Deem, a San Francisco-based e-commerce company, suddenly has an urge to purge after its diversification binge into multiple categories made it unprofitable.
Deem will simplify its business by focusing on travel, broadly defined. That will take capital. So it has received a $34 million round of equity financing, led by PointGuard Ventures.
Its new chief executive is Kris Panu, who is also co-founder and managing partner of PointGuard. Panu's other co-founder of PointGuard, Pete Thomas, will join Deem's board.
CEO Patrick Grady, the founder and 15-year leader of the company, is departing. Day-to-day operation will be run by John Rizzo as the new COO of Deem. (The leadership switch and the funding was first reported by The Company Dime.)
Rizzo told Tnooz he plans to slim down the company's product efforts from about 10 to three, travel, expense, and car service (in both flavors, corporate and operator).
"We got into a little trouble in execution, with so many irons in the fire that the company was spread too thin, frankly."
The slimming down means that the 250-employee company will have to undergo some layoffs, he said.
Deem's signature travel service suite enables corporate customers to buy travel services, supplies, and products at volume discounts, with the assurance that all purchases align with corporate policy. The company will continue to support ancillary products related to travel for its existing customers.
Within two weeks, the company expects to close a $34 million round of funding. Hony Capital is also participating, having joined PointGuard in previously investing in a round two years ago. Rizzo said the money is secured and it is just a paperwork matter at this point.
Deem has raised a lot of money over the years but won't reveal how much, except to say that the $492 million figure' cited by Crunchbase is "wildly inaccurate."
Deem's signature travel service suite enables corporate customers to buy travel services, supplies, and products at volume discounts, with the assurance that all purchases align with corporate policy.
As Tnooz has recently pointed out, travel and expense software is eating the corporate travel world. So how will Deem now fit into that universe of players? Rizzo told us:
"The expense market is split in tiers. The major corporates want enterprise solutions, and Concur has extended its leadership there.
Our expense product wasn't aimed at that. In 2016, we're going to focus on the middle market. Until now, we've left the SMBs to companies like Expensify.
But we need to, first, listen to our existing customers to find out how we can make them happier. Second, enhance our pace of innovation and come out with a retooled expense product before we push hard for new customers.
Third, we need a retooled sales and marketing practice that is more efficient in a digital marketing model before we go out broadly."
Rizzo touted as relevant his leadership role at SolarWinds, an IT software company that grew from $325 million to $505 million with claimed 40% gross margins in two years thanks. He partly credits that company's success to its salesforce embracing a fully digital demand generation model for its marketing.
Deem faces a challenge in turning around its ground transportation back-end support business, too. Yesterday, the National Limousine Association killed its less-than-a-year-old deal with Deem. The deal would have meant deploying Deem's technology platform as a preferred one to its members.
An urge to purge makes for good drama. Deem hopes it also makes for good business, so it can get back in the black by 2018.