At least 13 staffers (out of a total of 170) have been laid off by Headspace, the app-based mindfulness startup headquartered in Los Angeles.
The layoffs came earlier this month amid a department reshuffling that has left employees feeling stressed out, sources tell Fast Company. The app, which offers users guided meditations and mindfulness exercises, has been considered one of the most successful companies in its space, with Forbes recently estimating that Headspace was valued at more than $250 million.
But two people with direct knowledge of the situation, as well as recent Glassdoor employer reviews, paint a more muddied picture of the meditation technology startup and its internal company culture. The job cuts came right as the company launched the redesigned version of its app this month.
CEO Richard Pierson, who took over the company in March, confirmed the layoffs, telling Fast Company that 13 positions have been cut from the company’s marketing department, with further restructuring planned for the London team. Headspace also confirms that the customer experience team is being moved to the product side in a “strategic organizational shift.”
As part of that effort, the company announced earlier today that it has hired former Twitter VP Ross Hoffman as its new chief business officer.
Pulling Back On Marketing
Pierson says the layoffs were part of a shift away from having an in-house brand agency, which the company had been building in recent years. “We don’t need to invest in the brand that way,” he says now, adding that the company had put together a robust team as part of that investment in advertising.
It’s not unusual for app startups to invest heavily in marketing as they pursue user growth, and Headspace appears to be no exception. Last year, the company began testing expensive ad pushes specifically targeting New Yorkers–including pricey subway advertisements. Pierson says Headspace’s efforts in New York were a marketing “test” which cost about $2 million, and added that the company has no plans for a big marketing push to accompany its most recent app relaunch.
Pierson insists that, though the company’s advertising efforts and marketing department hiring spree were a “strategic misstep,” Headspace is still doing well and claims the company has been growing healthily for the past year. In an emailed statement, the company says it feels strategically sound: “We feel very confident around our product and growth strategy, it’s not something we divulge in public settings–but our board and investors are very happy with where we’re taking the company strategically.”
A Competitive Relaxation Industry
Headspace was founded in 2010 as a meditation event business run by cofounders Pierson, a former marketing executive whose clients included body-spray purveyor Axe, and Andy Puddicombe, a Buddhist monk. In those initial years, the company morphed into the popular meditation app it is today. For the first few years Pierson worked as CEO. Then, in 2014, Sean Brecker took on the executive role as the business began to really grow, raising $30 million in a Series A round in 2015. Overall, Headspace has reportedly seen over 11 million downloads [Update: a company spokesperson reached out to say the company has logged 15.8 million downloads to date]—and it has hovered between the 9th or 10th position in U.S. Health & Fitness app download ranks since last November, according to AppAnnie.
Earlier this year, Brecker decided to move to the CFO role–and Pierson took over again as CEO amid what seems to have been a challenging time for the startup. For one thing, competition from others in the space was heating up—rival meditation app Calm surpassed Headspace in app downloads earlier this year, according to one source, who called that moment “a wake-up” for the company.
For his part, however, Pierson says he was not aware that Calm had outpaced Headspace in download ranks, and questions the validity of that claim.
SimilarWeb’s algorithmic “usage rank,” which ranks apps by taking into account downloads and active users, put Calm far ahead of Headspace for at least the last month–Calm’s health and fitness app usage has ranked between 67 and 75, whereas Headspace has wavered between 83 and 92. AppAnnie’s rankings also show Calm in the lead–it hovered around the number four and five spot for health and fitness download ranks compared to Headspace, which oscillated between nine and 10.
Under Brecker’s leadership, employee satisfaction was relatively high and many staffers applauded Headspace’s open and communicative work culture, according to sources and Glassdoor reviews. The company hosted weekly all-hands meetings during which any question was fair game. “Everyone was so opinionated in a good way,” says one source, describing the work atmosphere under Brecker.
But lately, those meetings have taken on a different tenor. “When Rich took over, it would be crickets,” says one source, describing the all-hands meeting environments. The atmosphere feels more confrontational and less open, according to sources.
Comments on employer review site Glassdoor echo those sentiments. “For a company with a mission to improve the health and happiness of the world, we are not at all trying to improve the health and happiness of our world internally,” writes one reviewer. “You can’t cross the management. If you disagree or ask the wrong question, you will have a target on your forehead.”
Another Glassdoor post from earlier this week is headlined “Trainwreck.” In fact, of the 40 reviews of Headspace on Glassdoor, the bulk of the negative ones were written in the last few months.
When asked about the shifting cultural atmosphere, Pierson notes that he’s been at the company since the beginning: “it’s not like I stepped in out of nowhere.” Anonymous reviews, he points out, may be from disgruntled fired employees.
Pierson also claims that Headspace consistently takes great pains to foster a communicative culture. “We do as much as we can to have everyone have their voices heard,” he says, pointing to the weekly all-hands meetings, as well as anonymous surveys the company provides. “We take employee feedback really seriously.”
“I don’t think that any company or any culture gets it 100% right all the time,” adds the CEO.
Despite the layoffs, it’s clear employees still care about the product and mission. And Pierson doesn’t shy away from taking responsibility for the firings, adding that he regrets overhiring in the marketing department. The layoffs, according to him, had little to do with the individual people or their performance.
“It’s on me,” says Pierson matter-of-factly. “I made that call.”