SoundCloud only has enough money to last for another 50 days, according to reports
The streaming platform denies the report in TechCrunch, after laying off 40% of its staff last week.
The report comes in the wake of massive layoffs at the music streaming company last week, when it terminated the contracts of 173 staff members across the world – 40% of its workforce.
According to SoundCloud sources close to TechCrunch, company founders Alex Ljung and Eric Wahlforss admitted that the layoffs have only saved the business enough money to last “until Q4”, which begins in 50 days.
When SoundCloud was reached for comment by TechCrunch, the response was a reiteration of Ljung’s official statement from last week. When presented with the leaked information, a representative insisted it was “fully funded into Q4”, but that it was also in talks with potential investors.
This conflicts with Ljung’s statement, which described SoundCloud’s future in more positive language. “By reducing our costs and continuing our revenue growth, we’re on our path to profitability and in control of SoundCloud’s independent future,” he said last week.
The report paints a sobering picture of life at SoundCloud after last week’s layoffs. An all-company meeting on July 11 was described as a “shitshow” by one source, who 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 fuck are you going to talk about family?”
According to sources at the meeting, the company admitted that it had known for months that it had to cut jobs, but didn’t inform any departments that they should be cutting costs.
The report even alleges that new staff were starting at the company as little as two weeks before the job losses, with some new hires quitting jobs, selling homes and abandoning rights to permanent residency to join the Berlin office.
When questioned by staff as to why there hadn’t been transparency regarding the company’s finances or a freeze in new hires, management reportedly said a hiring freeze would show weakness and cause people to ask questions.
One new hire, Vojta Stavik, told TechCrunch that he had been offered a role at SoundCloud that was due to start on July 17, but his was job cancelled on July 7 – just before he had been due to move to Berlin.
Stavik is now considering legal action against SoundCloud, because he says his signed job offer included four weeks notice of dismissal. The company, Stavik claims, is now refusing to pay his salary for that period.
SoundCloud’s money troubles have been well documented over the past few years. In 2016, it emerged that the company lost $44 million dollars in 2014, while this year, reports showed that it suffered a $52 million loss in 2015.
Various companies have been rumored as potential buyers of SoundCloud, including Twitter, Spotify, and, most recently, Google, but the service’s struggles to make deals with the majors may have held back any buyouts.
SoundCloud launched its subscription service SoundCloud Go last year, but that company has not yet chosen to release subscriber figures for the service.
Update, July 13, 13:40 EST: SoundCloud claims there are “inaccuracies” in the TechCrunch article
In a statement sent to FACT, a SoundCloud spokesperson has challenged the TechCrunch article, refuting the accuracy of TechCrunch’s article, reiterating that it is “fully funded” into the next quarter.
“There are a number of inaccuracies within the TechCrunch article They seem to stem from a misinterpretation of information by one or two laid off employees during a recent all hands meeting,” the statement says.
“Due to the extensive number of inaccuracies, we will only comment regarding funding and layoffs. To clarify, SoundCloud is fully funded into the fourth quarter. We continue to be confident the changes made last week put us on our path to profitability and ensure SoundCloud’s long-term viability.
“In terms of layoffs, it is our policy not to discuss individual employee cases, but we can share we continue to work with all employees who were let go to support them during this transition, with employment and financial assistance.”