Layoffs At Plum District Point To Changes In Hyperlocal Deals Market

Plum District is a hyperlocal daily deals site that, by its own definition, was created “by Moms, for Moms.” Yet after extensive interviews with sources who worked and were terminated by the company, it’s clear that Plum District’s initial promise didn’t pan out.

The company’s claim to fame at launch and during its various funding rounds totaling $30.6 million was the fact that a working or stay-at-home mom could become a “momtrepreneur” with the potential to make a living on her own terms in her own community.

But it appears that hyper-local isn’t quite working out, as the company carried out an extensive round of layoffs last weekend in a slow shift toward national deals. According to sources, 24 regional sales managers and between 10 and 12 corporate employees were terminated between Friday of last week and this Monday. That doesn’t include the three regional managers who were fired over Mothers’ Day weekend, around the same time that the regional sales manager compensation packages changed.

The company told regional managers during interviews that they would earn a commission for how well their region does, on top of a yearly salary. However, Plum District changed the compensation package in May: regional mangers would only receive their commission if they met 70 percent of their monthly sales goals.

At peak, Plum District covered 27 markets, and has since closed down at least 13 of them. Hyper-local daily deals sites can only go so long before getting sucked into the lucrative world of national retail, and that’s exactly what’s happening here.

And it’s not entirely Plum District’s fault. According to those interviewed close to the matter, the company is not profitable as is, and only has so much time before the funding runs out. Sources have in fact told me that a conference call a few months ago included talk of ~$9 million left in the bank. Employees with finance backgrounds projected that $9 million would run out between October and the end of this year.

I spoke with CEO Megan Gardner when I had just come across these Glass Door reviews (Glass Door is a site where former and current employees can anonymously review their employers.) She denied that there was any crisis of cash, that Plum District is “financially sound” and “has money in the bank.”

She admitted that “some” regional managers were let go. In fact, most were let go except for the handful who were added to the national team.

She also affirmed what I had suspected: “We restructured the local sales model,” she told me. “We tested a few different models, and some of our regional managers were let go because we consolidated some of the markets. We also pulled some of our regional sales team into the national sales team.”

After getting more detailed and reliable information, I reached out to Gardner again for further comment, and she responded with the following:

We occasionally adjust our leadership structure to align with our goals. We realize that for those impacted by the changes, this is a difficult time and we are helping with references and introductions.

Plum District is still kicking but former employees are upset. The company is still hiring but the women who did not live out the Plum District dream, who worked as regional managers for 60-70 hours a week making less than they expected, were fired with absolutely no notice.

The irony came last when leadership flew all of them out to the San Francisco headquarters last Monday, picking their brains on their individual markets and ideas. One regional manager had only started that day. She quit her job at a Fortune 500 company on Friday, August 3rd. She flew to San Francisco on Sunday, spent two days in meetings before returning, and was fired on Friday, August 10.

Plum District locked all the laid-off regional sales managers out of the system on Friday morning, and by the time most of the employees on the West Coast received “the call,” word had already spread: “The reason you can’t get into the system is because we’re all getting fired.”

Over the weekend, various current and former employees joined a private Facebook group to vent their frustrations. After discovering this, Plum District then fired every woman in that group who was still at the company, holding that the women were breaking their confidentiality agreement which included “not disparaging the company.” But one of the sources I interviewed made an interesting point: “If we were all sitting together drinking wine and saying this, they couldn’t fire us. Why is it any different with a private [Facebook] group?”