For the swamped group-buying market, the cold winter is here to stay, at least for some of the unfortunate participants. Recently, insiders haved revealed details regarding Lashou’s turbulent and tense situation since last August.
Day by day, Lashou’s management team disintegrates. Two months earlier marketing VP Niu Lihua left, following the steps of former CFO James Zhang. Now, a new round of layoff has begun. From a former region director, we know that since December 2012, four provincial region directors have resigned. Cao Qian, one of the four resigning directors, has also used Weibo to make the claim that the company had withheld her salaries and even requested her to give back the iPad Lashou once gave her as a prize.
A former Lashou staff told media that the product department let many people go last fall. “But the new comers have not made any change. Within three months, the sales of the product department has dropped from monthly RMB 150m to merely RMB 30m.”
Apart from that, a lack of cash flow plus a debt of RMB 400m to the merchants forced the company to relocate to smaller office. Currently the company only has about RMB 200m left in the bank.
A TimeLine of Lashou’s Demise
Founder Wu Bo resigned his position of CEO, but remained on the board as chairman. An insider commented that the company has been taken over by investors.
VP Zhou Feng was appointed as COO, a decision widely attributed to GSR Ventures. Lahou’s IPO data showed that GSR owns 38.9% of the shares. This dwarfs Mr Wu’s share of 22.6% as the second biggest shareholder.
Song Liming, the GM for the innovative business division, left the company. Mr. Song was widely known as a loyal follower of Mr. Wu. From this month on, Lashou must obtain permission from its C Round investor Milestone Capital (holding 4.9% shares) before it could make payments.
Evidence of conflicts between the company and investors surfaced for the first time. When the first IPO try didn’t work out, staff heard that Mr. Wu was scolded by one Milestone partner over the phone. This setback affected Mr. Wu’s image and position inside the company.
Milestone Capital recommended Huang Yingxia to Lashou. After Mr. Huang signed on as the HR VP, the power of the HR department grew rapidly. For instance, the department set up a reporting system where a team was assigned to “shadow” every region manager and report directly to the head of HR.