Noom, a health coaching platform valued at $3.7 billion last year, is laying off a portion of staff for the second time in a matter of months, TechCrunch has learned from sources.
Noom has laid off 10% of its staff, or around 500 people, which is a reduction that mostly impacts its coaching team. It’s the second layoff impacting Noom’s coaching team in a matter of months, impacting hundreds of employees.
“Noom has experienced extraordinary growth over the past several years, and it’s essential that we are structured in a way that enables us to continue growing over the long term,” a Noom spokesperson said over e-mail. “We recently made the difficult decision to reduce the number of Noom employees. We are deeply grateful for their contributions to Noom, and we wish them continued success.” Noom declined to answer questions regarding scale of layoffs, separation packages, and strategy beyond this statement.
The startup, which has raised over $650 million in funding since launching in 2008, is partially known for its controversial approach to weight loss and dieting. Now, however, it’s showing tensions from a personnel front. Noom’s scaleback of its coaching services suggests a departure from the platform’s original pitch, which was to combine intelligent nutrition with exercise coaching. In 2020, Noom hit $400 million in revenue using this strategy. One year later, Noom expanded its coaching services by launching a mental health vertical.
Its current website shows a glimpse of how Noom thinks, or at least thought, about coaching as its strategy.
“Welcome to the Noomily,” Noom’s website reads. “Our coaches guide users through the ups and downs of the weight loss journey with empathy and compassion. They help users better understand themselves through personalized action plans that are based on their individual goals, preferences, and lifestyle.”
The landing page for coaches goes on to explain the daily life of a Noom coach, which ranges from helping clients develop “a healthy lifestyle” and “contribute to the growth of something amazing.” Coaches are able to enroll in health plans after 90 days of employment, the website said.
Now, however, that advertising has a different tone. The company is reportedly moving more to scheduled video calling 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 that it was critical for the company to “manage expenses, increase efficiency and be more effective about how we achieve our mission” despite “significantly improving” company financials.
“Today’s decisions put us in a position where we can continue to place big bets for the next year, and innovate and grow in the years ahead,” the co-founders wrote in the internal memo. Today’s layoff comes right as the company’s CFO, Mike Noonan, leaves to join TripAdvisor, the Wall Street Journal reports. A Noom spokesperson said over e-mail that the layoffs and CFO departure are two “separate, unrelated announcements.”
In the internal memo, the co-founders went on to say that the startup‘s big bet is focused on creating a more comprehensive mind and body platform with a higher degree of personalization. The co-founders nodded to their enterprise offering as “another bet that has the potential to dramatically expand our customer base.”
“Finally, over the next few days, we may see unkind headlines, but ask that you maintain focus on what’s most important now: caring for our departing colleagues like family, by treating them with humanity and respect,” the co-founders wrote.
The company was last known to be reportedly planning for a 2022 IPO, at a $10 billion valuation.
Current and former Noom employees can contact Natasha Mascarenhas by e-mail at natasha.m@techcrunch.com or on Signal, a secure encrypted messaging app, at 925 271 0912.
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