven customers TechCrunch spoke to, all of whom filed for refunds in June, either didn’t hear from the company or received standard emails with no information about the status of their refunds. One said they were told they would see a refund within three to five business days. Another was told that they had been approved for a refund, but were not told when to expect it.
“I had $50,000 of unfinished orders that are in limbo,” one TechCrunch customer said on Twitter. “[Modsy has] reported that they would fulfill the remaining unfulfilled furniture orders, but the actual logistics in this regard were sparse.”
Another customer said:[Modsy’s] service was supposed to make it easier to return – that was one of the benefits. But that doesn’t happen. We have an unfulfilled or unanswered refund request for $4,500, not counting missing design services.”
Modsy’s original business model was to sell interior design services based on an artificial intelligence platform. Prior to founding the company, Tellerman was a partner at GV (formerly Google Ventures), specializing in retail, 3D and augmented reality technologies.
Using the Modsy apps, property owners can create images of their rooms and change their style in real time, or pay a designer for a custom layout. The fixtures could be purchased either directly through Modsy or through partner tools such as Crate & Barrel’s 3D Room Designer.
Modsy’s supporters included TCV, Comcast Ventures, Norwest Venture Partners, and NBCUniversal. The company’s latest funding round ended in May 2019, raising Modsy’s total to $72.7 million, according to Crunchbase data.
In May, Modsy made it clear that turn around to offer a software as a service platformModsy Pro as a service for interior designers. on the company website, Modsy Pro is described as “an online interior design software that will change the way you do business…bring your client’s space to life with our proprietary room scanning technology, 3D rendering and easily editable and purchasable designs.”
The move comes two years after Modsy made a series of aggressive layoffs, cutting salaries for designers and cutting both full-time employees and its network of designers. At that time Tellerman said Business of Home that it was part of an effort to make the company “leaner”. The Business of Home report also revealed that Modsy, in addition to launching its own furniture line, at one point experimented with outsourcing design work to the Philippines and Bulgaria to cut operating costs.
The landing page of Modsy Pro offers users the opportunity to apply for early access to the beta version of the product. But in light of Modsy’s closure, the launch seems to be up in the air.
Credit: techcrunch.com /