- Earlier this month, the $775 million cloud-services company D2iQ — formerly known as Mesosphere — laid off 34 employees, which represented about 13% of its workforce, according to an internal presentation viewed in part by Business Insider.
- "The COVID-19 driven economic downturn has had an immediate and likely future impact on our business and we made this choice only after significantly cutting all discretionary expenses," a D2iQ spokesperson told Business Insider.
- Management told employees at the time that it was reducing its sales projections for the rest of the year by 40% and cutting expenses by 25% amid the coronavirus crisis.
- The layoffs were conducted about two weeks after D2iQ CEO Mike Fey announced his resignation from the company and as cofounder Tobi Knaup stepped into a co-CEO role with William Freiberg, who had been the chief operating officer.
- Fey previously told Business Insider that an acquisition "is certainly an option down the road," even as the company shifted to focus on the Google-created cloud-computing software Kubernetes.
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Earlier this month, the $775 million cloud-services company D2iQ — formerly known as Mesosphere — laid off 34 employees as it looked to cut costs amid falling sales, according to an internal presentation viewed in part by Business Insider. The layoffs affected about 13% of its total workforce.
That presentation on April 3 indicated D2iQ was reducing its sales projections for the rest of the year by 40% and that it was looking to slash costs by 25% to "ensure that we can maintain a sustainable business model." The same presentation predicted that without taking any action, the company would be forced to look for more venture-capital investment later this year or else it would run out of cash entirely as soon as summer 2021.
Beyond the layoffs, the presentation said the company would reduce costs by instituting a freeze on hiring and merit-based pay raises and looking for ways to cut down on spending in travel, cloud computing, marketing, and other areas.
The presentation was made about two weeks after D2iQ CEO Mike Fey announced on March 18 that he was stepping down, with cofounder and Chief Technology Officer Tobi Knaup and President and Chief Operating Officer William Freiberg stepping up to replace him as co-CEOs.
"Earlier this month, we made the very difficult decision to reduce the workforce at D2iQ by approximately 13 percent," a D2iQ spokesperson said in a statement.
"The COVID-19 driven economic downturn has had an immediate and likely future impact on our business and we made this choice only after significantly cutting all discretionary expenses," the spokesperson added. "Our entire global team was affected. We continue to support organizations across the globe as they rapidly move toward more nimble, cloud-driven strategies, and believe the painful decisions made this month best position the company for the long-term."
A change in product direction
D2iQ was founded in 2013 as Mesosphere, named for the Apache Mesos open-source cloud-computing software it used to build its products. In mid-2019, Mesosphere renamed itself D2iQ — short for "day 2 IQ" — to reflect a new focus on Kubernetes, the open-source cloud-computing project created at Google that is used by most Fortune 500 companies.
In total, D2iQ has raised about $250 million in venture capital, including a $125 million Series D round in 2018. It also raised an undisclosed amount from SharesPost, Rembrandt Venture Partners, and other investors in February 2019 ahead of the name change.
The company's software, across both of its iterations, is designed to make it easier for customers to manage and maintain their cloud-computing and server infrastructure, which helps them get more out of their investments in cloud platforms like Amazon Web Services or Microsoft Azure.
The company's technology has attracted significant attention from major technology players: In 2015, D2iQ turned down an acquisition offer of as much as $150 million from Microsoft, but the company turned it down.
More recently, Fey told Business Insider that an acquisition "is certainly an option down the road."
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