By Phil Hill
Late last year I wrote a post about Desire2Learn’s laying off more than 7% of the workforce, speculating that something had changed at the company. In particular, I didn’t buy the company line about continued growth.
In the end, I have trouble believing that these recent cuts are solely based on improving Desire2Learn’s growth without needing to correct for slower-than-expected growth. The arguments made by our sources that these are significant cuts driven by not hitting growth targets are compelling. However, there is no smoking gun that I have found to back up these claims definitively.
What I do feel confident in saying regarding employee numbers is that there’s more to the story here than just ‘churn’ alongside aggressive hiring. Since the end of the Blackboard patent lawsuit, Desire2Learn has grown at an average of 13 employees per month (140 in Nov 09, 560 in Sep 12, 750 in Nov 13). Yet the numbers might have actually gone down since July 2013.
After that post, Desire2Learn (through an interview with a local media outlet) further explained the company line about growth with challenges. [emphasis added]
The past year has included hirings and staff reductions as the developer of online learning software prepares for growth and expansion, says Dennis Kavelman, the Kitchener-based company’s chief operating officer.
Kavelman stresses that the company is growing, not shrinking, and restructuring to handle the growth resulted in some layoffs.
The past year alone saw new offices open on the East and West Coasts of Canada, another in Boston and significant expansion of business into Latin America, Europe and the Middle East.
Kavelman says he was hired to manage a fast-growing company, in part because of his experience at Research In Motion, now BlackBerry. Kavelman, RIM’s former chief financial officer, started at the smartphone maker when it had only 20 employees. When he left in 2010, it had about 14,000 employees.
“Because things change a lot when you grow from small, medium to large and you kind of have to do things the right way,” Kavelman says.
As some Desire2Learn employees were restructured out of a job in recent months, word of layoffs and cutbacks spread through blogs and emails. But Kavelman says the changes are necessary to ensure the company grows as efficiently as possible.
The company expects continued growth in 2014, although Kavelman will not be specific about numbers.
“We are just going to keep growing for a while, and everybody there really wants to do this for quite a long time,” he says.
I believe that the e-Literate article was one of the main targets of the highlighted comment, so it seems worthwhile to provide an update. Now that it has been almost six full months since the layoffs, what does LinkedIn data show? First, some caveats:
- Not every employee of a company lists their affiliation with the company on LinkedIn, and not every employee has a LinkedIn profile. So the best view of this data is to look for trends.
- From my experience with technology companies, often 90 – 95% of employees are listed on LinkedIn, which at least provides a sanity check.
A few months after the layoffs, once employees or ex-employees had time to update their profiles, LinkedIn showed 711 employees. This seems to be in line with Desire2Learn’s updated claims of 750 employees (94.8% on LinkedIn connected to the company).
Today, six months after the layoffs and three months after the above LinkedIn view, they have 715 employees listed.
I don’t want to over-interpret smaller variations, but the message I get is that unless Desire2Learn has convinced all new employees to avoid LinkedIn, the company has not had any significant growth since last summer. As I described in the layoff post, prior to summer 2013 Desire had been adding approximately 14 employees per month. If, as the company claims, they are continuing their aggressive growth, then we should have seen something on the order of 84 employees added since the time of the layoffs and some significant increase since February. We have not seen this.
The more data I see lately, including the recent ITC study on community colleges, it seems that Desire2Learn has also stopped growing in terms of market share in US higher education. They do claim growth opportunities outside of this market (K-12, corporate learning, international), but even if they are growing in these other markets, it does not appear to be affecting the company size.
It is possible, however, that some of the international growth would include new employees who are less likely to have a LinkedIn profile. This might explain part of the discrepancy, but not all or even most of it.
We’ll keep you updated as we hear more public information.
Update: I forgot about this article, but Forbes did a profile of John Baker last month and included this description:
Today the approximately 750 employee company is one of the leaders in the burgeoning e-learning market.
750 is the number of employees listed by the company as of the layoffs last year. This is another source of information to add to the LinkedIn data backing up my point.
Update 8/14/2014: Still no change."Six Months After Layoffs: No signs of growth at Desire2Learn",