I've never understood why Digg required so many staff (~80) while competitors such as Reddit have < 10 people. Bringing their numbers down to a level more appropriate for their product (and revenue opportunity) can only be a good thing.
From this, I inferred that Digg wanted to be an idea lab, a kind of innovation factory, sort of like Google, constantly coming up with new ideas and services. So they staffed up in the hopes of becoming that kind of company. But they failed to pull it off.
"That's a good idea. And Digg, too, huh?"
"Don't even bother with Digg," he said, "There's no chance your article will get on the front page".
"Well, it's worth a shot," I replied. He seemed to disagree.
So, being the stubborn guy I am, I decided to post on both. Every time I post on reddit, I get at least 100 views from it. I've yet to notice a single view from posting on Digg.
I don't really know what my point is. I guess this anecdote is another reason they're in trouble. If I have an interesting post (subjective), posting it on Digg will now be an afterthought to me.
It's necessary, at least. The problem with having multiple layoffs is that morale suffers across the board ("am I next?", etc), and the best talent often flees.
http://www.imdb.com/title/tt0256408/
It's called Startup.com and shows the massive initial growth of Govworks web-site (300+ staff), but then things go South and their competitors catch them up and put them out of business. One of my favourite documentaries and gives good insight into the dot com bubble burst of 2000-2001.
At some point you have to wean yourself off the VC money. Some of these companies were set up more to land investors than customers, and even though they understood, intellectually, in the long term the money had to come from the customer, it's not an easy shift.
Not really. What it could mean is a downward spiral, which is what's been happening in the newspaper biz. Fewer people can't do as much work, which means lower revenues, which means fewer people, which ...
The deeper problem (in the newspaper example) is very few of the employees have skills that can be leveraged to increase output while reducing headcount. Newspapers are loaded with coal-shovelers. Fewer shovelers, less coal. If you've built your business on coal-shoveling and the value of coal drops, it's very hard to find a profitable kernel to retreat to.
In most cases that's true.
However, it's also a possible and very feasible way to cut away the excesses and keep on-board core pieces that can compensate for the losses. For example, a company I used to work for had a massive layoff when the bubble burst in the early 2000s. They learned their lesson and had very gradual employee growth while they still continued on lucrative projects eventually expanding rapidly today.