Instructure Restructure: Significant layoffs hitting Canvas side of the business

26 replies
  1. InstGuy
    InstGuy says:

    I worked at Instructure. Nobody should be surprised by this. Cutting costs is what Private Equity does. They do it to dress up a company and maximize profit and then they sell the company at a higher multiple. Thoma is one of the best at this, they will resell the companies they buy after 3-4 years. They do not care about people or if the company becomes a bad company. Phil, do not be fooled here. Speaking from the inside, there are very bad things going on at Instructure. These cuts included many people in product and engineering. Thoma is choosing to cut investment on products and things that are important to customers. The Thoma plan is to quickly cut costs and generate high margins, so they can use Instructure as an asset to take on debt. I saw the plan. Earlier this year, there was no further planned layoffs. Why do you think Goldsmith left and Coates cashed out? They did not agree with Thoma Bravo and what they want to do with the company, but they are ultimately the owners and can force decisions, like this. You should know that the management team almost revolted with the proposed changes that Thoma was putting forward. The way they keep management is to load them up with equity. They will give large amounts of equity to senior management to do their bidding. You should ask people like Mitch Benson, Melissa Loble, Matt Kaminer, Jeff Weber, and Frank Maylett how much equity they now have to gain with this new ownership. Thoma allocated over 200 million in future value equity (value over the next 4 years). Most goes to top management and very little goes to employees. Next step in plan…. raise prices on existing customers.

  2. Ex-InstEmployee
    Ex-InstEmployee says:

    I just wanted to second everything InstGuy said. This company is going to trash and everyone knows it, but the only people who can stop it are getting a big old cash payout while they she’d crocodile tears on Slack and LinkedIn about “oh boo hoo it’s so hard to see all this fine talent go.”

  3. Disappointed
    Disappointed says:

    Phil – I keep hoping you will try to report in an unbiased, respectful and cogent way, but your personal biases, and yes, your apparent personal vendettas, seem to keep getting in the way. As the previous poster pointed out Thoma’s plan was likely the reason former CEO, Dan Goldsmith, and former-former CEO/board chair Josh Coates, stepped away from the business. You’ve consistently failed to consider that they were likely the ones trying to stop exactly this type of thing from happening. Instead, you decide that because the current PE owners have “kissed your ring” and agreed to meet with you, you will give them the “benefit of the doubt.” Whether or not Instructure’s past or current leadership is doing a good job has never been dependent on their direct dialogue with you, nor should it be. Grow up. Stop letting the personal slights you feel were delivered to you impact your narrative. Maybe then your reporting will provide some valuable insight vs the tabloid drama you are currently peddling. You can do better than this.

    • not-disappointed
      not-disappointed says:

      there is no evidence that’s why Dan/Josh left. Until you have evidence to prove otherwise, I think Phil has it pretty spot on.

      • Disappointed
        Disappointed says:

        What is your evidence that Phil’s reporting is “spot on”? If both of the ex-CEOs were onboard with the Thoma approach, why leave at all? Thoma’s playbook surely would have netted them (as senior leadership/investors in a Thoma company) a significant sum (as it will for the remaining senior leadership). That is an indisputable part of the “playbook”. Why do you think that InstGuy (above), who states that he has first-hand knowledge of what happened, would lie? Further, what “evidence” has Phil presented that supports his “facts”? The answer is simple: none. InstGuy has presented clearer thinking and more direct evidence in one reply post than Phil has in multiple, drama-ladened op-eds. #tiredofthedrama #thinkbeforeyouspeakphil

        • Phil Hill
          Phil Hill says:

          I’ll ignore the personal statements – make your own judgements. But let’s keep this civil.

          The two people at Instructure most responsible for bringing in Thoma Bravo as a new owner were Josh and Dan. The only other one with close to that influence on the process was their independent director Kevin Thompson. Read the proxy statements for these details. These were the people soliciting the Bravo offer and directly working with them to finalize the deal, setup the new strategy, and get past shareholder resistance. It stretches credulity to hypothesize that at the exact same time Josh and Dan “were likely the ones trying to stop exactly this type of thing from happening”.

          “If both of the ex-CEOs were onboard with the Thoma approach, why leave at all?” If you want to get facts straight, one of the main points of going private was for Josh to finally cash out and leave. He wanted out, not in. He took a $1 salary for years and planned to make his money from Instructure by selling his shares – that’s what the Bravo deal did for him.

          Dan’s situation was different, but he was forced out along with his sister. His letter to the company upon his departure was classy, but it contained no suggestions whatsoever that he was quitting due to Bravo plans. But there is no “proof”, as that is the whole point of forcing someone to resign (while giving up half his shares) rather than firing him. I would not call this a fact, per se, but it is my analysis based on multiple interviews with company insiders and investors and reading board documents.

          To address InstGuy’s comment on why they left, that was the plan all along for Josh, and Dan was forced out by the board based on the fiasco of a sales process and how it was endangering the completion of the sale.

  4. James
    James says:

    On a long enough timeline you become the very thing you criticized. Now the machine unravels.

    To the Instructure leadership that criticized other platforms and companies, enjoy these just deserts. To the rank-and-file workers, I’m sorry you were sold a vision on layaway.

  5. This is getting old
    This is getting old says:

    Goodness Phil, so much speculation with so little proof. Haven’t you realized yet that there are enough people here discrediting what you are saying who actually have the real facts? These are individuals who work(ed) at Instructure and clearly understand the situation better than you do.

    This is pretty obvious, so I’m surprised you can’t put the connections together or perhaps you’re just that dense. Why force out a CEO during a transition? That certainly doesn’t look good. There’s only one reason why that would happen. Connect the dots, super-sleuth.

    • InstGuy
      InstGuy says:

      I was in the room much of the time. I reviewed documents and was part of the inside communications on the process as it was happening. I have evidence (communications, financial models, business plans, correspondence between the board and Thoma Bravo). I can verify the late night phone call where Goldsmith objected to the Board going with the Thoma approach (one that cuts 80M in costs with major layoffs). The Board insisted that he get on the phone with Thoma (Holden Spaht) to work out an agreement right then. Thoma agreed to the management plan created by the leadership team at the time (about 40M in cuts). That plan was in process and cost cutting measures and business changes were completed in Jan/Feb. Then Thoma turned around and was pushing for the 80M. Dan dug in and did not agree because he knew their plan would ruin the company. That is why he is gone now. And Phil, if you really want to get to the facts, why have you not asked Dan or other people from the management team? You have done really good work for education over the years, why would you take the risk of reporting something that is not informed with data and facts?

      • Phil Hill
        Phil Hill says:

        Interesting points, InstGuy, and thanks for sticking to straight analysis / debate.

        I have spoken to many people at Instructure, including management, and to multiple institutional investors that were being lobbied by the Instructure board. However, what you suggest (Bravo pushing for $40m cuts then changing after the fact to push for $80m, leading to Dan’s departure one way or the other) is something that is worth exploring.

        I stand by my comments about culture changes since Jan 2019, the unrealistic nature of promising no more significant cuts, about mistaken DIG claims, and the positive comments about Goodman. Your point is interesting but unrelated to the key arguments in the post. Thanks.

        • Disappointed
          Disappointed says:

          You can’t ask for the evidence, then get the evidence, then decide that because you don’t like the answer, it was never relevant at all. InstGuy appears to have shockingly specific details on this and those details support the idea that these layoffs were specifically engineered by Thoma to do exactly what InstGuy stated: reduce costs to increase profitability, load the company up with debt, and then sell it off in 3-4 years at a significant profit. That should be the point of your story. 150+ people lost their jobs because of that. Customers may be left with little investment in new capabilities (I assume you saw the tweet about the whole mobile team being laid off?) and with reduced support and customer services because of that. Instructure as a company and Canvas as one of the best tools on the market may end up in the dust bin of software history because of that. That’s the real drama here and the more interesting story. But, by all means, continue to talk to your “management sources”, who are apparently boiling this down to “Dan, Josh, and Kevin bad. Goodwin and Thoma good.’ If that’s the story you choose to believe, that’s your prerogative.

          • Phil Hill
            Phil Hill says:

            Well at least we’re putting our cards on the table, since I only asked for docs from InstGuy by private email and specifically did not want to put him / her in a tight spot publicly. Since you’re choosing to make this public, here is the text of my email:

            “I didn’t want to ask this in comments, but do you have any docs you could share that back up your points about Bravo changing plans on cost reduction and Dan vehemently disagreeing? I would be interested in seeing those – they contradict the information that I have but could be very relevant.”

            Let me follow your logic. You accuse me of not basing analysis on data or facts. When InstGuy references some specifics, I agree they are relevant and ask privately if I can see them. You respond publicly that I cannot have the “evidence” because you know I’ll censor. Let’s grow up here – I’m willing to look at info that might counter what I’ve heard and researched. Why are you answering for InstGuy rather than letting him / her reply to my private email? And while we’re at it, how about keeping to one commenter name -you do know that blog systems check IP addresses as part of spam control, right?

            And I’m not sure how you’re interpreting my post as “Thoma good”. It’s hard to respond to that one. I am happy to respond to specific points in the post.

          • Disappointed
            Disappointed says:

            Phil – I can’t seem to respond to your comment directly, so I will respond here. I’ve never changed my name on my responses, so you must have me confused with someone else. Nor am I the same person as InstGuy, although I agree wholeheartedly with his point that the most important questions here are how this will impact institutions, educators, and students currently using the Canvas products. Honestly, the rest of your response is just kind of confusing. If you want to talk about how you think the current situation will impact institutions, educators, and students moving forward, I am all ears. That would make for a good story. Have a good evening.

          • Phil Hill
            Phil Hill says:

            Have a good evening as well. I agree that the real story beyond describing the news is how this move will impact institutions, educators, and students. I plan to cover this angle and look forward to your commentary.

        • InstGuy
          InstGuy says:

          Phil – I am not looking to get into a debate. I am just sharing facts. The plan only included the 40M in cuts. It was created by the management team (many of them the ones that are there today), it was accepted by the Board, and it was implemented in Jan/Feb. Your logic does not make sense. If Dan was pushed out, then as of Jan/Feb he must have been assuming he was staying on, so for him to lie directly to the employees and the public saying that the layoffs were complete would not make sense. There was nothing unrealistic to be communicating that when the management team, then Board, and Thoma Bravo were aligned to the plan. The issue is that Thoma was not honest and is doing bad things for the company. The management plan had the company getting to a very healthy state that any investor would be happy with, but Thoma and the Board prevented the analyst day from happening as planned in December and they are being greedy now in a way that will do harm to educational institutions all over the globe. However, your read on this situation and your new found love affair with Goodman/Thoma seem out of alignment with facts and what you should be focusing on: “What is the impact of all of the Instructure changes on Institutions and educators….”

          • Phil Hill
            Phil Hill says:

            Again – I’ll try to stick just to relevant, civil points.

            I want to be clear that I did not say that Dan “lie[d] directly to the employees”. I, too, have a concern on the Bravo focus on profit and the “harm to educational institutions all over the globe”.

  6. Kris B
    Kris B says:

    So…moving past the strategy and questions of who did what and why, my question is what will Canvas become in the next year? Next 3 years? Because I mostly care about the product and how it will continue to perform and hopefully continue to improve. Otherwise the who and why don’t really matter to me as an LMS admin. Next, I care about the “aura” or culture of a company that listened to me as a customer (of course, mostly not me individually but me collectively). If Canvas the product becomes that big giant dinosaur (no names), then I’ll take my money to the next great big thing…

    • Phil Hill
      Phil Hill says:

      Kris, well stated – those are the big questions, despite the direction the comment threads have taken. We can speculate on these questions, but it is more important to track Canvas progress and evaluate over time.

  7. EduPants
    EduPants says:

    Phil, I always enjoy your perspective on things, and the comment section is always a fun read. I’m just curious if the logged IP address of Disappointed and Instaguy are the same and if it happens to geolocate to an ISP outside of Philadelphia… 😉

    • Phil Hill
      Phil Hill says:

      Having a little fun, I see. While I’m not ready (yet) to fully address this question, I will clarify that InstGuy and Disappointed do not appear to be the same person, at least based on IP address. We do seem to have a few anonymous commenters on this and previous Instructure posts that either are the same or might be closely related. While this may not be idea, I prefer to keep comment policies somewhat permissive.

Trackbacks & Pingbacks

  1. […] than 150 individuals—about 12 % of its employees—in late May. Those layoffs had been first reported by schooling business analyst Phil Hill, who famous that the corporate additionally closed lots of […]

  2. […] off more than 150 people—about 12 percent of its staff—in late May. Those layoffs were first reported by education industry analyst Phil Hill, who noted that the company also closed many of its offices […]

  3. […] off more than 150 people—about 12 percent of its staff—in late May. Those layoffs were first reported by education industry analyst Phil Hill, who noted that the company also closed many of its offices […]

  4. […] off more than 150 people—about 12 percent of its staff—in late May. Those layoffs were first reported by education industry analyst Phil Hill, who noted that the company also closed many of its offices […]

  5. […] 🏢 Instructure ∙ 🌎 Salt Lake City ∙ 👩 150 employees (12%) ∙ 🔗Source […]

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