SoundCloud shocked the music industry by a recent announcement. Due to low revenue numbers, the company chose to depart from 40% of its international staff. The offices in London and San Francisco will be the ones affected by this decision. The offered explanation for this move relies on cost-cutting strategies.
Around 40% of Its International Staff Will Leave the Company
SoundCloud managed to build a global brand and gather a community of music lovers of 175 million users. Despite these impressive achievements, the company is far from being safe from financial troubles. As of recently, the CEO and co-founder Alx Ljung posted an announcement on the official blog. The article made public a wave of layoffs that will affect a total of 173 employees from London and San Francisco. The offices in New York and Berlin will remain almost untouched by these hardships.
The company was struggling with revenue for a long time now. There were talks of a merger initiated by Spotify and Twitter, yet none of these deals saw a successful result. As a consequence, SoundCloud opened a credit line of $70 million in March 2017 to cope with its expenses. The company was sure that its round of funding would end with an additional budget of $100 million.
However, the wave of layoffs can mean that the company didn’t manage to raise such an amount of money. Another possible explanation is that investors themselves asked for such conditions in exchange for their financial support.
By eliminating 40% of its international staff, the company intends to remain independent and assure a fruitful future. The SoundCloud platform hosts at least 150 million articles from the music industry. However, the company might be in need of a determined iron fist to guide it through the business world. That’s because numerous high-tier executives decided to abandon this ship. Therefore, this recent drive for cost cuts might reveal intentions of accepting a proposal for acquisition.
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