Russian startup Ostrovok cuts one third of staff just 3 months after $25m funding round

Russian startup Ostrovok cuts one third of staff just 3 months after $25m funding round

Russian hotel booking startup Ostrovok has announced that it is cutting its workforce by about one third in a bid to push the company into the black following a recent round of funding.

The Russian outfit announced the somewhat surprising move in a blog post on Monday.

“Today is a very difficult day for us. Ostrovok.ru decided to part with a third of our people, and many of the great Islanders are leaving us today,” an Ostrovok.ru spokeswoman said. “Typically, companies try to hide these things. But as for us now priority number one – to help our friends and colleagues to find a great new job, we decided to tell the public the details and get attention.” [Google Translation]

Behind the push is a desire to have the company break even and drive for profits in the near future. It hopes that by doing this it will be able to attract significant investment quicker in the future.

Ostrovok said its core mission remains the same and that its quality of customer service will not change. Instead, it plans to work “harder, smarter and more focused” in small teams. The outgoing staff will get three months’ wages plus any bonuses owed.

The resulting team is “ideal for our purposes”, Ostovok said, noting that an increase in users of its service (it recently passed the 100,000th booking milestone and has grown 50 percent in its last quarter) would likely necessitate hiring new members of staff in the future, albeit “more slowly”.

It’s not unheard of for startups that seem to be performing well and growing to try and cut costs at an early stage in a bid to jump into profitability and therefore attract new investment, but with $25m recently secured in Round B funding, we’re left wondering if some of the backers are behind this push for short-term rewards.

Image Credit – Getty Images

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