SoundCloud Disputes Reports It's Running Out of Money
Update: Co-founder and CEO Alex Ljung wrote on the website's blog that "SoundCloud is here to stay."
Photo via SoundCloud
Update [July 14, 3:45 PM]: Soundcloud co-founder and CEO Alex Ljung stated on the company's blog that SoundCloud is "here to stay."
"The music you love on SoundCloud isn't going away, the music you shared or uploaded isn't going away, because SoundCloud is not going away," he wrote. "Not in 50 days, not in 80 days or anytime in the foreseeable future. Your music is safe." Read the full statement here.
Update [July 13, 2:30 PM]: SoundCloud released a statement today disputing a report by TechCrunch that it only has enough money for 50 days, stating that it is fully funded into its fourth quarter.
Music-streaming platform SoundCloud allegedly only has enough money to keep running into the fourth quarter of its fiscal year, which is in 50 days time, sources at the company told TechCrunch.
The news comes after nearly half of SoundCloud's staff was laid off last week, in a move that company co-founder and CEO Alex Ljung explained was to ensure its path to "long-term independent success." In a note posted to the company's blog, it was also announced that offices in San Francisco and London would close, with remaining staff consolidating into the Berlin and New York locations.
TechCrunch reported that an all-hands meeting was held earlier this week to discuss the layoffs and the company's future, during which Ljung and fellow co-founder Eric Wahlforss reportedly shared that they have only enough money to last until the fourth quarter of their fiscal year, which begins in 50 days.
Sources at SoundCloud also allegedly told TechCrunch that the company knew it had to lay off staff. Yet, people were hired up to two weeks before the layoffs occurred, including engineer Vojta Stavik, who on his blog wrote how he was laid off two weeks before he was scheduled to start working—after he'd signed a contract, quit his job, and gave up his apartment in Prague in order to move to Berlin.
TechCrunch reported that when asked by staff why a hiring freeze had not been implemented, management reportedly replied that a hiring freeze would show weakness and would lead to people asking questions.
A spokesperson from SoundCloud told THUMP there are "a number of inaccuracies" in the TechCrunch story. In a statement, the spokesperson clarified that the company is in fact "fully funded into the fourth quarter." They added: "We continue to be confident the changes made last week put us on our path to profitability and ensure SoundCloud's long-term viability."
SoundCloud has been experiencing trouble for some time, as a financial report from 2014 revealed "material uncertainties" and a loss of a loss of $44 million (€39 million). This past January, the company's most recently available financial report revealed a $54 million (approximately €51 million euros) loss and the possibility that the company would run out of cash before the end of this year. At the time, Ljung stated that the company's future will depend on the success of its recently launched SoundCloud Go subscription service.
An anonymous employee told TechCrunch of the situation: "It's pretty shitty. Pretty somber. I know people who didn't get the axe are actually quitting. The people saved from this are jumping ship. The morale is really low."
Full statement from SoundCloud:
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.
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.