SoundCloud Is Just Days Away From Running Out Of Money
Even after laying off 40% of its workforce last week, SoundCloud is just weeks, or at most a few months, away from running out of cash, according to current and former staffers. Remaining employees are now openly questioning the music streamer's future, with many planning their exit.
SoundCloud held an all-staff meeting yesterday to discuss why it had laid off 40% of staff last week, as well as, plans for the future. But the meeting reportedly left many staffers even more concerned about the future of music streamer and their own jobs.
One SoundCloud employee called the all-hands meeting a "shit show." “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," the staffer told TechCrunch. "You just fired 173 people of the family, how the fuck are you going to talk about family?” Similar sentiments were shared by others at the meeting.
A brand new SoundCloud hire, Vojta Stavik, also openly described his own SoundCloud nightmare, which began even though he had a newly signed an employment agreement:
"Friday, July 7th, at 8 pm, I received a call from SoundCloud’s CTO, saying my position at SoundCloud had been canceled.
I told him I already quit my job, let my apartment in Prague go, and was supposed to move to Berlin in just a few days!
I also asked him about the possible compensation. The response was negative.
“So it means we are gonna act like my application to SoundCloud never happened?” I asked him.
“Yes”, he replied.
A day, and a lot of negative press and reaction on social media later, SoundCloud has agreed to pay Stavik the four weeks severance pay promised in his employment agreement.
The fate of SoundCloud itself is just as messy. Sources at SoundCloud told TechCrunch that co-founders Alex Ljung and Eric Wahlforss admitted that these layoffs only saved the company enough money to stay afloat “until Q4,” just 50 days from now. A SoundCloud spokesperson has all but confirmed the tragic timeline, saying, “We are fully funded into Q4” and that the the company is in talks with potential investors.
A March 2017 $70 million round of debt financing came with the condition that SoundCloud layoff some staff, according to a source. Why Ljung and Wahlforss did out act more quickly to trim expenses or warn its staff remains unclear.
SoundCloud has raised nearly $200 million to date, and it is hard to see how it can attract new investments. A fire sale seems far more likely, with Deezer, Google, Apple and perhaps Spotify rumored to have varying levels of interest.
In the meantime, most SoundClouders are polishing their resumes and joining the 173 recently laid off in looking for jobs. SoundCloud had attracted a very talented and passionate crew that could bring there expertise to other music tech startups.
Here's a spreadsheet with contact info of ex-SoundClouders looking for new opportunites.