Laid-Off Employees Criticize Revolve Clothing's Big Budget, Celebrity-Laden Event Spending

By Clover Hope | July 27, 2016 | 7:20pm

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Revolve Clothing, an increasingly popular Los Angeles-based fashion e-commerce business, is the latest such retailer to fall victim to layoffs, even as the company’s profits continue to grow. Earlier this month, Revolve announced a round of layoffs in the photo department of its Cerritos headquarters, and sources who spoke to Jezebel believe the company’s seemingly endless budget for mega influencer events—including a Kim Kardashian appearance in the Hamptons—may be coming at the expense of those jobs.

Two Revolve employees (both spoke to me over the phone under the condition of anonymity to avoid penalty) said Revolve co-founder Mike Karanikolas held a meeting on June 17 and announced that the company was laying off the majority of its photo editing team—which is responsible for acquiring and editing photos and editorials that appear on the site—to save on operational costs.

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One staff member also said people who lost their jobs were offered severance packages that will only be issued if they remain at Revolve until their official termination date, which is months down the line. Some employees will stay on until September, while others will remain until November or January, after which their jobs will be outsourced to workers in another country (two employees, one current and one former, specifically said the Philippines). Employees appear to be cautious about publicly discussing the layoffs to avoid jeopardizing their future severance.

In an email in response to questions about the specifics of the layoffs and what it means for the company’s overall goal moving forward, Revolve’s VP of brand marketing and strategic partnerships, Raissa Gerona, said a total of nine staff members (out of over 600 employees at the company, she stated) were told they would be laid off. Gerona also confirmed that Revolve had not experienced any layoffs in recent years. This could be considered a small hit for a company so vast (Revolve still employs a separate team of photographers), but the employees I spoke to question the decision. In an email to me, Gerona wrote:

In June, we notified a small number of employees that they will likely be let go between the months of September and January, as we shift certain work to a 3rd party provider. All affected employees were provided at least several months advance notice, and all were additionally provided severance packages including salary and health coverage, as well as assistance locating other career opportunities. While fewer than ten employees were affected by the changes, we sympathize with their situation, and are doing our best to assist them going forward.

We don’t anticipate any other operational changes of this nature and the company will continue to hire and build the team as the business continues to grow.

Expenditures relating to sales and marketing efforts are generally unrelated to operational decisions, and are necessary for the continued successful operation of REVOLVE, which employs hundreds of individuals. We generally do not comment on marketing expenditures, but we will say in this case the information reported by the press was inaccurate.

The inaccuracy she’s referring to are reports that Kim Kardashian was paid $700,000 to host a Revolve Hamptons event this summer. According to the laid-off employees I spoke to, it’s the optics of excess spending that make the layoffs feel more offensive. Perhaps what’s happening is an overlap of their personal disappointment about losing a job and the natural effects of a company that’s prioritizing public image.

Since its 2003 launch with an initial investment of $50,000, co-founders Michael Mente and Mike Karanikolas have positioned Revolve as a lucrative style depot with access to fashion influencers and, increasingly, money to woo them. In 2012, the company landed a $50 million investment from the private equity firm TSG Consumer Partners (a rep for TSG declined to comment on the layoffs); in 2015, Revolve profited $440 million in apparel sales. A November 2015 Fortune article called them “the biggest, trendiest, most profitable e-commerce startup you’ve never heard of.” The piece mentioned how proud co-founder Mente was to create jobs in his hometown of Cerritos. It also noted at the time: “Revolve doesn’t have a celebrity attached to its operations, like ShoeDazzle had with co-founder Kim Kardashian, or The Honest Company with Alba.”

Still, like other fashion outlets, Revolve relies heavily on celebrities and influencers for a marketing boost. Nicole Richie collaborated on a line, stars like Kendall and Kylie Jenner have sold a collection on their site, and style bloggers are frequently sent on trips to promote the brand. Such events have become the lifeblood of Revolve.

On July 16, Kim Kardashian hosted a Revolve party in South Hampton for which sources told Page Six she “was jetted in and out for the event.” Kim’s appearance was part of a month-long summer extravaganza (Search: #RevolveintheHamptons), during which Revolve rented the Water Mill mansion for a second year in a row (reportedly for $37,500 a month) to house a revolving door of celebs (Chrissy Teigen, Nicole Richie) and fashion influencers big on social media. Fashionista described the home as “a sorority house” and noted that Revolve paid for the majority of expenses:

In addition to taking care of their travel and accommodations, Revolve gifted each influencer with a sizable clothing credit — a source close to the participating talent tells us $2,000 is standard — in addition to paying his or her appearance fee. And for certain agency-backed bloggers, like Bernstein and Bazan, who are both represented by Next Models, this can easily run in the tens of thousands of dollars.

The first Revolve employee I spoke to who was part of the layoffs told me the company’s decision to hire Kardashian angered staff members who’d been let go. Kim reportedly spent an hour at the party, where she was seen “taking numerous selfies with influencers,” Page Six reported.

Also in attendance were fashion insiders like stylist Chriselle Lim, blogger Arielle Charnas and DJ Amy Pham.

Gerona responded to my question about the Kardashian event in her email above with: “Expenditures relating to sales and marketing efforts are generally unrelated to operational decisions, and are necessary for the continued successful operation of REVOLVE.” Gerona also declined to comment on how much Kardashian was paid for the event.

In a post about the event, Fashionista wrote:

Why the huge cost for Kardashian’s brief appearance? It’s all part of Revolve’s big picture marketing strategy to show clothes in context so customers aspire to wear them — and in turn, buy them. (Google recently released a study that found this tactic influences 64 percent of women to make a purchase on their smartphones.) When the brand isn’t hosting parties in the Hamptons, it’s sending fashion bloggers on epic, scenic trips around the world — Jamaica, Mexico, Croatia, etc. — dressed in the e-tailer’s latest offerings.

The first employee I spoke to after Jezebel received an email tip about the layoffs last week said HR met with individual staff members after the layoff announcements. “When they turn around and hire someone for a party, I mean that would fund our department for probably the next two or three years,” the employee told me, adding that there was no mention of event budget during the announcement. “That would be something that you wouldn’t really want to tell us, especially if so many people are losing their jobs in order to make room for a celebrity to throw a party. Obviously they have to find that money somewhere.”

Most of the Revolve employees I reached out to didn’t respond to requests for interviews. A second employee who was laid off and also asked to remain anonymous said the focus on event marketing is questionable. “It just felt like such a blow. What would be two years salary for a whole department on one event just so Kim Kardashian can go to this stupid party in the Hamptons,” the employee said over the phone. “We’re a high performing department. They’ve had a photo editing team since they were founded. We see how much money they throw away on parties, flying models out, celebrities. Seeing all that excess wealth everyday on social media, in your email, it’s totally offensive, because we don’t get paid that much.”

The employee estimated that the average photo editor’s salary at Revolve is around $36,000. Some of the laid-off staffers first heard about the Kardashian appearance when a fed-up ex-employee railed about it in a scathing Instagram post and tweet posted on July 19.

Isaac Estrada, who worked at Revolve as photo editor and video lead from August 2012 to January 2015, wrote an Instagram caption that reads in part:

“So @revolve is firing all their photo editors and outsourcing to the Philippines due to budget cuts yet they can afford a multi million dollar budget for coachella and pay @kimkardashian 1 million dollars to show up to the #revolveinthehamptons event to take #selfies ? Sounds like that is no longer a company that cares about its employees, sounds like it’s a company that will destroy the lives of the people who got it to where it was In order to make more money , this sounds like big money making bad judgement.”

When I spoke to Estrada over the phone, he said the photo editing team at Revolve is responsible for “pretty much about 95 percent of the website” and that employees who were laid off but still working—some of whom he’s remained friends with and have expressed grievances to him, he says—have been tasked with making the outsourcing a smooth transition.

According to Gerona, the photo department layoffs were meant to help Revolve “operate in a way that builds long term value.” “While most of our efforts are not so public and did not directly affect employees in the same way, we have achieved multi-million dollar efficiencies this year as a result of our efforts. So it is not correct to say that our focus was centered around the photo team,” Gerona wrote over email. “However, we believe the changes we are making with the photo team will allow us to achieve better operational metrics, including faster photo turnaround, earlier availability of new product styles for our customers, and decreased expenditures.”

When asked whether the recent layoffs could simply be viewed as a common, unfortunate result of a growing company’s bureaucratic decisions, Estrada noted that cost-cutting could have been directed elsewhere.

“It’s all budget, it’s all operational. I’m sure they made a conscious decision to cut costs from the editing department and they can use it to fuel these big, trendy events,” says Estrada. “Maybe other operational costs [to cut] would be the beers on tap. Maybe the fact that we get taxi vouchers so people can take a taxi home when you get too drunk at work. There’s a lot of things you probably could’ve cut before cutting people’s jobs.”

At press time, Gerona had not responded to my email follow-up requesting clarity on this issue of whether other operational costs were considered. After this story was published, Gerona emailed: “With regards to specific expenditures such as happy hour and taxi vouchers, we view them as a form of employee compensation & benefits, that are important to employee satisfaction, productivity, and retention, and an investment that builds long term value. While cutting these benefits might produce minor short term efficiencies, they would be counterproductive to our long term goals.”

The Kim Kardashian appearance, the Hamptons initiative and its timing particularly offended Estrada, as it did other laid-off employees, he claims. “The moment I read about it, almost instantly texts came pouring in” from employees who were laid-off, he says. “To hear they had a multi-million budget for Coachella, which they send a good portion of the higher ups from the company to every year, and to see the Revolve in the Hamptons event going on, it was just like, so many editors losing their jobs for that. That’s just wrong.”

For now, the employees who were laid-off are still working at the company. “I’m holding out because those are the terms,” said the second anonymous employee. “For me, financially I need that cushion. I need that safety net so I just hold out everyday.”

UPDATE (3:40 p.m.): This post has been updated with additional comments from Revolve’s brand and marketing rep Raissa Gerona.