Despite fallout at social networking and other Web 2.0 companies lately, its clear that the problem isn’t lack of opportunity. Many companies still see strong growth ahead.
Check out social networking veteran Friendster.
The company lost $410,000 in December, according to documents a source just slipped to VentureBeat. Revenue was a decent at $700,000, but overhead was $900,000, and other depreciation costs made up another $200,000 or so. The company’s books project monthly losses until July of this year. But there’s a reason for this: Good side is, at this burn rate, Friendster’s $10 million raised in August should see it through until break even. And David Jones, Friendster’s VP of marketing, says this is all part of the plan. The company is spending more now to grab customers, and its seeing traffic at an all-time high, with six billion page views a money, and nearing 16 million unique users — “We’re a top 30 global web site. We’re doing fine,” he said.
Indeed, shakeups maybe rattling other companies, but in some cases its precisely because the companies don’t want to squander what appears to be significant growth ahead.
Take Backfence, the community news and review site. It confirms news of layoffs that have circulated a while, and that chief executive CEO Susan DeFife has resigned. Co-founder Mark Potts tells VentureBeat the board asked him to take over, and implement a “course correction.” The board, and Potts is a board member, wants to grow more quickly, he explained. There are signs advertisers are starting to sign up on community Web sites, and Backfence’s board feared it wasn’t moving aggressively enough — still serving only in 13 communities, when it could serve many more. Also, it hasn’t upgraded its technology quickly enough, still running photo gallery technology it built two years ago, instead of implementing Flickr streaming, for example. They plan to implement more video and social networking aspects, too, Potts said. He wouldn’t confirm the number of layoffs — but said reports (see Paidcontent.org, for example, and The Local Onliner) of the 12 layoffs out of a total of 18 employees is wrong.
Anne Raimondi, vice president of marketing and product, confirmed Insider Pages had cut 20 of its 30 employees. Here too, though, the company is still seeing growth, with traffic up double digit in December and the first days of January — in part because the site has optimized its site better, she said. Costs were too high, when compared to the company’s revenue projections, which is why the cuts were made, she noted.
Orb Networks: Co-founder Joe Costello takes over from Jim Behrens as chief executive of the company, which lets you transfer your TV and other media to any devices while you’re on the go. We spoke to Gary Morgenthaler, an investor in Orb, last week, who told us Costello has experience growing companies through partnership building. He said Orb’s recent second release, already with half a million downloads, is picking up nicely. It works with a mere software download — in contrast to competitor Sling’s requirement of a hardware box — and there’s a free ad-supported version. The company is seeking $30 million in a new round of venture capital.