Blooom, which offers a 401(k) management robo, will no longer market its product to plan sponsors and will now pitch its offering only to consumers, the company’s CEO Chris Costello says. The move results in the layoff of 10 employees. Additionally, blooom President Greg Smith, who focused on large enterprise partnerships, is resigning.
"Direct to consumer is a core focus at blooom, and we decided to concentrate on what we know best," Costello said.
The Kansas City-based startup, which earlier this year announced it received an additional $9 million in Series B funding, has $800 million in AUM and 7,500 clients, Costello said, with 1,000 clients gained from enterprise partnerships.
Costello emphasized that the decision was a strategic one, "done from a position of strength."
"The mistake a lot of younger companies make is that they try to do too many things," he says. "We're trying to not spread ourselves too thin."
Costello said that blooom's existing plan sponsor relationships would remain intact, and the company would still work with plan sponsors that wanted to use its platform. However, blooom is shifting resources away from enterprise outreach to direct-to-consumer marketing efforts.
Costello said that the firm wouldn’t rule out plan sponsor business in the future. But, he adds, "It doesn't make sense for us to do that simultaneously today."
The CEO acknowledged that the layoffs were "incredibly hard for us."
Smith said he will remain a shareholder in the company as he returns to his native New York City in a few weeks time. At blooom, Smith worked on partnerships with record keepers, advisers, tax preparation firms, in addition to policy matters, media relations and VC investor relations.
"[Costello] and I are on good terms," Smith says. "I think I contributed a lot to the company. I look forward to cheering them on from the sidelines."
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