The San Francisco-based company, which gives party-planning tips and sells related items, shed two-thirds of its staff last week, including chief executive and co-founder Tanya Roberts, the company confirmed today.
GreatEntertaining, less than two years old, also will revamp its business strategy to focus less on consumer sales and more on corporate and trade customers, such as florists and professional party planners.
The company's chief operating officer, Christy Ross, has been named CEO. Ross said acquiring new customers was costly for the company. By selling larger volumes directly to corporations, professional party planners and others, the business has a clearer path to profitability.
"All of this change requires less people and less money," Ross said. "It's very expensive to build a new brand online, and it's very competitive out there."
Forty people from all areas of the company were let go. After the layoffs, 20 people will remain, mostly in sales. Ross said the company had a round of layoffs earlier in the year when a project on the site had been completed. Roughly 40 people were let go at that time.
GreatEntertaining joins a long list of online retailers that have cut staff or gone out of business because of pressure to meet profitability, including Garden.com, More.com and Productopia.
When the company launched its site last October, it boasted big-name Silicon Valley backers and established online partners. GreatEntertaining raised $35 million last year from such high-profile venture capitalists as Benchmark Capital and Technology Crossover Ventures. It also touted prestigious board members and advisers such as Intuit chairman Bill Campbell.
America Online signed the company as its premier party-planning store in a $10 million deal. And GreatEntertaining was named Forbes' "Best of the Web" for party-planning sites.
Now the company is looking at severing its relationship with AOL after a year and about $3.3 million paid to AOL for premium placement on its network. "We won't be on AOL for the holiday," Ross said.
The company still plans to sell directly to consumers through the season. "We've invested in a lot of inventory for the holiday, so there won't be changes until after that time," Ross said.
With the strategy shift, which will happen slowly over the next several months, the company plans to have enough cash to operate throughout 2001 without raising additional funds.
Calls this morning to the company's customer service phone number were met with an "after hours" recording. Ross gave assurances that customer service representatives are still working, and the company plans to hire more for the holidays.
Executive changes within the company stopped at Roberts' move; she will stay with GreatEntertaining as a board member. "By going down to 20 (employees), we didn't need all the executive overhead," Ross said.