Glam lays off seven percent of its employees, prepares to launch “Men”

September 25, 2008 | Matt Marshall

Updated with more details about Glam’s channel for men, which has been called “CodeBlue” internally — see image below left

Glam, the women-focused online ad network, is laying off 14 out of 200 employees, mostly in sales, reports by Valleywag and Silicon Alley Insider indicated today.

The cutbacks, while coming just seven months after Glam raised $85 million, marks the “popping” of the ad-network bubble, according to Valleywag.

However, we haven’t heard much about any wild and lavish spending by the company, which is what Valleywag speculates is the reason for the layoffs.

We talked to chief executive Samir Arora today, and he confirmed the cuts, but put a different spin on them. He said that the company has routinely reviewed its workforce before the fourth quarter of each year, to make sure each employee is still in the right position, and trimming about 7 percent is in line with the cuts made last year.

Separately, Glam is preparing to launch a new product, or a men’s version of Glam (see early mockup of a button at left that points to videos contained by the channel). Company sources say that the layoffs are also part of an internal reorganization to get ready.

That’s not to say that the company’s immediate future won’t be chaotic. We’ve written about the aggressive moves by this company to expand over the last two years, and mentioned that a downturn in the economy could affect Glam’s efforts to construct a massive advertising company. A decline in online sales could cause this company to unravel.

Update: More details are emerging about the company and its plans:

First, we’re hearing the company is reporting revenue growth of 200 percent in the current quarter, compared to the same quarter last year.

Also, one of Glam’s goals is to get to EBITDA profitability in its “core business” by the fourth quarter of this year, another reason the cuts are being made, according to our source. We’re hearing Arora and the the exec team and founders volunteered to take at least a 20 percent reduction in compensation, with Arora halving his.

Moreover, Glam has the vast majority of its $20 million credit line still at its disposal — and so it continues to expand in places like the UK, Germany, Japan and France.

Finally, we’re hearing more about Glam’s product plans. It will launch two more “channels” shortly, one of which is focused on men. The men’s channel, which will be an ad network, together with content both owned in house as well as externally is called “CodeBlue” internally. It is expected to launch with a different name before the end of the year (plan is November). Glam is rumored to have already signed on Fox (Hulu), Sony Music, and MTV and is in discussions with other media companies. Like in the MySpace Music case, this may be a joint venture, or be wholly-owned by Glam.

It will be the third target demographic, after women, and African Americans.

The company boasts it reaches 44 million people with its current offering, with two billion ad impressions a month. It has lofty — some would say even hallucinatory — ambitions for its plan for Men. According to one internal target we’ve heard, it wants to reach 90 million people a month — although we haven’t confirmed whether that is an official target or not.

The insiders here in Silicon Valley seem to be divided evenly between those who think Glam, led by Arora (left), have hyped the company too much, and can’t be taken as a serious player, and those on the other hand, who have chosen to engage with him seriously. Notably, at Google’s Zeitgeist event last week — where Google wined and dined its top partners — Google placed Arora at the main table where Google’s top ad executives, top ad agencies, and even Google chief executive Eric Schmidt were also seated. Google hasn’t done that great at display advertising. Glam claims it has. Is this a case of Google wooing Arora, or of wanting to suck him dry of info — so that they launch their own network and kill Glam? Don’t know.

Image below is of the CodeBlue navigation bar.

Disclosure: VentureBeat recently employed a business manager who was related to one of Glam’s co-founders. However, he no longer works at VentureBeat.

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About the Author, Matt Marshall

Matt Marshall is editor and CEO of VentureBeat.

  • Glam's extension into men's realm is a surprising but logical and interesting enough. It reminds me of Hearst's Men's Vogue launch, which is not a very good move in their context, but with Glam it's different. Glam's model is vertical ad network, and it has gobbled almost all of highly coveted brand advertisers and establish a good customer base and sales staff and platform.

    Therefore I guess Glam's venturing into men segment will reap similar success, provided that it focus on prestigious male-centric marketers and verticals like men's grooming, fashion & accessories, gadgets and health/pharmaceuticals. Think of online GQ o Maxim for Glam's men verticals. After this, Glam could easily further their grip by dominating the lifestyle segment online display ads.

    The weakness of Glam is ad serving and ad network has become more of a commodity than a competitive advantage recently, in which anyone can launch their own "vertical ad network". What will happen if other company like Hearst, Meredith etc. launching their own vertical ad network, and Yahoo Shine or AOL Living launch their own women ad channel? Glam should develop some core technology before other competitors jump in.

    For me, I think the recent $1.3 b valuation of Glam is even highly UNDERvalued! Glam's position and valuation can be as big as AOL, or 2/3 of Yahoo if they can do well both on vision and execution to dominate the women segment and grow their lifestyle verticals.
  • MattS
    What I find interesting about this post is that the management is taking action starting with themselves! In the post days of Lehman Bothers and Enron, it is a delight to see a investors and employees responsible company. Every VC should email this story to all their CEO's-- the message is run your company based on the reality of the market, take action before you have a problem, manage your cash tightly, and most important-- lead by setting an example.

    Doing a cut at the top level sends the right message and sets the right tone-- that the management actually cares about the people. There was a story this weekend on Larry Elison making the most compensation in spite of firing 1,000's of employees-- clearly does not need the money, but doesn't care. We need more leaders like the CEO of Glam in a tough economy-- I bet the investors must be feeling relief as they have a management team that is doing the right thing.

    The other part I like about this post is that by cutting expense in the main business Glam seems to be following a GE or P&G like expansion strategy not seen in media. It seems to have launched one channel first-- fashion/beauty for women and remained focused. Most startups do everything for anyone (Slide, Digg, Technorati, YouTube) No one really talked about Glam for the first few years-- while it seems to have built a deep brand display ads business with publishers for women. Then it seems to have slowly added new categories-- very similar to a line extension or cable network growth- more channels, same infrastructure. By making its earlier categories cash cows, and raising enough capital to grow new markets it is getting multiple "virtuous cycles" It also gets new revenue from new areas, so cutbacks if they happen could be supplemented by revenue in new areas- sort of like Google's last few quarters-- Europe with a weak dollar is the driver for revenue, as US Search has slowed down in growth rate.

    Lastly, a launch of CodeBlue for men is a head turner as I keep hearing the term "We are the Glam of XYZ..." By launching men, Glam is completely changing its position as a woman's display ads company to a display ads company with multiple verticals. Having Hulu, Sony Music, as well as large publishers like Lifetime, MayoClinic, LifeScript, CBS E!, Apartment Therapy, Glam seems to going down the path of Google AdSense- Essential for small publishers, Great for large media. If this trend continues, Glam is a very serious contender. Fascinating that there is no question that Glam will win in men, the question is in which channels. And if Glam can do a men media business, then it could potentially expand to almost any vertical in the future. It already has the agency and brand relationships--so will easily get more Ad sales. Very clever move by Glam.

    I do agree that being more like Google not Yahoo and investing in Technology is key for Glam. The more they build internally, the more they can scale. I think this may be the battlefield where the real ad networks war will be fought--who has scale and technology--who is remnant and ho is premium. See the APT announcement of Yahoo in WSJ today--smoke and mirrors. Google has no solution for Display and can't sell YouTube Video Ads. AOL is in spin-off mode. And Microsoft seems lost like their new ads. Matt needs to write a post on technology--who has what. If Glam can build a system, its value as a player completely changes-- it would become a platform. I would be very worried if I was AOL or Yahoo.
  • JillK
    Sounds like Glam is acting like a New York/Madison Ave company and not like the delusion in Silicon Valley startups. Companies that are continuing with blinders on, taking their investors and employees to the ground. I am surprised that Yahoo, Google and AOL have not announced deep cut backs. Reducing exposure now is the best way to manage better earnings in 2009 as it takes 3-6 months for reductions to be completed in Corporate America.

    Publishers need to brace themselves, and should work closely to ensure their relationship will last. The power has suddenly moved to the revenue providers- like Google and Glam. MySpace for example is certain to not have any revenue from Google after the billion dollar deal is over. They should find a new deal now, rather than wait and have zero revenue next year from Google.

    Companies that are the generators of revenue are in the stronger place, as they can scale their networks up much more easily or down if needed. Companies with fixed costs like Yahoo/Portals can't move that fast and will have tough earnings.
  • VentureVenturer
    These posts are very interesting.

    I think its odd that the Madison Avenue "mad men" have put their votes ($$$) behind Glam, admid a new-to-market business model, yet some of the few, pop-sugar backing SV blogs continue to find clever ways to keep bashing CEO Arora.

    Obviously, they are doing something right ...

    Yes, Arora pushes it. He isnt intimidated at doing what he thinks is right. And, telling his team so.

    But, at the end of the day (and its only the first inning, remember?!) if the business is bouyed by these nimble moves and tough choices, in a rough environment, who really wins?

    Marketers and their agencies -- and, of course, Glam's backers.

    Only time will tell.
  • JillK
    Matt,

    Someone needs to go back to check what people wrote in light of new facts. It has just been 2 weeks since you wrote this, and other like ValleyWag and Portfolio bashed Glam for making cuts. Earlier, Michael at TechCrunch spoke about how Glam shifted its business model and stopped paying Publishers a minimum and stopped running house ads. Both these looked odd when they happened -- specially given Glam high flying profile and the tons of cash they raised $100 million!

    Today, Glam looks like it was smart and made moves ahead of the curve -- specially given what has transpired in the world markets and in silicon valley. We've all read the RIP doom presentations that happened this week -- looks like Glam's leadership moved before the alarm bell was sounded. Why is this important -- one of the slides in the RIP presentation you posted is death spiral vs the smart cut backs survivors. Glam acted way before anyone else, and that means today has months of runway in the event Ads slow down.

    This is the type of leadership and resolve we need in the market. Federated, Adify, Martha Circle, SI Net, and the smaller Travel Ads will face a very hard time -- from the slow down and facing better funded, faster moving competition in a down turn. It was just a few years ago that iVillage, Conde Nast and Hearst dismissed Glam as "just a network" a "sham" and "fly by the night" Glam through the power of its Publishers and the loyalty created by them and their Community programs is rare. We all see how the Glam Publishers reach out when ValleyWag or TechCrunch have tried to dismiss Glam.

    With the launch on men, any publisher that is working with Federated or old Overture team at Yahoo, will want to evaluate and work with Glam. Look at the Banks in financial markets -- some will move and gain marketshare, others will get consolidated. Tough times are when the bigger do even better as they are a safe bet for advertisers, the small go away.

    Strange as this timing of men's launch sounds, I think diversifying is safer in down times. I also wonder how many advertisers Glam already has like movie ads that I see a lot more, that are recession proof and also buy women and men? Current publishers have a better chance at incremental ad sales with Glam.