The largest music and audio platform denies TechCrunch report after having fired almost half of its workforce.
A TechCrunch report stated that SoundCloud has enough money to run the business for only 50 more days. This statement came after the massive dismissal that took place at the music streaming company last week when SoundCloud let go 173 members of its staff, nearly 40%. According to SoundCloud sources close to TechCrunch, the two founders admitted that the layoffs only saved the business ‘until Q4’, which begins in 50 days.
On the other side, when presented the leaked information to SoundCloud, one of the founders, Alex Ljung, repeated what he said one week ago, ‘By reducing our cost and continuing our revenue growth, we are on our path to profitability and in control of SoundCloud’s independent future.’
Everything said by Ljung seems to contradict what has been said so far in the report, describing SoundCloud’s future with a positive language.
However, the report gave a completely different picture from the positive vision of the founder. A company meeting held on July 11after last week’s layoffs has been described as a ‘shit show‘ by one source, that according to Factmag website, said: ‘I don’t believe that people will stay. The good people at SoundCloud will leave. Eric (Wahlforss) said something about the SoundCloud ‘family’ and there were laughs. You just fired 173 people of the family, how the f— are you going to talk about family?’
The report stated that SoundCloud knew in advance that it had to cut jobs in order to decrease costs, even though the company kept hiring new people: new staff were starting at the company two weeks before these job losses. Some of these new hires lost their job after having moved to the new country to join the office.
It also seems that, when workers asked why the company decided not to be transparent on the current financial situation or why the company kept hiring people when they knew they were going to cut half of the workforce, the company affirmed that a hiring freeze would have showed weaknesses and eventually cause people to ask questions or to leave.
One of the new hires, Vojta Stavik, affirmed to TechCrunch that he recently got the job with SoundCloud which it was supposed to start on the 17th of July. However, his job was cancelled on July 7, just before moving to Berlin. Stavik is now considering to pursue a legal action in order to receive the salary for this period, as the contract included four weeks notice of dismissal.
The company has always released financial reports which showed its troubled financial situation. In 2016, it emerged that the company lost almost $45 million in 2014; while this year the reports showed that the company lost over $50 million again in 2015.
Lately, there were many rumors and speculations regarding potential buyers of SoundCloud company, including tech giants like Twitter, Spotify or Google, however they might have held back now considering the overall company’s current financial situation.
Last year, SoundCloud has launched its subscription service SoundCloud Go in multiple countries, an additional service that gives subscribers the possibility to use the service offline and ad-free. However, the company decided not to release these subscriber figures for the service yet.