Noom, a health education platform valued at $3.7 billion last year, is laying off some staff for the second time in a few months, sources told TechCrunch.
Noom has laid off 10% of its staff, or about 500 people, a reduction that mainly affects its coaching staff. It’s the second layoff to affect Noom’s coaching staff in just a few months, affecting hundreds of employees.
“Noom has experienced exceptional growth over the past several years, and it is important that we are structured in a way that allows us to continue to grow over the long term,” a Noom spokesperson said via e-mail. “We recently made the difficult decision to reduce the number of employees at Noom. We are deeply grateful for their contributions to Noom and wish them continued success.” Noom declined to answer questions about the scale of the layoffs, severance packages and strategy beyond this statement.
The startup, which has raised over $650 million in funding since it launched in 2008, is partly known for its controversial approach to weight loss and dieting. Now, however, it shows tensions on the personnel front. The reduction of Noom’s coaching services suggests a departure from the platform’s initial pitch, which was to combine smart nutrition with exercise coaching. In 2020, Noom reached $400 million in revenue using this strategy. A year later, Noom expanded its coaching services by launching a mental health branch.
Her current website shows a glimpse of how Noom thinks or at least thinks about coaching as her strategy.
“Welcome to Noomily,” Noom’s website reads. “Our coaches guide users through the ups and downs of their weight loss journey with empathy and compassion. They help users better understand themselves through personalized action plans based on their individual goals, preferences and lifestyle.”
The coach landing page goes on to explain the day-to-day life of a Noom coach, which ranges from helping clients develop “a healthy lifestyle” to “helping develop an amazing one.” Coaches can enroll in health plans after 90 days of employment, the website said.
Now, however, this ad has a different tone. The company is reportedly moving more towards scheduled video calls instead of live chat.
According to a memo obtained by TechCrunch, Noom co-founders Artem Petakov and Saeju Jeong addressed the layoffs to employees and said it was critical for the company to “manage expenses, increase efficiency and be more effective for how we achieve our mission’ rather than ‘significant improvement’ in the company’s finances.
“Today’s decisions put us in a position where we can continue to make big bets for the year ahead and innovate and grow in the years to come,” the co-founders wrote in the internal memo. Today’s layoff comes just as the company’s chief financial officer, Mike Noonan, is leaving to join TripAdvisor, the Wall Street Journal reports. A Noom spokesman said via email that the layoffs and the CFO’s departure are two “separate, unrelated announcements.”
In the internal note, the co-founders went on to say that the startup’s big bet is focused on creating a more comprehensive mind-body platform with a higher degree of personalization. The co-founders hinted at the business offering as “another bet that has the potential to dramatically expand our customer base.”
“Finally, in the coming days, we may see rude headlines, but please keep your focus on what’s most important now: caring for our departing colleagues like family, treating them with humanity and respect,” the co-founders wrote.
The company was last known to be planning an IPO in 2022, at a valuation of $10 billion.
Current and former Noom employees can contact Natasha Mascarenhas via e-mail at [email protected] or Signal, a secure encrypted messaging app, at 925 271 0912.