What's up with Fruugo?

One of the hot (and very secretive) new Finnish "super-startups" is Fruugo, at www.fruugo.com, an "online shopping" company with Nokia's former CEO (and current Chairman of Shell) Jorma Ollila, and F-Secure Founder/Chairman Risto Siilasmaa in the board of directors.

Fruugo has been quite secretive, signing NDA's with everyone they talk with. There has been plenty of gossip about Fruugo, which is precisely what you get if you are being secretive and don't tell ;-)

According to the gossip they have pretty impressive funding (tens of millions of EUR), and as many as 150 employees (plus possibly many 3rd party partners and subcontractors). Also according to the gossip they were hiring more people as recently as last month. The burn rate is huge for a startup: well over 1M EUR per month and climbing with all those 150 people.

ArcticStartup wrote stuff about them in late June:

http://www.arcticstartup.com/fruugos-ceo-shares-plans-with-arctic-startup/

Now the gossip has recently really heated up. Some of the stuff circulating around include:

- They are going to "tell all" at SIME Stockholm.
- Fruugo is currently mass-firing people, up to 33% of their staff (which would be 50 people?)
- Customers (merchants) are not entirely impressed with what they have to offer.
- Those who have seen the product say it's impressive and very nicely designed.
- However at the same time the gossip is hinting that "there's no beef yet"
- Their product launch has been severely delayed multiple times now.
- All the dash in hiring more people is partially a result of missing deadlines and trying to speed things up by hiring more people.

I would LOVE to see Fruugo succeed and "conquer the world". Finland (and all of Scandinavia) needs impressive "super-startup" showcases. Fruugo could be one. www.blyk.com could be one, www.spotify.com could be one. It's nasty to see people always concentrating more on the negative, than on the positive and the obvious potential.

In any case it sounds like a really serious venture: to burn up multiple millions and hire up to 150 people before the product even hits the market. Ambitious, certainly. Risky, for sure.

The 33% people laid off sounds very serious for a couple of reasons; the first one on the list being how poor management competence it demonstrates (if it is true at all?). First hiring people rapidly and then firing lots of them a month later doesn't really showcase competent management. The current economic crisis is not and could not have been a surprise to anyone in the industry. Most people have been waiting since about 2005 for things to crash "any minute now". I personally remember being in Thailand in August of 2007 on a scuba diving course (PADI; Nitrox Diver), and discussing this economic stuff with other entrepreneurs vacationing there. Some memorable lines from the conversations were that "people don't realize how serious this is, our firm has been preparing for the crash for about 1,5 years now, and we except the economy to hit the wall within a year". Didn't happen quite that fast, but almost. Not a surprise for anyone; and it should not be for Fruugo either. Managers cannot see the future, but when they have to lay off people they ARE the ones ultimately responsible.

So what's up with that? All I have is the usual gossip and rumor mill, no really concrete stuff here. Does anybody know better?