Runkeeper cuts about 30 percent of staff, shifting focus from user growth to revenue

Fareed Mosavat, Chas Wagner, and Jason Jacobs looked at support tickets at Runkeeper.
Fareed Mosavat, Chas Wagner, and Jason Jacobs looked at support tickets at Runkeeper.

The maker of one of the earliest fitness-tracking apps for smartphones, Boston-based Runkeeper, cut almost 30 percent of its staff last week. Founder and CEO Jason Jacobs says via e-mail that the layoffs were not “in response to market conditions,” but rather part of a shift in focus from purely attracting lots of users to wringing more revenue from those users.

One example Jacobs cites is selling Runkeeper-branded merchandise to the app’s loyal users, “especially if they need to earn it by completing some kind of physical challenge that they can be proud of.” In addition to a free app that lets runners maintain a log of their workouts, Runkeeper also offers a premium version, Runkeeper Go, for $9.95 a month. It includes features like prescribed training plans and live broadcasting of a runner’s progress along a course.

Founded in 2008, Runkeeper has raised about $11.5 million in funding from investors, including Boston-based Spark Capital and Launch Capital. It has been among the city’s highest-profile mobile startups. But the company’s most recent infusion of funding took place almost four years ago, in 2011. Jacobs says that last week’s layoffs of 16 employees were not focused on a specific department, but cut across the company.

Jacobs says that reducing headcount is “not an easy thing to go through as a first-time CEO, but the right move for the business, and I’m as excited as ever about the path forward.” In June, the company added former Leaf Holdings product exec Dan Smith as its chief operating officer. Jacobs says that he has brought on several other senior executives, but the hires haven’t yet been announced.

Big companies such as Adidas and Under Armour have been snapping up fitness apps this year. Earlier this month, Adidas paid $240 million to acquire Runtastic, headquartered in Austria, and Nike has developed its own fitness app, Nike+. Runkeeper says that about 45 million people use its app; Runtastic has about 70 million users of more than 20 different mobile apps it offers.

In May, Runkeeper discontinued Breeze, a more passive app that enabled users to track the number of steps they took throughout the day, gently encouraging them to be more active.

Scott Kirsner writes the Innovation Economy column every Sunday in the Boston Globe, in which he tracks entrepreneurship, investment, and big company activities around New England.
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