BRS Layoffs and New Strategic DirectionBy: Carlton Purvis, Published on Jul 18, 2013
BRS Labs' new press release trumpets bringing their 'technology to new markets.' Inside the release, they note that they are embarking on "a new strategic direction for generating future growth." However, what they did not reveal is the significant layoffs and restructuring that is underlying this move.
While BRS Labs has declined to comment on any particulars, we have confirmed the layoffs with multiple sources close to the company. The most reliable information suggests that 20 something people, including members of its sales teams, were laid off this week. Our sources say that pressure from investors to reduce the burn rate was a key motivating factor.
Previously, BRS Labs moved from direct sales to marketing through resellers, but the strategy was “no longer sustainable as it was becoming increasingly difficult and expensive,” according to financial documents. In that document, the company said if that plan was unsuccessful, it would focus on expanding into other markets, saying its AiSight technology could be tailored to sonar (detecting abnormalities in sound waves), radar (finding abnormal situations based on radar readings), "learning" behavior of a targeted individual based on biometrics and Internet traffic.
The "New Markets"
BRS Labs declined to comment on the layoffs, but released a statement Thursday saying its “new strategic direction for generating future growth" would involve expanding its technology to new markets, specifically big data and “SCADA, operations management, facilities management, trade-traffic-and-transaction monitoring, chemical-biological-radiological-nuclear-explosive threat detection, airspace management, submersible systems, and cyber security.” This change is consistent with the company's stated plans in its prospectus if its 2013 growth strategy did not work.
These cuts will significantly reduce its burn rate which would give them a longer runway to shift into big data. Earlier this year, BRS Labs disclosed raising tens of millions plus the company has recently been working to raise millions more. Assuming a staff reduction of ~25, this could reduce the burn rate from $3 to $5 million per year.
However, it could still be a risky move despite the cash savings. Big data is an emerging market which BRS Labs will need to prove its acceptance. As their efforts into security showed, long sales cycles and demanding expectations can make rapid ramp ups in sales challenging, for any company.
What BRS Labs does with its existing surveillance offering will be quite interesting. Will the new markets of 'Big Data' shift resources away from surveillance? How significantly will the current cuts impact their existing surveillance prospects and projects?
For those looking at BRS Labs, this new strategic direction and layoffs should result in cautious examination of the risks involved.
UPDATED: 20x Revenue Growth
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