The Skinny blog is written by Rick Smith, editor and co-founder of WRAL Tech Wire and business editor of WRAL.com.
RESEARCH TRIANGLE PARK, N.C. – When Ryan Allis, the founding chief executive officer of iContact, called his co-founder Aaron Houghton to tell him that their former company was losing a third of its workforce under layoffs mandate by the new owners, Houghton couldn’t believe what he was hearing.
He described the news as “pretty shocking” in a phone interview Thursday afternoon.
“My understanding is different than what played out,” said Houghton, who stepped down as chairman when iContact was acquired last month by Maryland-based Vocus in a deal worth $169 million.
“It’s fair to say that my understanding was different” about what would happen to iContact employees when the two firms merged,” he added.
“I am personally upset to see what occurred on Wednesday.”
When the deal was announced, Allis said there would be no layoffs and labeled the deal as between “growth” companies.
On Wednesday, a third of iContact’s local workers – from some 75 to more than 80 based on other reports – were told they were being let go. Allis and Houghton started the company as students at UNC-Chapel Hill.
Allis did not respond to an requests from WRAL Tech Wire for comment. He remains the president of the iContact division at Vocus.
In a conversation with WRAL Tech Wire on Monday, Houghton, who is launching a new marketing analysis company in Durham, reiterated that he and Allis had received “assurances” from Vocus about the future of iContact workers.
On Thursday, he said what happened far exceeded expectations.
“We had received assurances that a large number of the team with the exception of obvious overlapping positions would be preserved,” he said.
One consistency in what happened to workers in view of his understanding, Houghton pointed out, was that “decisions were made quickly.” He also said that he and Allis had insisted that any laid-off workers “would be taken care of” financially. That apparently is being done, he noted.
Personal Interventions to Help
In reaction to the layoffs, Houghton said he and Allis are intervening personally to help all the workers affected.
They are willing to meet with employees and are seeking to help place employees in new jobs. They also are working with the Council for Entrepreneurial Development to put on a job fair next Wednesday from 12-2 p.m. at The American Underground in the American Tobacco Historic District.
Allis and Houghton lost control of the company in taking outside investment. While they remained board members and Houghton was chairman, the investors sought a buyer – and found one. Allis noted when the company was sold that neither he nor Houghton planned to sell the company. But he also said he had a “boss” – the board – when he was asked about no longer being in charge of the company.
Realizing what might happen if a sale occurred, Houghton said he and Allis tried to protect employees.
“We did negotiate in the deal that if something happened it would be out of our control and we wanted people taken care of in a certain way,” Houghton said of the severance packages giving exiting employees.
But he also noted: “We were hoping to not see it used at all.”
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