How Facily went from ‘unicorn’ status to mass layoffs

Amid the growth of Brazilian startups, the digital hypermarket Facily seemed to be one of the biggest success stories in the recent innovation landscape. In December 2021, just over three years since its founding, the company reached “unicorn” status (startup valued over US$ 1 billion). Behind the title, however, there was a company with problems, which were exposed only four months later, when more than a thousand people were laid off, between direct employees and outsourced workers.

Facily acts as a digital hypermarket, selling food and cleaning products through an app. To reduce costs, the startup delivers the goods at pick-up points, strategic locations where the customer himself picks up purchases. The simplified chain attracted investment.

In November and December 2021, the company raised US$ 385 million – the funding made Facily close the year behind only names like Nubank and QuintoAndar. With cash on hand, the startup started a hiring plan.

At the time of the contributions, Diego Dzodan, CEO of the company, gave clues about the company’s growth. “With the new investments received, the company will focus on logistical efficiency to accelerate deliveries of orders placed on the platform, in addition to working on the company’s national expansion,” he wrote in a note.

However, four months later, between April 18 and 19, the cuts came. The company was aiming to cut about 60% of the payroll. Between 300 and 400 direct employees were laid off, according to unofficial information. Although Facily did not publicly disclose the size of its staff, the company had between 800 and 900 people.

Among outsourced workers, the cuts began in March. Hired by Facily, i9 Xperience Center provided service and logistical support and had about a thousand people working directly with the startup.

At i9, about 900 people were out of work because of the cost cut – 700 of them are in an email group for people with a legal entity contract that circulated information about i9’s relationship with Facily. The outsourced employees also estimate that about 200 people under the CLT regime were also dedicated to work.

By email, Dzodan told the report that the cuts were carried out by a “re-prioritization” of projects. “Until the end of last year, the Brazilian scenario was different and promising, but as soon as we entered 2022, we already saw that the scenario, containment and advances would be different and more cautious by all. the political and social instability that rocked markets and investors around the world,” he wrote.

He did not confirm how many employees were cut.

nor the size of the payroll deduction. According to him, all areas were “reorganized according to the reprioritization of projects”.

However, for former employees, who spoke to Estadão on condition of anonymity (the report spoke with 11 former employees), there were signs that the company had not planned for the new moment. Among them were overloads in payment systems, information mismatches and problems in supply chains – not to mention customer complaints.

Former employees say the layoffs were spread across multiple levels and sectors. However, what drew the most attention was the dismissal of about 150 employees from the technology team, contrary to the current market for startups.

Dzodan refuted the idea of ​​bad planning: “We hire according to organizational planning. National and global scenarios are changing and, automatically, projects are being re-prioritized”.

Problems

Founded in 2018, Facily is also a social commerce model in which users with common interests join groups to earn discounts. Finally, still seeking to reduce prices, the company works as a marketplace, where retailers and producers can sell directly to consumers, bypassing intermediaries and suppliers in the supply chain.

The streamlined chain attracted investors, but the startup’s growth was accompanied by problems. “In this process, the infrastructure was left behind,” said one of the former employees who spoke to the Estadão. System errors, for example, have become common and have forced Facily to cancel thousands of orders in recent months.

Often, says another former employee, it was possible to see incorrect information about orders on the platform. In some cases, the orders appeared as “shipped” in the merchants’ systems and “canceled” in the startup’s system – the inconsistency of information meant that the orders did not go anywhere.

Regarding canceled orders and problems in the distribution chain, Dzodan says that Facily is undergoing restructuring to continue growing. Regarding delivery complaints, he says: “We have invested heavily to improve our processes and ensure that all our customers are served. We have implemented control processes, new customer service tools and a logistics structure to ensure speedy deliveries.”

procon

With 211 thousand complaints, the company was the leader in the ranking of Procon-SP in 2021. In December last year, Facily said that the brand was the result of its rapid growth.

The problems started in May 2021, when complaints about products not delivered or payments not made began to arrive en masse to the consumer protection body. That month, Facily received 2,068,000 complaints, compared to 223 the previous month. From there, the number skyrocketed. The peak was in October, with 59,000 complaints.

In November, Facily signed an agreement with the agency to reduce registered complaints by up to 80% in 30 days. To Estadão, Guilherme Farid, executive director of Procon-SP, said that the signed agreement was not fully complied with and that the body will forward the case. Facily may receive a fine of up to R$12 million. In 2022, there are already 34,300 complaints.

Neck

Failures in the systems also generated wear and tear with the platform’s tenants. With each sale, Facily keeps 10% of the value or with a minimum fee, which varies from product to product. The transfers are made through a system of the startup itself.

According to sources heard by the report, some establishments decided to end the partnership with Facily due to lack of payments.

Facily’s website informs that payments are always made ten days after the closing of the sales month, but former employees say that there are bottlenecks in the transfer system, which would only have three professionals to carry out the analyses.

About the alleged debts and the operation of the payment system, Dzodan said he was unaware of the information.