Digg CEO Matt Williams has just announced a wave of new layoffs at the struggling social media company. The current staff, 67, will be downsized to 42, more than one-third of the total team.
According to the letter (and the phone call) we received, Digg’s current burn rate is simply too high, and the only way to reach profitability is to cut expenses.
Digg’s been reducing its staff size periodically over the past couple years; in May, 10% of Digg staffers were laid off, and a 2009 staff cut also reduced the company’s size by 10%.
In addition to potential changes to salaries and other fixed costs, the company is laying off 25 people. It’s not clear currently whether the cuts will be from engineering, sales, business development or another department, however, Chief Revenue Officer and Publisher Chas Edwards announced his plans to retire from the company earlier this morning.
In addition to the announcement of layoffs, Williams also hinted at a new direction and a new strategy for the company. There will be announcements related to the company’s future plans tomorrow. Everybody at the company is currently in an all-hands meeting.
We’ve posted the letter Williams sent to the entire Digg team in its entirety below:
“Team,
When I joined Digg six weeks ago, we set an immediate focus on improving the web site. We listened carefully to user feedback and started making changes to generate momentum in our business.
As I mentioned in one of our first all-hands meetings, another top priority was to take a hard look at the entire business, across product, sales, and operations. Through the time I have spent with each of you, I’ve been impressed by the commitment and enthusiasm you’ve shown. I’ve also learned a great deal about what is working well at Digg, and what is broken.
Many things are working well. The team is listening and acting quickly on the feedback from our passionate community. We’ve been able to deliver nimbly on the new platform, with over 100 bug and feature releases to the web site in the past two months. Our Diggable ads product has seen a notable increase in use by advertisers and clicks by users.
Unfortunately, to reach our goals, we have to take some difficult steps. The fact is our business has a burn rate that is too high. We must significantly cut our expenses to achieve profitability in 2011. We’ve considered all of the possible options for reduction, from salaries to fixed costs. The result is that, in addition to lowering many of our operational costs, I’ve made the decision to downsize our staff from 67 to 42 people.
It’s been an incredibly tough decision. I wish it weren’t necessary. However, I know it’s the right choice for Digg’s future success as a business. I’m personally committed to help find new opportunities for everyone affected by the transition. Digg’s Board members have also offered to help find placements within their portfolio companies.
Let’s please use today to show our sincere appreciation for our friends and colleagues who will be moving on. Tomorrow, we’ll go forward with a new strategy for Digg.
Matt”
Reviews: Digg
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