Yesterday, the Inquisitr reported about the sudden closing of Zirtual, including the lay-off of 400 employees and customers in the dark as to the status of their up to $1,000-per-month subscriptions.
Late last night, Zirtual Chief Executive Officer Mary Kate Donovan published a new blog post explaining the whirlwind of events that occurred over the previous week.
“Burn is that tricky thing that isn’t discussed much in the Silicon Valley community because access to capital, in good times, seems so easy. Burn is the amount of money that goes out the door, over and above what comes in, so if you earn $100 in a month but pay out $150, your burn is $50.
Zirtual was not flush with capital — for as many people as we had, we were extremely lean…
And at the end of the day… ‘burn’ is what happened to Zirtual.
The reason we couldn’t give more notice was that up until the 11th hour, I did everything I could to raise more money and right the ship.”
As had been widely speculated, Zirtual simply hired at a rate that did not keep pace with the company’s sales — something that has happened to more than one technology startup in the past.
Zirtual client and CEO of Startups.co Wil Schroter “at the eleventh hour” got in touch with Donovan, and the two were able to come to an agreement where Startups.co will purchase Zirtual and all of its assets and restart the service, making good on the company’s contractual obligations.
Further, Donovan stated that all Zirtual employees will be paid in full, and that paychecks will be mailed today. Donovan reported that she was forced, under law, to terminate employees when it became clear that Zirtual would not be able to make payroll. The Zirtual CEO wrote the following in regard to her employees, clients, and investors.
“I cry for all the employees we hurt. I cry for all the clients we infuriated. And I cry for the investors we let down.”
Startups.co CEO Schroter was quoted with regard to the Zirtual deal.
“As a young company ourselves, having access to a curated on-demand workforce that can help us grow and scale is a huge opportunity. It’s an enormous challenge for the 1 million registered startups that we have across the Startups.co platform, and one that we absolutely can’t see go away.”
Though Zirtual has stated that Startups.co intends to “hire some of our Zeople back,” it was not immediately clear if all employees would be invited back, or how such hiring decisions would be made. Former Zirtual employee Daniell Wells tweeted as follows.
[Screenshot of Medium.com Mary Kate Profile]