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Video game coaching marketplace Metaphy cuts 23% of staff despite doubling revenue • Technology Flow

Metafy, a marketplace for video game coaching, laid off 23% of its staff last week, primarily affecting product, design and engineering teams, the founder said. Joshua Fabian Confirmed via email to Technology Flow. The layoff affects 12 full-time employees. A notion page has been created for those looking for their next jobs.

Metaphy has raised over $30 million in known funding from Tiger Global, Seven Seven Six, Forerunner, DCM and others. Fabian said the layoffs were preceded by pay cuts by the leadership team.

“I’m not mad about the ivory tower bullshit. Cuts have affected roles that once made business sense, but are now difficult to justify. No one who was fired did anything wrong and it is not reflective of their work ethic,” Fabian wrote in an email to Technology Flow. “The needs of the business have changed over the last couple of years as it has grown and developed.”

Everyone affected, Fabian said, has been offered three months’ severance pay and extended health care, regardless of tenure. For people who have been with Metafy for less than a year, the equity cliffs have been lifted. The startup also offers a subscription to LinkedIn Pro.

Metafy’s mobile (iOS and Android) teams have been hit the hardest by workforce reductions, with the company saying it now wants to build on React Native, a single code base that doesn’t require two separate iOS and Android teams.

What went wrong is the story of many startups adjusting to the “new normal” in a more disciplined environment. Metafi last raised its Series A round in February 2022, “when things were rosy,” according to Fabian, who plans to raise a Series B round months later.

“If you’re fundraising last year, the priorities are GMV and growth, not unit economics or revenue. There is a new normal, if you want to survive, you have no choice but to be more disciplined with product vision and direction, not just spending,” says Fabian. “My regret is waiting as long as we did it. It caused unnecessary pain. We learned a valuable lesson, but we did it the hard way.

Opting for a more transparent explanation of the layoffs than his fellow founders, the founder added, “It’s my fault.” Fabian also published a public investor update including recent cash burn, active students and coaches, and cash on hand (which is now $18.4 million).

Here’s an excerpt from the investor update that goes more specifically into the company’s financials:

Q2 has come to a close and we’re happy to say, we’re in the quarter. June is our best month Never In GMV, AOV, Game Distribution and Total Active Coaches. The market is all about bloodbaths, but thanks to a weirdly certain fortune cookie, I never shower without my floaties. You are in good hands.

In response to the market, we prioritized getting smarter about our unit economics. More to come soon. Thanks to the hard work of our expert Vijaya team, our experts continue to run their business better. Our outreach team has also discovered a repeatable model for linear growth. Now we are cooking with gas.

Speaking of which, let’s get to the point.

Q2 Division:

  • Active coaches: 570 -> 686 (+20.4%)

  • Active students: 1812 -> 3337 (+84.2%)

  • Sessions are booked: 2549 -> 5733 (+124.9%)

  • Monthly GMV / Revenue: $185,975 -> $375,971 (+102.2%)

  • Cash on hand: $18,388,055

  • Monthly burn: ~$1.3M (does not reflect Q3 layoffs)

Put differently, in the most recent quarter, the company increased its active coaches and active students, leading to a 100% growth in monthly GMV and revenue. The move toward layoffs seems like a step toward managing a leaner business, especially considering the time costs associated with video games consulting.

The layoffs will help Metafy reduce employee expenses from $746,000 to $607,000 per month. Reduced operating costs by 70% from $306,000 to $100,000 per month. With these trims, Fabian estimates that Metafi has a little more than two years of runway if Metafi stops generating revenue. Or to be more specific, Metaphy says it has a runway until February 2024.

The founder says that Metaphy has a lot of team members to build over the next two years, but will take on key roles moving forward.

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