Sitter reassesses its future after shrinking margins

DENVER — Sitter, an app that connects babysitters with parents looking to hire them, had decided to evaluate its future after market conditions have made it difficult to build a scalable, sustainable business.

Kristen Stiles said Sitter has not closed — operations are still up and running and users should see no interruption. Rather, the company is exploring its long-term solutions.

“When we told partners and investors that we were going to wind down operations, we were overwhelmed by the community’s interest in keeping it alive,” Stiles, co-founder and CEO of the company, told BizWest in an emailed statement. “We are in discussions with many interested parties about possible acquisition so we’re hopeful that a solution will be found.”

The topic of winding down was brought up after the startup, with its origins in Boulder, noticed shrinking margins.

“Caregiver wages are on the rise due to a strong economy and recent increases in minimum wage,” she said. “That’s fantastic because childcare providers have been paid too little for too long given the extremely important service they provide. However, high price sensitivity on the parent side leaves limited margin for middlemen like us to develop a strong enough revenue stream to achieve substantial scale. As we approached the end of our runway, we looked at the dynamics and economics of the industry, and we determined that even with more time that was unlikely to change.”

As the company explores what it will do next — acquisition is a possibility, as are other options, although Stiles said she could not specify at this time — it will conserve its resources in order to provide its services for as long as it can. Employees are staying on board, and non-critical resources such as software expenses that don’t affect user experience have been cut.

Stiles said her investors have taken the news that the company’s future might be up in the air in stride.

“I am probably the luckiest entrepreneur alive in that I have such an incredibly supportive pool of investors,” Stiles said.  “They have been through all the ups and downs over the last four years and know how hard we’ve worked to build this business…. When running a business, there are a lot of things outside of your control. In this industry, unfortunately, the dynamics that limit the potential of smaller companies like ours to scale are well outside of our control in the absence of a significant marketing budget.”

Sitter is a Denver-based startup that graduated from the Techstars Boulder accelerator.

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