Back in February, when several of Gilt Groupe’s non-core businesses were suffering layoffs and restructurings, we’d heard rumors the company might consider selling off the growing side businesses. Why not? Gilt’s main flash sale business had hit a plateau, but several of these side businesses, including Jetsetter, were regularly fielding offers from VCs and investors. Such a deal could help incentivize employees of the faster growing businesses with equity in their individual “companies,” I was told.
Funny thing is, when I asked Gilt insiders about it at the time, I was told it would be too complicated to make sense. Gilt didn’t want to give up control of these growing companies (to do so would mean marking costs as a loss on its bottom line without being able to mark revenue on its top line). And outside investors didn’t want to invest in something they might have to share a majority interest with Gilt.
No matter! Gilt is shopping the entire asset now, according to the Wall Street Journal, asking $50 million for it after initially trying a $100 million price tag.
Why the about face? Perhaps it’s a sign that Jetsetter is no longer a growing company. Jetsetter expected around $100 million in revenue this year, as of February, but is not yet profitable after three years in business. Not helping the matter is the departure of Drew Patterson and related drama. Gilt CEO Kevin Ryan asked him to leave after a high turnover at Jetsetter began to hurt morale.
Jetsetter was a pioneer in now popular “content and commerce” business model that blends media assets with sales online. But Jetsetter’s brand of content, which requires sending writers and photographers to each destination they sell bookings for, is more expensive than that of, say, hiring fashion bloggers at Refinery29. Content and commerce is a tough business for travel. And as Gilt prepares for its much-delayed IPO, it can’t afford to have a single non-growth asset weighing it down.