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Zirtual Is Coming Back, But in a Different Form The embattled virtual assistant service was bought by Startups.co, but it remains to be seen how much of the previous business model will stick.

By Nina Zipkin


Zirtual, the virtual assistant company that seemed to disappear overnight on Monday, has gotten a reprieve after being bought by startup launch platform Startups.co. But while the Zirtual name lives on, the company's structure will likely change once service resumes next week.

The company's social accounts are back online and its website has undergone a makeover as well, with a "reactivate" button in the top right hand corner. On the homepage is an announcement about the re-launch with an explanation for what went wrong.

Related: 7 Steps for Establishing the Right Business Model

"Long story short, Zirtual grew too quickly," the site reads. "As part of that growth, Maren and her team worked on building a ton of infrastructure ahead of demand. Unfortunately the costs of building that infrastructure quickly ran ahead of the timing of revenue and financing to support it," the Startups.co and Zirtual team wrote.

Startups.co co-founder and CEO Wil Schroter told Fortune he plans to hire a small number of employees and grow the company carefully; he's still not sure who, if anyone, from Zirtual's management team will continue on. He also said that he found out about the shutdown along with everyone else and then decided to make the move. It wasn't something that was previously in the works.

Related: 5 Lessons From 5 Years of Managing Remote Workers

Maren Kate Donovan, the company's co-founder and CEO took to Medium to delve deeper into what she and her team had experienced the last few days, citing burn as the central reason behind the company's issues, especially with the business's shift from independent contractors to full-time employees.

"Burn is that tricky thing that isn't discussed much in the Silicon Valley community because access to capital, in good times, seems so easy. Zirtual was not flush with capital -- for as many people as we had, we were extremely lean. In total we raised almost $5 million over the past three years, but when we moved from independent contractors (ICs) to employees, our costs skyrocketed. (Simple math is add 20–30% on to whatever you pay an IC to know what it will cost to have them as an employee)."

Related: Employee, Not Contractor: What the Uber Ruling Means for the Sharing Economy

She also went on to explain the reason for the abrupt shutdown, which Zirtual's clients and 400 employees were informed of via email on Monday. "Up until the 11th hour, I did everything I could to raise more money and right the ship. After failing to secure more funds, the law required us to terminate everyone when it became clear to us that we wouldn't be able to make the next payroll."

Donovan wrote that Zirtual employees would be fully compensated for the work they put in, and will receive PTO payments and refunds for benefits charges. Current customers will get a credit for "unused paid time," and the company is working to connect clients with their original ZA's (Zirtual Assistants).

Related: This Is How Instacart Is Reclassifying Contract Workers as Part-Time Employees

In an FAQ about the next steps for the company, it writes of its workforce "we'd like to keep everyone, but given that the previous state of the company was unsustainable, it's not reasonable to think we can continue to do so. Prior to the announcement, the company had employed over 400 professionals, so we have a lot of work to do to determine how many we can retain." The employees who do want to continue to work for Zirtual, will get contractor agreements, and the company will "calibrate compensation to be comparable to previous levels wherever possible."

Of whether Zirtual's clients will return in full force, Donovan writes that she understands that customer loyalty is something that has to be earned. "I regret not having answers for our community sooner. We've built up an enormous amount of trust over the past four years and it hurts to know that we compromised this in a few days."

Related: 5 Ways to Put Your Customers First

Nina Zipkin

Entrepreneur Staff

Staff Writer. Covers leadership, media, technology and culture.

Nina Zipkin is a staff writer at Entrepreneur.com. She frequently covers leadership, media, tech, startups, culture and workplace trends.

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