The "YouTube for music" company SoundCloud has announced in a blog post from co-founder and CEO Alex Ljung that is to close its London and San Francisco offices, cutting 173 jobs in the process. The business has been struggling to make ends meet in recent years, making an estimated $24 million in revenue but a loss of $51 million in 2015.
The closing of the London office will mean the loss of around 20 jobs there; the San Francisco office was much larger. The total SoundCloud workforce numbers around 420, so 173 constitutes 40% of its workforce.
Back in January, it was reported that it was possible the company wouldn't see the year through if it ran out of money, although investors did put in an emergency fund of US$70 million to see it through. That money will run out too, though -- there was a funding round of $100 million earlier this year but it seems somewhat unlikely that the round ever closed. An acquisition is also an option for the struggling "scale-up," but with Twitter -- itself somewhat struggling -- and Spotify having both looked into the possibility and declined to go any further, it seems that path has dried up.
SoundCloud's Berlin offices, located near Bernauer Straße. Credit: SoundCloud
It's a lesson to later-stage startups looking to take the next step though -- get a solid revenue plan in place before attempting to becoming a fully established company. While SoundCloud has a fantastic product, it's failed to convert its users, who use the service mostly for free, into paying customers using the SoundCloud Go platform. Because the business plan has not, er, gone to plan, SoundCloud is doing have to downsize and rethink its strategy, which is never a good look when attempting to attract potential investors.
With the closure of offices in London and San Francisco, substantially streamlining the company, let's hope, for independent music's sake, that SoundCloud can find a way through the difficult times.
London topped the list of destinations for tech-based migrant workers within the EU in 2017, beating Berlin, Paris and Amsterdam – and it has more than 250,000 developers, almost 100,000 more than any other European city.