Lot18 Is Straight-Up Paying Unhappy Employees to Quit

At least seven employees have taken a buyout at the wine sales startup that raised more than $44 million.

Lot18’s headcount is changing again. (Photo: Foursquare)

On Thursday night, Philip James, the oenophilic founder and CEO of the well-funded wine and artisanal sales startup Lot18, was confident, bordering on blustery. The wine market is bigger than the entertainment market, Mr. James told an audience that had gathered at the Seamless office for an Internet Week panel, adding that Lot18 rejects 93 percent of vendors who apply to sell there.

Some of that braggadocio came through last week  in a company-wide meeting, where Mr. James announced an offer to buy out some of his own employees.

If you’re unhappy at Lot18, he told employees, I will pay you a month’s salary to leave now.

So far, six seven people have accepted the buyout.

The announcement was prompted by an internal, anonymous employee survey three months ago, Lot18’s editorial director Eric Arnold told Betabeat. “Management thought it was appropriate to address negative and positive feedback,” he said. “Some people expressed unhappiness.”

But, he assured us, “absolutely nobody is being ushered out the door.”

The move is in the spirit of a tactic made famous by Zappos, Mr. Arnold told Betabeat. Zappos offers new employees money to leave, to ensure that only the truly dedicated will stay.

Lot18 has 10 open job listings on its website, suggesting the company is trying to add headcount. However, Mr. Arnold said he was unsure if the employees who take buyouts will be replaced.

Mr. James also told three employees yesterday that they would be let go, prompting fears of another round of layoffs like the 15 percent staff cut that hit the members-only wine and epicurean site back in January.

Those three layoffs were due to the decision to shutter Lot18’s gourmet and experiences offerings, Mr. Arnold said.

The buyout offer was also accompanied by an incentive to stay, he said. Employees who hit the two-year mark at Lot18 will be allowed a month of paid vacation, or two weeks fully paid along with two roundtrip tickets anywhere in the world.

“[Seven] people decided to take one month’s salary and leave the company, each deciding on their departure dates with their managers,” Mr. Arnold elaborated in an email. “Every discussion’s been amicable, and no one who decided to move on is leaving the company today. All are staying for a couple weeks or longer to help with transitions.”

However, the layoffs and buyout offer sparked suspicion that layoffs are imminent, said one source close to the company. The company had visitors filtering through its Manhattan office today for a scavenger hunt as part of another Internet Week event, WalkaboutNYC. As the guests wandered by, some employees were “blatantly” job searching, the source said. “Lot18 seems to be imploding and the only non-disgruntled employees there are the new ones. Again, from what I hear you can cut the tension with a knife over there right now.”

Lot18 has raised $44.5 million, according to Crunchbase, and gobbled up a European startup late in 2011. In the first year of existence, Lot18 grew from six employees to 90 and got up to 99 before whittling back down to 85 in January. As of today, Lot18 has 81 full-time employees globally.

“By and large, wine sales are strong for the first quarter of the year, so far,” Mr. Arnold said.

Lot18 Is Straight-Up Paying Unhappy Employees to Quit