UPDATED: BeachMint Founders Deny They've Been FiredOriginally published July 3, 2013 at 10:22 a.m., updated July 3, 2013 at 9:04 p.m.
BeachMint, the three-year-old Santa Monica e-tailer, is denying a report that it had let go of its two founders and plans to return millions of dollars to investors.
Diego Berdakin, BeachMint's co-founder and president, told the Business Journal via email that a report late Tuesday night in tech blog PandoDaily that he and Josh Berman, co-founder and chief executive, had been dismissed and that the company would be returning $20 million to investors is "100 percent fiction."
Berman said the report was "completely made up."
"Diego, Greg (Steiner, COO) and myself are all at BeachMint," he said. "Nobody has ever asked us to return any money. We are doing extremely well and are more bullish on the business than ever."
The blog post came amid a time of retrenchment for BeachMint, which has brought in $74 million in venture capital funding since 2010. The company has struggled of late under the weight of its rapid growth. It lost three top executives in the last year: Chief Marketing Officer John Volturo, Chief Technology Officer Carl Trudel and Chief Financial Officer Jordan Posell. And tech blogs have reported several small-scale layoffs.
Despite BeachMint's challenges, Thomas McInerney, president of Nala Investments, which was part of BeachMint’s $35 million round in 2012, said he’s still bullish on the company.
McInerney confirmed that the company had been scaling down its staff and focusing its resources on its most successful verticals in an effort to reach profitability, but he said Berdakin and Berman were still onboard
"They got too big in the first place," he said. "They raised probably too much and hired too many people. They are right-sizing and slowly letting people go."
He said the company is also testing the idea of selling inventory to consignment buyers, which will help raise margins and produce more cash flow.
BeachMint burst onto the Santa Monica startup scene in 2010 with JewelMint, which sells a personally selected selection of jewelry for a monthly subscription fee. Since then, the company has expanded into clothes, shoes, lingerie, housewares and beauty products.
Peter Sonsini, a BeachMint board member and general partner at investor NEA, spoke to the Business Journal this morning to discuss the current state of BeachMint.
He said the board has not ousted founder Berman and Berdakin nor asked the company to return capital to investors. Instead, he said, the company is looking overseas for strategic partners and investments, which PandoDaily also reported Tuesday night.
“BeachMint is looking to build a global business,” Sonsini said. “That involves working with people oversees. When you do a strategic deal, it often involves investments from that partner.”
He added that BeachMint’s revenue is growing quarter-over-quarter and said the company is on a path to profitability. To do this, the company has reduced its headcount. He would not give specifics about the number of employees that have been laid off thus far or disclose the company’s current headcount.
Some of the BeachMint’s product lines – known as “Mints” – have been more successful than others, Sonsini said, but there are no plans to consolidate those separate products at this time.
“We knew that the company would introduce Mints that would not do as well as others,” he said. “E-commerce is hard. We’ve learned along the way. BeachMint has continued to refine its model, which is a normal part of the business.”