- Fast CEO Domm Holland says the main reason he shuttered the firm was hiring too many too quickly.
- The startup, which offered one-click-checkout software to online merchants, collapsed last week.
- Holland told “20VC” about the strategic blunder that stopped the fast-growing startup in its tracks.
If Domm Holland had it his way, the Fast CEO would have laid off half his workforce months ago.
“I’ll tell you what, it would’ve been a lot easier come December last year to just let half the team go and fundraise,” Holland told “The Twenty Minute VC” podcast in an episode released Wednesday.
In Holland’s telling, that’s what he voted to do: Cut the company’s burn rate around the turn of the year to eke out more runway for the startup to finish building its big-merchant integrations.
“My vote was to do that, to raise money or whatever and keep going,” Holland said in the podcast. “We really would have needed the existing investors, the insiders, to step up, execute the restructuring, execute a sort of right-sizing, reduce burn, then go out and raise money. I think our insiders just really wanted to see external investors come in and lead that process.”
The one-click-checkout startup shuttered operations last week, after raising more than $120 million from Silicon Valley investors. Competition in e-commerce checkout, meanwhile, has been heating up, with Amazon, Shopify, and Bolt building their own checkout solutions.
While Holland said during the podcast that payroll, not marketing, expenses accelerated Fast’s cash burn rate in the months leading up to its closure, people within the company placed the blame on the company’s spending on advertising and lavish corporate retreats as well as its hiring spree .
In the podcast, Holland disputed reporting, as detailed by The Information, that Fast’s burn rate by the time it shuttered was $10 million a month, but he did not provide different numbers to support his assertion.
Just three months before its implosion, Fast was close to a tipping point, Holland said. In January, Fast onboarded its first billion-dollar merchant. And there were more where that came from: The startup had $8 billion in “signed enterprise-merchant deals” that it was onboarding, Holland said.
Bringing on enterprise e-commerce merchants involved thorny integrations, for which Fast staffed up.
“The reason why we grew the team, especially on the R&D side, which was the majority of the business, you do have to build — there’s a lot of stuff to build. To support enterprise, it’s not just about having an enterprise-grade E-commerce is very fragmented — lots of different platforms, lots of different integrations, there’s a lot of different stuff you’ve got to build before you can actually kind of onboard enterprise,” Holland said.
But the customer success team and partnership team, both of which “were just too big for what we needed at that time,” had cranked Fast’s cash burn past the point of no return.
“The vast majority of our burn came directly from people. Like well over 80% of our cost space was just wages, healthcare, benefits, over 80%. Like our money just went to people. We just hired a lot of people,” Holland said.
“Frankly you can be aggressive, and we were still just too far ahead in terms of hiring,” he added.
The frothy private- and public-investment markets that fintechs enjoyed through the pandemic has chilled in 2022. Enduring supply-chain issues and Russia’s invasion of Ukraine have added to uncertainty.
In the third and fourth quarters of 2021, “we basically doubled our burn,” Holland said. “We got to a point where the time we were fundraising — we needed a fundraise — the market also shat itself and fell upside-down. Any company with high burn was having trouble fundraising.”
Meanwhile, Fast had competitors that had a head start on those “big, hairy” integrations.
“Bolt had just been building all of those integrations for a lot longer. They had a five-year head start on building all these pieces. They had been chipping away at the sort of medium-size business, and so they were bigger than our small business that we had gone and onboarded lots of, they weren’t as big as our big ones,” Holland said. “They definitely weren’t growing very quickly, but it was enough to give them this foundation.”