entrepreneurs

Most tech start-ups host company-wide "all-hands" meetings every four to six weeks. At Hopin, however, they take place every Friday at 2pm. The star of the show is Johnny Boufarhat, Hopin's 28-year-old founder and CEO, who holds messianic status among at least some of his employees. The virtual event platform's unofficial motto is "let's fucking go" and while Boufarhat is talking, employees often post "LFG" in the meeting chat. Others share fawning messages such as, "oh my god – I love your beard, Johnny", a former employee recalls. "It's really sycophantic. All the British people would be in a separate chat going, 'oh my god, cringe'. It was for the most part the Americans who were in awe of him." So too were Hopin's investors. Last August, just over two years after its launch, the virtual events platform raised $450m at a valuation of $7.8bn, leading to it being named the fastest-growing start-up in Europe. Hopin's future didn't always look so bright. Eighteen months earlier, before the pandemic hit, Hopin had just a few dozen employees. As lockdowns came into effect, however, virtual conferences and events became far more common. The start-up capitalised on this trend with extraordinary success, raising more than $1bn from investors within two and a quarter years of its launch. Buoyed by this investment, Hopin, which lets clients host tens of thousands of people on its platform, lured staff away from more established companies, including Facebook, Salesforce and Google, with joining bonuses worth tens of thousands of pounds. But last month, as the appetite for virtual events continued to fall, Boufarhat decided to lay off 242 people, nearly a third of his staff. The chief operating, chief financial and chief business officers are among those who have left the company in recent weeks. There were job cuts in February as well. A spokesperson for Hopin said that "in light of the current macroeconomic climate" it is "focused on building a profitable and sustainable company" and "despite the shift around virtual events, thousands of our customers and millions of users" continue to enjoy using its products. The New Statesman has spoken with staff who recently left Hopin who describe a company lurching from project to project with little strategic oversight. "Working at Hopin was probably the biggest waste of time in my career," says the former employee who recalled the weekly meeting chats. "[Although] I suppose I did learn how not to do things." [See also: Is there any way to stop energy companies profiting from the cost-of-living crisis?] As the impact of the US tech downturn begins to be felt on this side of the Atlantic, Hopin serves as a cautionary tale to entrepreneurs, policymakers and investors. A decade of growth in the UK start-up scene, powered by quantitative easing, low interest rates and high investor confidence, is now coming to an end. Hopin's decision to lay off hundreds of staff, despite holding significant cash reserves, reflects the pressure founders are facing from their investors as they brace for a global economic slowdown. Boufarhat graduated from the University of Manchester with a degree in mechanical engineering in 2016. It wasn't until 2018, when an autoimmune condition forced him to isolate for long periods, that he became interested in videoconferencing apps. He founded Hopin the following summer. As its valuation increased last year he became the UK's youngest self-made billionaire at the age of 26. In the early days Boufarhat would update employees on company finances in the weekly all-hands meetings. At first, growth was meteoric and Boufarhat was insatiable. As Hopin approached the $100m annual recurring revenue mark, the founder talked up plans to double its incomes. As pandemic restrictions lifted and physical events returned, however, Hopin struggled to maintain engagement. The number of public events hosted on its Explore platform fell from 15,000 to just a few hundred. Client retention has dropped significantly, according to three former employees. The Hopin spokesperson said that the Explore site was not a focus and that it still hosts thousands of private events each month. Two former employees said the revenue from Hopin's core product, the virtual events platform, started falling last autumn. It was at this time that Boufarhat appeared to become increasingly worried. He started obsessing over user experience, reprioritised products and eventually stopped citing revenue figures in meetings. Hopin has been unusually acquisitive for such a young company. Revenues from its $250m acquisition of StreamYard, a live streaming service, have helped to offset the drop in revenue from its core product, but revenues from the non-core products are only growing slowly, two former insiders said. In October Boufarhat called a meeting of the product and engineering teams working on the virtual events product. "He just ranted about how shitty the user experience was," says an ex-employee who attended the meeting. "He just went mad. It was one of the most ridiculous, awkward meetings I've ever had. But this is what happens when you basically just dump a bunch of willy-nilly features and change priorities all the time. You end up with a really crappy product." Hopin said Boufarhat had always been and remains confident in the business. The first former employee recalls Boufarhat admitting in the meeting that he hadn't properly tested Hopin's virtual events product for seven months. "It was shocking," they say, "but the dumb thing was, we had been trying to tell leadership for months that the software was buggy, unreliable and overly complex. Nobody listened." The Hopin spokesperson said: "Johnny uses the Hopin virtual events product almost daily and has always been active in product reviews, new feature development and testing the product. When Johnny founded Hopin, he wrote and tested much of the product code, until Hopin built a development team, who managed product code writing and testing, as is usual for any growing tech company." Over the course of six months, the former employee was tasked with developing five new features for one of the key parts of Hopin's virtual events product. None of them was completed. This scattergun strategy was underpinned by the company's unusual approach to product development. Rather than basing the plan on market research, it would be determined in one of two ways. Either a customer would request a feature that the leadership team decided must be prioritised or managers would decide they wanted to copy a feature produced by a competitor. [See also: Can “Trussonomics” work?] "They wanted to build what specific customers were asking for, rather than spending time to understand if that was the right solution," says the former employee. "Do all the customers want this or are you just building things because one person asked for it?" While working there, the former employee "delivered absolutely no outcomes whatsoever. It was very difficult to put my CV together and explain what I'd been doing." The talent within Hopin's ranks was underused, according to the ex-employee. "The individual contributors at Hopin are really fantastic." The company hired people from Google, Facebook and Skyscanner, "but they then didn't let them do their job. It was very much about leadership getting together in a room, deciding what should be built and then asking for it to be built." In one case, the ex-employee said, the company sought to patent a smart matching algorithm for networking which, according to an internal message seen by the New Statesman, had been "inspired by one of our competitors". A member of staff had queried whether they needed to revise the patent plan, but the company's lawyers said they would file it anyway, the former employee said. Hopin's spokesperson said: "There was an internal discussion that any matchmaking algorithm at any company (including our competitors) is likely to contain similar elements. Our patent lawyers disclosed this competitive landscape information to the patent office, so the office can accurately assess the patentability of our patent in light of all material information." Boufarhat's management style may have been motivated by the faith his investors had placed in him. He once talked openly about how he dealt with pressure from investors. "Oh, that's not a problem for me," he said, according to an ex-employee who heard the exchange. "They just let me do what I want because, you know, we're really successful so they know they can just stay out." While Hopin's high-profile investors may have been hands-off at first, they appear to have become more involved as the company's financial outlook has deteriorated. The decisions to lay off 12 per cent of staff in February, then a further 29 per cent last month, are widely believed to have been motivated by pressure from investors. The job cuts have been met by confusion among those who still work there. In a recent all-hands meeting, staff from the finance team told employees that the reserves were large enough to sustain the company for another decade. Hopin was believed to have had around $600m in the bank as recently as three months ago, according to a venture capitalist who has not invested but has knowledge of Hopin's finances. As revenues for the virtual events product fall, Boufarhat has assigned his most valued employees to a new project focused on building a virtual community product, which is compared internally to Slack and Twitch. If the project doesn't work, says one of the former employees, "I think they'll wrap up the events business, and then use their war chest to buy another profitable company and just pivot over to that... I think that's why they're not spending on salaries." The tech industry idolises ambitious businesses that grow rapidly. However, the human cost of unsustainable growth is difficult to overstate. In the recent round of cuts, Hopin laid off two Ukrainian engineers who were supporting their families through the war in their home country. As hundreds of "Hopineers" lost their jobs this year, Boufarhat moved to Switzerland, after investors allowed him to sell $195m of his own shares. Investor largesse insulates entrepreneurs from the repercussions of the decisions they make. Meanwhile, it is often those who accrue the least power and wealth who suffer the most severe consequences. Hopin's spokesperson said: “In light of the current macroeconomic climate, we’re focused on building a profitable and sustainable company, as we continue on our mission to build technology that better connects people. Despite the shift around virtual events, thousands of our customers and millions of users continue to love hosting their events with Hopin events, streaming content on StreamYard and sharing videos on Streamable. We’ve grown our core product suite to better serve our customers, and we’ll continue to expand it by investing in growth areas across all of our businesses, including new products already in development.” Jules Maltz, general partner at the private equity company IVP and Hopin board director, said: “When the pandemic massively accelerated the demand for virtual events, Johnny and the wider Hopin leadership team scaled to meet unprecedented demand. As the pandemic has abated and we all face the prospect of a recession, the company, along with many others, has had to take action to position itself for long-term and sustainable success. The company is of meaningful scale, with a strong customer base and talented team. We continue to have full confidence in Hopin’s leadership team, product set and long-term vision.” [See also: The woman who plans to switch off obesity with a pill]

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