LEHI — Just weeks after company leaders painted a rosy picture of success and planned expansion, tax preparation software company Canopy slashed its staff by almost a third, leaving over 80 full-time employees out of work.
Canopy CEO Kurt Avarell said he announced the layoffs last Friday, following a decision to realign the company's approach to the sales and marketing of its five tax preparation products.
"We decided, and the board decided, to refocus efforts on the go-to-market strategy, on a more streamlined, do-it-yourself sign-up process," Avarell said. "Our previous, high-touch sales team worked very well, but for efficiency reasons … the decision was made to move to something more streamlined."
Avarell said the changes were not on his radar when he spoke with the Deseret News for a story in February. The company staff, after the reduction, stands at about 170 and the layoffs were not reflection of poor performance for the company's product portfolio, according to Avarell.
"Sometimes when companies go through something like this it’s an 'oh my gosh' moment and you need to pivot away from what you're doing," Avarell said. "This is in no way a pivot.
"Despite a really tough week and some really tough decisions, the future of Canopy is still to disrupt the tax preparation industry."
Avarell, a tax attorney who studied at BYU, founded the company in 2014 and said the idea for launching a businees to revamp the tools for tax preparers came from doing pro bono work at a Wall Street law firm.
"It was while doing pro bono work at Milbank that I recognized a problem that needed to be addressed," Avarell said. "I was working with low-income taxpayers and the process, that should have become easier each time we did it, took just as long because of the volume of paperwork required by the IRS.
"The amount of time required was startling … and I realized automation would change everything."
The company recently moved into a brand-new building perched in the foothills east of I-15 near the Point of the Mountain and has raised some $70 million in venture backing to date.
About a year ago, Canopy earned a tax incentive package from the Governor's Office of Economic Development that was based on the company's projection of hiring 530 employees in the next five years. The GOED program is structured on a postperformance basis and Avarell said the company has yet to apply for any rebates, though it will remain eligible to do so over the five-year life of the agreement. The tax rebates are worth as much as $1.2 million over that time period, but only if the company hits the agreed upon benchmarks.
Avarell said announcing the layoffs was one of the most difficult tasks he's ever faced and said the company is doing everything it can to help the former employees land on their feet.
Support for former Canopy workers is also coming from fellow Utah tech industry companies, several of which are co-sponsoring a job fair event on Wednesday at the Silicon Slopes headquarters. A Canopy representative said 80 of its former employees have signed up to participate in a networking breakfast at which some 130 recruiters are expected to discuss job opportunities.
Provo-based venture capital firm Peak Ventures is one of the event sponsors. Peak principal Diogo Myrrha said while staff reductions are always difficult, the need to make abrupt adjustments is not unusual in the world of startups where the rates of growth, and change, move very quickly.14 comments on this story
“Just as startups are built to grow at an uncommon pace, so, too, there are times when they have to recalibrate quickly," Myrrha said. "These times come for startups just as often, in fact arguably more often, than the times when it’s all ‘up and to the right.’
"There are many talented team members spread throughout Silicon Slopes and Canopy is no exception. We welcome the opportunity to lean in a little to help point that talent to the many other great opportunities in our tech ecosystem.”
Additional details on the networking event, open to former Canopy employees, can be found online.