Imagine how operations stopped when Wall Street shut down last month, that is how Zirtual's over 400 employees, associates and customers were caught off guard when the virtual start-up company reported halted operations a few days ago.
Tech Times and Business Insider recently reported that Zirtual sent an email to hundreds of its employees that it is stopping operations as soon as the announcement was disseminated, not to mention deletion of its Facebook pages, Twitter account and Google+ profile.
No official statement has yet been released of the reason behind Zirtual's employee issue until Tuesday when CNN Money reported CEO Maren Kate Donovan providing an explanation.
The report said the company "has grown too fast," and it was "burning cash than it was taking in."
"... Growing fast caught up with us, and the last seven days have been a spiral like I have never experienced before in my life," Maren Kate wrote on Medium.com. "So what went wrong? Short answer: burn."
She further noted that Zirtual raised almost $5 million in the past three years, but costs went high when they started shifting from independent contractors to employees.
She added that high revenues also led to the halting of Zirtual's services.
Saving grace
CNN Money also said that Zirtual will be acquired by another startup launch platform, Startups.co. It will reportedly relaunch the services and hire back Zirtual employees that got laid off.
The Zirtual employees were informed of this acquisition, the report added and they will be given the chance to re-apply.
This is where the bad news comes in, because Startups.co CEO Wil Schroter said in the report that not all employees will be re-hired.
"Ideally we'd like to keep everyone, but given that the previous state of the company was unsustainable, it's not reasonable to think we can continue to do so," Schroter said in the report.
However, founder Maren Kate assured in her blog post that "everyone will be compensated fully," including the Zirtual employees. She noted that "checks have been processed and are being mailed out."
She wrote, "I cry for all the employees we hurt. I cry for all the clients we infuriated. And I cry for the investors we let down."
