Meta Platforms Inc., formerly known as Facebook, has agreed to sell Kustomer, a business-software startup it acquired for $1 billion last year, to Redpoint Ventures, Battery Ventures and Boldstart Ventures.
The move comes as Meta looks to focus on its core business and marks a rare instance where Meta is trading its ownership of Kustomer for a passive minority stake in the company. Under the deal, the three venture firms will jointly invest $60 million of capital in Kustomer to cover its operating costs, and Meta will remain the largest stakeholder but won't have a seat on its board. The deal values Kustomer at $250 million.
Kustomer’s founders, Chief Executive Brad Birnbaum and Chief Technology Officer Jeremy Suriel, will still have stakes in the company. The deal is expected to close on May 15, after which Kustomer will have to maintain growth and operations with a fraction of the headcount it had under Meta, according to internal communications reviewed by The Wall Street Journal.
Kustomer's software enables businesses to communicate with consumers via a variety of channels, including phone, email, text messages, WhatsApp and Instagram, taking conversations from different channels and putting them on a single screen. After the deal closed, Kustomer employees were told they would be a linchpin in Meta’s e-commerce strategy, but Meta whittled down Kustomer’s ranks over multiple rounds of layoffs.
Meanwhile, Meta has been making changes to its own operations. It has added a team of 10 experts in artificial intelligence (AI) networking technology to boost its data centers' ability to handle demand for AI features. But the company recently announced its first wide-ranging layoffs, affecting over 10,000 employees, citing a shift in consumer behavior.
There is a silver lining for those in the gaming industry. Teams focused on gaming will be able to hire for certain roles once the layoffs conclude, according to sources familiar with the matter. This comes as enthusiasm for gaming within Meta continues to grow, with some hardware elements being "retooled" to improve Quest headsets for gaming and game developers.
The fallout from Meta's recent layoffs continues as employees express frustration and demand accountability from CEO Mark Zuckerberg regarding bonuses given to top executives. During a town hall meeting on May 4, one employee asked why the entire executive team received ratings of "EE/GE," which typically result in bonuses, despite being responsible for choices that led to the layoffs. The move has raised questions about the fairness of the bonus system and sparked further criticism of the company's leadership.
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Zuckerberg reportedly defended his top managers' performance but also announced that the company will slow hiring and onboarding of new employees in the wake of the layoffs, which affected 4,000 workers across Meta's tech divisions.
The sale of Kustomer represents a significant downgrade from how Meta previously viewed the unit, as the terms of the deal suggest. The decision to maintain a stake in a Kustomer spinout rather than outright sell the company to other suitors was made by Meta as the company had endured more than a year of antitrust scrutiny from both U.S. and European regulators before the deal closed last year.
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