In December, Cometeer quietly carried out layoffs and put in its chief working officer as co-CEO. Former staff spoke of dysfunction and excessive govt turnover as progress has slowed on the most-funded espresso startup ever, the place head rely is down almost 50%.
To the surface world, Cometeer was buzzing. Its espresso—roasted by elite accomplice manufacturers like Counter Tradition and Joe Espresso, flash-frozen and shipped in recyclable aluminum pods that wanted solely to be dropped into sizzling water to serve—was beloved by tech influencers and enterprise capitalists alike.
When Cometeer introduced $35 million in funding from name-brand traders in October 2021, taking its whole raised to $100 million, the startup grew to become the highest-funded espresso startup ever. “We’re hiring people from Apple, Tesla, Palantir and Wayfair,” founder Matthew Roberts advised Forbes then. “We’re speaking about actual tech corporations, actual tech staff coming into the espresso trade as a result of they see the chance to vary an trade that’s actually been caught in its outdated methods.”
However behind the scenes, it’s Cometeer that’s been caught in a cycle of layoffs, govt departures and dysfunction that has contributed to slowed progress and a uncertain future. June and December layoffs, by no means publicly acknowledged, every minimize about 20 staff, greater than 10% of Cometeer’s workforce, Forbes has discovered. Key executives throughout its enterprise have in any other case stop or been fired— together with one advertising and marketing boss employed within the fall who lasted simply two weeks. The exodus has come as the expansion of its subscriptions, which stood at round 28,000 subscribers to finish the yr, have slowed prior to now six months. (Assuming every subscriber consumed one Cometeer pod each day, that may put the corporate on tempo for about $22 million in annual income.)
Forbes spoke to 16 former staff and others near the corporate for this story, all of who requested to stay nameless for concern of retaliation or lack of profession alternatives, and reviewed inside paperwork. They painted an image of a startup that, regardless of a popular and high-quality product, has struggled beneath the burden of inconsistent technique and a well-intentioned however inexperienced founder CEO.
Final month, as Cometeer carried out layoffs throughout two consecutive Wednesdays, the corporate internally introduced that chief working officer Matthew Mandel can be stepping in alongside Roberts as co-CEO; a December group chart obtained by Forbes confirmed that a lot of the firm reported to Mandel, who up to date his LinkedIn profile to notice the change in title (Roberts didn’t). Then on Friday, the chief who had overseen Cometeer’s layoffs, chief individuals officer Elyse Neumeier, introduced her personal departure. From a peak of 160 staff, Cometeer now employed “roughly 85,” Neumeier stated in an all-hands e-mail reviewed by Forbes, implying head rely on the firm has dropped 47%. (Based mostly on the org chart reviewed by Forbes, this quantity seems to have included greater than 20 contractor or hourly staff.) “With the discount of the Cometeer workforce comes a essential discount in my function,” she wrote. Neumeier didn’t reply to a remark request. Cometeer declined to touch upon its head rely.
In response to an in depth listing of factors on this story, Roberts and Mandel supplied a press release: “Like so many different corporations, the tactical realignment final yr of our enterprise mannequin resulted in painful however essential changes to our workforce dimension and composition to be able to match market situations. We really feel how tough that has been for these affected and stay grateful to all those that have performed a task in Cometeer’s journey so far.” (Emphasis theirs.)
Investor D1 Capital declined to remark. Buyers Elephant and Greycroft didn’t reply to requests for remark. Cometeer companions Counter Tradition and Klatch didn’t reply to a remark request. Jonathan Rubinstein, the founder and CEO of Joe Espresso, stated, “They’ve been an unbelievable accomplice for us and I believe they’ve an incredible mission.” Information of December 2022 layoffs at Cometeer was first reported by meals information website Nosh.
Cometeer is way from the one startup to have carried out layoffs or confronted challenges within the latter half of 2022 as public markets contracted and enterprise capital companies have urged their startups to chop spending and focus extra on income and hoarding money. Public tech corporations like Alphabet, Amazon and Microsoft have lately minimize 1000’s of jobs; even high-flying Silicon Valley unicorns like Stripe have minimize 1000’s extra in combination. Such an setting has confirmed notably difficult for retail and direct-to-consumer manufacturers nearer to Cometeer’s enterprise, from widespread layoffs at companies like Allbirds and Everlane to different startups shutting down.
However whereas latest cuts at bigger startups like Flexport and Lattice got here with public letters from their CEOs and guarantees of assist, Cometeer has stored quiet, to the frustration of some former staffers. (Others have scrubbed their LinkedIn profiles and social media accounts of any point out of ever having labored at Cometeer.)
“I believe they’ve a fairly good facade happening,” stated one former worker, who, like others, stated they felt misled after being recruited by Cometeer. “I’d see the articles and reveals about dysfunctional startups and suppose, ‘No, not us!’” stated one other. “And it’s so demoralizing that over time, that wasn’t true.”
Cometeer frozen pucks just like the one at proper are faraway from pods and dropped into sizzling water and dissolved, or left to soften and poured over ice and water to make an iced espresso.
Boston Globe through Getty Photographs
In
Might 2022, Cometeer staff acquired an e-mail from management touting the funding the startup had raised and how briskly it deliberate to develop. There have been some warning indicators of rising pains—some employees have been let go the earlier December, in line with two individuals with data, and the corporate’s chief monetary officer had departed in April. However, in line with one former worker who acquired the e-mail, it mirrored the optimism that persevered internally on the time. “There was loads of ‘We simply bought funded, we’re going to the moon’ discuss,” they stated.
Cometeer was making marquee hires, as Roberts had predicted, filling roles rapidly via an accelerated interviewing course of and providing top-of-market salaries, a number of sources stated. And it’s doable Cometeer had a good larger warfare chest than outwardly identified: Based on startup tracker PitchBook, the corporate raised an estimated $80 million in extra funding that spring, doubling its valuation to greater than $800 million. (By comparability, fellow espresso startup Clean Road Espresso, a retail chain, has raised a minimum of $60 million; Blue Bottle, a series acquired by Nestlé in 2017, raised $117 million.) Cometeer declined to touch upon the funding.
For individuals who a sexy wage didn’t instantly sway, there was Roberts, the corporate’s founder, who made the Forbes 30 Underneath 30 listing in 2021. Potential staff bought his full pitch: Collectively, Cometeer might disrupt the staid espresso trade for the higher, not simply offering a high-quality product to prospects, however supporting roasters with ethically sourced merchandise, too. And in contrast to with many job pitches, Cometeer’s product itself was proper there to strive. “You’d get overvalued on the caffeine and offered the imaginative and prescient,” stated one other former worker.
However a extra existential friction was additionally creating between the approaches of two teams of staff at Cometeer: those that noticed the enterprise primarily as a espresso firm that operated like a tech startup, and people who thought of it foremost a tech startup that occurred to promote espresso.
Even at its greater value level, Cometeer was fortunate to make a dime per pod, one supply stated.
Cometeer’s core innovation—the one for which it held a patent, one supply with data stated—was the way it flash-froze the espresso it acquired from roaster companions into its self-serve pods, to be shipped over dry ice across the nation. Cometeer traders had lengthy imagined the corporate increasing past espresso to different product traces delivered equally, corresponding to tea and alcoholic drinks, two sources stated. Roberts, nonetheless, appeared extra focused on “working a billion-dollar espresso model,” one of many sources added. “Except you begin roasting your personal beans, you’re not a espresso firm,” the particular person stated.
To accumulate and ship espresso from its 12 roaster companions like Counter Tradition, Joe Espresso and Klatch in such a vogue wasn’t low cost, both. At about $2 per cup, Cometeer was twice as costly as Nespresso pods, or six occasions the value of lower-end Inexperienced Mountain pods obtainable at Staples. Not like these rivals, Cometeer touted that its aluminum pods have been recyclable, as was its packaging. However even at its greater value level, Cometeer was fortunate to make a dime per pod, one supply stated. The corporate misplaced cash on a minimum of some orders it shipped, one other claimed.
“We’re proud that Cometeer has constructed a sustainable mannequin and is now comfortably worthwhile on almost each field of espresso that we ship,” stated Roberts and Mandel in a joint assertion.
Each supply who spoke to Forbes stated that a minimum of till lately, Comteer’s product was nicely acquired by prospects. The issue was that regardless of vocal on-line followers corresponding to Josh Wolfe, the Lux Capital cofounder, and its personal busy Twitter presence, Cometeer was struggling to succeed in newer demographics exterior the Twitterati, six individuals stated.
Some staff grew pissed off when Roberts and different executives advised the groups accountable for bettering Cometeer’s gross sales that they couldn’t threat spending cash on untested methods or advertising and marketing, the individuals added. An inside doc reviewed by Forbes confirmed that Cometeer spent greater than $160,000 on influencer and creator advertising and marketing alone in a single month that spring. “They’d spend $50,000 on an influencer, however they wouldn’t strive new demographics as a result of they didn’t need to check them,” stated one. “They have been caught doing the identical factor repeatedly, and hoping for a distinct outcome.” Cometeer declined to touch upon its advertising and marketing spend.
When Cometeer laid off about 20 folks that June, leaders advised remaining staff the cuts had been lengthy deliberate and didn’t mirror weak spot within the firm’s enterprise prospects, two individuals stated. However that summer time, as progress slowed, in line with one particular person with data, Roberts and the corporate’s board began to evangelise slicing prices, from how a lot it paid its roasters (cheaper suppliers grew to become favored for bigger orders) to promoting spend. A milestone that August, Cometeer’s first brick-and-mortar presence in famed Los Angeles space grocery mini-chain Erewhon, was trigger for public celebration. However that placement was pricey to the corporate, three individuals stated, whereas persevering with to cater to a smaller, well-heeled set.
Different pink flags have been showing throughout the enterprise. Many Cometeer staff labored a minimum of part-time from a New York workplace or at its Gloucester headquarters. Downstairs, the corporate employed a number of dozen individuals in command of truly manufacturing, packaging and delivery its pods, and conducting high quality assurance. Morale in such jobs was low. “They have been working there for the cash,” one particular person with data stated. “It wasn’t a contented place.” Within the months after the June layoffs, greater than a dozen different individuals have been quietly minimize, a minimum of some from such groups, the particular person added, with out the broader firm being knowledgeable.
“Gonna pursue a life with much less stress that [sic] cometeer has endure [sic] on my life,” one worker wrote in a November resignation e-mail to Neumeier that copied your entire firm. “Cometeer has created option to [sic] a lot stress for me to return to work.”
Roberts struggled throughout this era in setting constant objectives for his executives, in addition to trusting their experience, three individuals stated. In a single occasion that reverberated across the firm, Cometeer’s longtime vice chairman of meals science and low improvement stop in frustration as Roberts continued to belief exterior consultants and businesses over their enter, two individuals stated. (The previous govt didn’t reply to a request for remark.)
“Nice product. Firm mustn’t have raised $100 million.”
A latest school graduate when he began Cometeer, Roberts, who’s 32 now, was additionally closely influenced by considered one of his traders specifically, 4 sources stated: Zach Frankel, a low-profile enterprise capitalist who has backed corporations together with e-cigarette maker Juul, controversial on-line mortgage enterprise Higher.com and fintech unicorn Ramp. (Disclosure: This reporter attended school with Frankel and has maintained his acquaintance within the years since.) Frankel exerted heavy affect over Roberts and the corporate’s hiring and firing choices, the individuals stated.
Leaders who didn’t match their most popular mould, in line with the sources—younger, Ivy League or comparably educated, usually white and male—struggled to keep up Roberts’ belief, they added. (One famous that whereas most of the firm’s espresso trade veteran leaders are not employed by Cometeer, its head of espresso product, who joined instantly after graduating from Princeton in 2021, per his LinkedIn, stays.) “It was a fratty tradition within the inside circle,” stated one former worker. Frankel referred a request for remark again to Cometeer. Mandel and Roberts didn’t reply a query concerning the firm’s tradition.
Buyers’ religion in Roberts himself was shaken, nonetheless, following his hiring of a brand new advertising and marketing chief in October. The rent, made with out the board’s data, two sources stated, was reversed and the chief let go inside two weeks. By December 2022, when Cometeer let go one other group of 20 or so staff throughout two Wednesdays, Roberts’ personal function was on the block. The identical week it knowledgeable employees they have been to depart, the corporate introduced internally that chief working officer Matthew Mandel can be stepping right into a co-CEO function. The transfer was not publicly introduced, although Mandel up to date his LinkedIn profile. An organizational chart seen by Forbes confirmed that almost all groups and staff at Cometeer reported to Mandel following the transfer, with Roberts left in command of a number of staff in gross sales and PR.
In the primary week of 2023, bankers at Goldman Sachs stopped by a Cometeer cart parked exterior their Manhattan workplace to get pleasure from free cups of espresso and pods to convey again to their desks. Coming simply after the funding financial institution had minimize some free espresso in its workplaces, an worker recognized as Cometeer’s “proprietor” advised a New York Put up reporter who coated the stunt: “The scenario is dire,” and “Persons are actually bummed concerning the espresso phasing out.”
Within the fall, Cometeer employed quite a lot of model ambassadors for such alternatives, an individual with data stated. The org chart reviewed by Forbes lists 17 individuals in such a task, probably the most of any job perform on the firm. (That “proprietor” appeared as head of discipline advertising and marketing for New York.) Regardless of head of individuals operations Neumeier’s latest departure, most former staff who spoke to Forbes believed that the corporate confronted higher prospects beneath Mandel’s management; a minimum of one stated they may see a situation the place the corporate might nonetheless flip issues round.
One former staffer insisted that, if Cometeer might revise its pricing mannequin and usher in an outdoor, seasoned CEO, “There’s a mannequin there that would nonetheless work.” Others, nonetheless, say that with the advantage of hindsight, the “rose-tinted glasses” have been eliminated. “My main takeaway is that on this startup world, there may be loads of smoke and mirrors,” stated one laid-off Cometeer staffer.
Most stated they didn’t imagine their choices to purchase Cometeer shares would quantity to a lot. “I’d urge whoever is seeking to work there to do extra analysis,” stated one. On this case, smelling the espresso could not have been sufficient. Summed up one other former worker: “Nice product. Firm mustn’t have raised $100 million.”
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