PASADENA, Calif. – Defunct dotcoms aren’t the only ones cleaning house these days. Former high-flier idealab! is doing a little spring cleaning of its own, but it’s not selling off copier machines and desk chairs. Instead, it’s handing out pink slips.
The company shed approximately 10% of its 170 employees in January, citing adverse market conditions as the chief cause for the layoffs. The staff cuts affect workers in various departments throughout all five of its offices, said Teresa Bridwell, a spokesperson for the company.
Still, employees who received pink slips may not have to totally sever their ties with Pasadena-based idealab!
In fact, Bridwell said that the high-tech incubator hopes to transition as many workers as possible into jobs at a number of idealab!’s portfolio companies, especially some of its earlier-stage start-ups. She declined to comment on which firms might be hiring, but did say that, in some cases, former idealab! employees had already started new jobs with a few of its affiliate companies. Other workers are currently considering opportunities both inside and outside of the idealab! fold, she added.
Interestingly, however, a number of those portfolio companies seemed to have none of the recently laid-off employees on their new-hire rosters, nor had they even been approached by any internal job-seekers.
“As of right now, we don’t have anyone from idealab! coming to join our staff,” said Sarah Alcorn, a spokesperson with dotTV Corp., a worldwide registry for television domain names that received its initial funding from idealab! “Of course, if anyone approaches us, we’ll be more than happy to chat.”
Erin Mills, Alcorn’s counterpart at Sameday.com, echoed that sentiment. “We do have positions we’re looking to fill and would welcome former idealab! employees,” she said. “We don’t have anyone officially coming on board as of now, though.”
Drastic Change Isn’t in the Wind
According to a prepared statement idealab! released in mid-January, the layoffs do not signify a dramatic strategy shift, despite the fact that such fat-trimming exercises have previously signaled a changing focus for competitors such as Divine InterVentures and Internet Capital Group.
“Our focus on creating and building companies remains the same but we are adapting to current market conditions,” the company said in that statement. The claim sounds eerily familiar. Idealab! cried “bear market” back in late October when it decided to pull the plug on its pending initial public offering.
According to the idealab!’s Web site, the self-proclaimed “creative capital start-up factory for Internet businesses” isn’t currently considering any new investments, but it will heighten its focus on building companies in high-tech areas including Internet infrastructure.
To that end, Bridwell called the layoffs a “relatively modest change” that will “make the company healthier overall.”
At this point, idealab! could use all the help it can get. Several of its start-up graduates, including online retailer eToys Inc. and Internet services provider NetZero floundered and tanked once they made their Wall Street debuts.
Keeping Its Distance
Another possible target for layoff fallout is Idealab Capital Partners (ICP), the Pasadena-based venture capital firm co-founded in 1998 by idealab! founder Bill Gross. Although the venture firm is technically independent of the Internet incubator with which it shares a common name, no organization wants to be closely associated with a troubled company, especially when it is in the midst of fund raising.
“We’re so separate that it isn’t affecting us,” said Bill Elkus, co-founder and managing director of ICP. “The people who we’re approaching and talking to [about investing] know us and who we are. The only people the [layoff] news might affect would be those who cold call us… and we only had one LP from a cold call in our first two funds.”
When asked if ICP had considered changing its name in order to disassociate itself from idealab!, Elkus declined to comment.
He did add, however, that the firm is plugging along on the new fund, although the proposed final close date has been pushed back slightly to accommodate funds-of-funds that have recently suffered through their own delayed closes.