Layoffs At Turn, As Company Restructures And Moves Away From SaaS

bruce falck turnTurn is going through a restructuring and has laid off 57 of its roughly 400 employees, said company CEO Bruce Falck, who was appointed to the role in September.

“We did a pretty big restructuring of client services and sales,” he explained. “We merged the team, so it’s true that’s a larger chunk. But we’re paring back everywhere.” That includes business development, human resources, marketing, and several management layers. No other layoffs are expected after this round.

It’s a drive to cut costs, as the company has been losing money – despite having raised $80 million in January 2014. A source with knowledge of the situation said Turn recently had $35 million in the bank. Falck anticipated by the end of the year, it will have $25 million.

“The company was in go-big-and-go-fast mode [when it raised the $80 million],” Falck said. “There’s been a slowdown where we want to preserve our cash and build the business for the long term.”

While Turn has an excellent platform, according to the source, past management decisions have led to its decline. For instance, under former CEO Bill Demas, it doubled down on the SaaS business model where, like Salesforce.com, brands would pay a monthly fee to access Turn’s technology. It brought in former Lyris CEO Wolfgang Maasberg to oversee its sales initiatives in this area. But Maasberg left Turn October 2014 and is now in sales at Oracle Marketing Cloud. Demas also left the company last April after struggling to make the company profitable.
Falck ultimately feels the market wasn’t ready for Turn's SaaS approach.

“We’re an omnichannel DSP. I want to focus on that and getting large customers to scale,” he said. That means investing heavily in areas like video. “There’s no need to reinvent the pricing model.”

So while the SaaS model continues to exist, Turn is moving away from it. “We’re doing the standard platform percent-of-media type deals,” he said, adding most of the SaaS work is happening around Turn’s data management platform.

The problem with the SaaS model is that many clients wanted an old fashioned I/O process, or they just wanted to buy media, not license technology.

Meanwhile, competitors offered pricing models buyers were more comfortable with than a monthly tech fee – like pricing based on a flat CPM or the percent-of-media deals that Turn is now embracing. And the 13-14% tech fee Turn charged wasn't enough savings to entice prospects – especially against competitor tech fees of 15%. Clients wanted at least five points difference.

Despite its restructuring, Falck said Turn will continue selling to agencies, trading desks and directly to brands. Its relationship with Kraft and the brand’s agency Starcom remains its poster child partnership.

12 Comments

  1. Matthew Marsden

    Turn for a long time has been on a destructive decline, put on that path by the executive team's bad decision making. Yet again new leadership has come in and thinks that they can solve Turn's downward spiral by making another bad decision and sacking 57 people, many of those who were key contributors to keeping Turn afloat through many difficult times. Unfortunately for them, they worked at a company that doesn't value lower ranking individuals and repeatedly sacrifices them in favour of rewarding the new executive team's pay packet before they have made any contribution to the organisation.

    Turn's technology is dated, buggy (all clients can attest to this), does not do what it says on the tin and through bad leadership has been left behind by the marketplace. Most agencies and trading desks will not touch Turn purely because the platform operates so badly. In 2016, Bruce Falck has already confirmed that the platform development and bug fixing will be slow, in turn this means that clients and prospects for Turn will need to use a platform that consistently under performs and damages campaigns.

    Turn's agency trading desk relationships are at a stand still. Amnet one of its major partnerships has moved almost all of its Global budget to DBM, as the Turn / Amnet relationship trades at a 12.5% tech fee. Where normally negotiations are meant to make the deal better, Turn, again through bad executive level management, tried to play hardball pushing the rate to 14%. Amnet responded by almost completely stopping trade with Turn. There are many examples of Turn's executive team destroying relationships, the list goes on with Cadreon, Accuen, etc.

    In turn, Turn has decided that instead of continuing to focus on its Trading Desk relationships, it will go after brands, as the brands have not been exposed yet to the level of incompetence of the executive team or the incredibly bad platform. Do they really think firing 57 people is going to help them fix all of their issues? The issues for Turn are only just beginning as firstly major attrition will happen, especially from engineering and client services, who have long been undervalued and treated terribly in favour of underperforming sales people who are treated as if they have the Midas touch (whilst actually bringing very little revenue into the business).

    Kraft's name is constantly used by Turn as an example of a great brand relationship. In 2016 Turn's plan is to bring on another 10 brands as big as Kraft and start to remove from Q1 all of its lower paying clients and clients with lower margins. If a client is not worth at least $6 million, Turn will be looking to remove those clients as mandated by Bruce's strategy to operate next year at break even. Clients with the rest of 2015 should be looking to move Q1 budgets immediately to other platforms to safe-guard their 2016 strategies.

    Bruce has repeatedly mentioned that this is a cost cutting exercise, meaning that Turn does not value people. If you work at Turn, you should be looking to find an exit as soon as possible before the next round of lay-offs is announced. Bruce has already stated that this will happen in Q2 if they are not trending to its $110 million target.

    Reply
  2. Stephen Byrne

    I feel sorry for the Turn employee's that work hard day to day for a company that values their contribution very little. Yet again, Turn finds itself under new management that see little value in the people who kept Turn afloat through many difficult times. Instead of rewarding these people, new management who have done very little work in the time they have been there have chosen that the best option is to fire 57 hard working people, whilst protecting their pay packets. As the new CEO puts it, this is a cost cutting exercise, but I wonder how much he and his exec team will be rewarded for putting hard working lower ranking people on the job market right before christmas. These people will not be able to provide for their families, whilst the newly appointed exec team get to share in the spoils of the recent redundancies.

    I hope they at least have the decency to use some of the $35 million in the bank, to give these people a decent redundancy package. I guess we will read about whether they do or not after employees start posting reviews on Glassdoor.com

    If I were a Turn employee, I would be looking to make a hasty exit from a company that will be doing the same cuts in Q2 after it does not perform as anticipated and the exec team look for other scapegoats.

    Turn is a company in steady decline, bad exec decision making, bad technology and a strategy to after brands as they have burnt all of their agency and trading desk relationships. This is a last ditch attempt to resuscitate a company that the market does not want to work with. Turn will end up burning the digital strategies of the brands it works with as the new CEO has already mentioned the platform development will be slow in 2016.

    As a manager, I will be looking out for great Turn employees that have been burnt by this terrible 'Turn' of events.

    Reply
  3. Steven Byrne

    I feel sorry for the Turn employee's that work hard day to day for a company that values their contribution very little. Yet again, Turn finds itself under new management that see little value in the people who kept Turn afloat through many difficult times. Instead of rewarding these people, new management who have done very little work in the time they have been there have chosen that the best option is to fire 57 hard working people, whilst protecting their pay packets. As the new CEO puts it, this is a cost cutting exercise, but I wonder how much he and his exec team will be rewarded for putting hard working lower ranking people on the job market right before christmas. These people will not be able to provide for their families, whilst the newly appointed exec team get to share in the spoils of the recent redundancies.

    I hope they at least have the decency to use some of the $35 million in the bank, to give these people a decent redundancy package. I guess we will read about whether they do or not after employees start posting reviews on Glassdoor.com

    If I were a Turn employee, I would be looking to make a hasty exit from a company that will be doing the same cuts in Q2 after it does not perform as anticipated and the exec team look for other scapegoats.

    Turn is a company in steady decline, bad exec decision making, bad technology and a strategy to after brands as they have burnt all of their agency and trading desk relationships. This is a last ditch attempt to resuscitate a company that the market does not want to work with. Turn will end up burning the digital strategies of the brands it works with as the new CEO has already mentioned the platform development will be slow in 2016.

    As a manager, I will be looking out for great Turn employees that have been burnt by this terrible 'Turn' of events.

    Reply
  4. Jason Haas

    I couldn't agree more with Steven. Management has squandered the money they raised by not listening to the employees about the needs of the market. Demas and Massberg didn't understand that SAAS did not exist in the RTB world in 2014 and it still doesn't for all intents and purposes. While I think the new CEO is doing what is likely necessary, I think it's too little too late. Pipes with no unique data or inventory are a commodity, Turn needs a strategic buyer and fast.

    Reply
  5. John Henry

    One has to wonder how much due diligence was done before making the command decision to move to a SaaS model, esp. given the move to a new UI which annoyed many long term agency customers. It was a move that smacked of optics, nothing more, to attract investors. It had nothing to do with "customer delight" as the last CEO was fond of repeating, ad nauseum.

    Reply
  6. Doug Hansen

    I am an ex-employee of Turn. Members of my team and I are being laid off. I don’t speak for the company here, at all, only for myself. Please understand, we all share the risk when we go to work for young, forward edge technology companies like Turn. High risk, high reward. While it is always distressing to see people lose their jobs, smart, savvy people should understand when they hire on that commensurate risks go with the potential rewards. If you can’t stomach that, there are plenty of less risky albeit less thrilling employment options for you, especially in the tech/ad-tech world. In the specific case of Turn, the risk was taken and lesson was learned. They took a risk in getting out ahead of the ad market with a SAAS model the market was not ready for. That’s risk. That’s business.

    Turn is a fair and humane company and handled this necessary step with utter regard for it’s ex-employees. I know because I am one of them and I think my entire team would agree.

    Reply
  7. Turn is getting bashed for this move, but in general the entire industry in growing. We are still working with Turn as a DSP. It works well! I see a place for Turn in the market and it is not going away anytime soon. This announcement probably just feel ill timed because of holiday season. We like many other companies are hiring and are desperately looking for qualified people. One door closes another one opens.

    Reply
  8. I have seen this way too many times at companies big and small. Once the founder is gone or pushed out, professional managers are brought in. Many times these folks don't know what they are doing. Usually they got their stripes based on how well they sell themselves to higher ups and not by their ability to run a company. I have found that the two skills are often not found in the same person. In big companies this lack of skill gets absorbed and covered up by the smart people that keep the company going. In a small and fast growing company it is often not possible to do that. With venture funding having a short fuse for results you wind up with churn at the top as they put in a person that lacks skill, watch them fail, and then do it again.

    Reply
  9. Bob Kusche

    We are a vendor trying to follow up a bill that is 7 months overdue. I called EVERY U.S. office. Nobody answered, and none of the general mailboxes were able to record my message. I'd say it's time to put a fork in them.

    Reply
  10. Mike PIlcher

    If SaaS is failing it is because Turn are selling to the wrong people. If you sell to people who buy toner cartridges, sell toner. If you sell to people who want high quality copies, sell photocopiers. Too many of the DSPs are chasing short term revenue with the agencies who buy toner. If the DSPs want to charge a monthly fee, they need to sell monthly value and not campaign by campaign. A tough choice in a VC backed company but they can be good or great. The choice is theirs.

    Reply

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