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Comment by iainctduncan | Hacker News Reader

Background, I work in diligence for software aquisitions.

There are a lot of assumptions on this thread. I don't know the answers in this case (not sure if anyone does?) but I think it is naive to assume that Bandcamp was wise to be employing all these people. While acquisitions tanking a company with stupid decisions are super common, it's also super common for companies who are trying to look like they are growing (for future funding or acquisitions) to have way too much staff (and thus, high a burn rate) instead of running a sensible, profitable business. It is not necessarily a good thing that they have tons of employees - sometimes it's entirely motivated by putting lipstick on a pig in order to look like a runaway growth success thing.

Songtradr is in the music infrastructure business. I think it's quite possible they are cleaning house to make Bandcamp a more viable business that is actually focused on their core business. Doesn't seem impossible to me that Bandcamp was way off base trying to make too much written content when really, it's about selling music.

But I'm spitballing here, anyone know more about whether Bandcamp was bloated?

View on HN

Bandcamp had 118 employees total. That doesn't smell bloated to me.

(Source: https://www.sfgate.com/tech/article/bandcamp-layoffs-oakland...)

So we work for private equity mostly, and they are in the business of buying and selling steady growth, profitable businesses, as opposed to VC/bubble stuff, so our expectations are a lot leaner. But at a guess, I think we'd expect that to be a 40-50 person company. 118 seems high.

The app is tiny, it has changed very little in who knows how long. Infrastructure is obviously the big thing, so there would be a solid size infra team. Then standard business, product, marketing stuff. I just can't see that warranting more than 50 people unless it's raking it in. Sounds like they could be wasting money on marketing initiatives that may or may not be worth anything at all. Six full time writers seems pretty out there given the questionable ROI of those articles.

Obviously, take this with a huge a grain of salt as this is a guess based on being a frequent user of the app, and having done about 60 diligences and been a part of another 30 or 40 in review capacity. But it seems significantly oversized on what I normally see looking at business that have to be run sustainably. For whatever that's worth!

EDIT: someone had a good point that bandcamp takes international payments, which is complex. So I would revise my first WAG up based on that for sure. Thinking further I would probably guess 50-60 people - which is about what I guess it is after the layoffs. Still a total WAG, but slightly better informed...

Your view of bandcamp seems like a cartoonishly perfect representation of a consultant’s perspective with very little understanding of what the company actually does beyond the balance sheet. It’s the kind of no-skin-in-the-game perspective that ruined Boeing, and it’s why most folks absolutely abhor private equity.

Bandcamp has been successful because of the trust they have within the internet music community. It’s not a very complicated product, but people buy music there because the whole thing feels like it’s a part of the music scene, not the tech or business scene. Given that the Daily is well regarded in that community, I highly doubt those six writers, who were likely paid significantly less than the median staff member, were the problem here. Even if they didn’t have the purely trackable ROI, they were a huge part of the platform’s only moat: its goodwill with the artists and listeners who used it.

I would also add that Bandcamp was pretty publicly profitable prior to their sale to Epic. Given that they didn’t significantly grow the staff after the acquisition, they would have had to make huge blunders in a very short period of time they owned it. So at this point we’re talking about laying folks off purely for better looking numbers, not really for sustainability.

You are making some wildy off base assumptions. I'm not a finance guy, I'm a hacker. We do technical diligence. I was a developer for 20 years and am doing a music and CS phd right now. I've slung code in over a dozen languages, I'm the open source developer of Scheme for Max and the csound6~ port to Max, an electronic composer, and a gigging musician. I am currently bootstrapping a music education product in Python, Javascript, C++, and Scheme. You would be very hard pressed to find someone as embedded in the problem domain of bandcamp who also does acquisitions related work.

So I use bandcamp all the time, I have purchased tons of music on it, and the articles have not made any difference to me as a user at all. The only thing I care about is the band I'm purchasing from! I use bandcamp for three reasons: lossless audio, no DRM, fair payments to the band. None of those are at all relevant to their article efforts.

As for most people abhoring PE, believe me, I am under no illusions about our clients. But most software company exits are now PE deals (something like over 75%), so while people might like to make public noises about hating PE, they sure like to sell their companies to them.

Apologies on misunderstanding your role here, most of the speculation on this thread has been related to finances and staffing so I made an assumption there when I shouldn’t have.

> I have purchased tons of music on it, and the articles have not made any difference to me as a user at all

n=1, but that’s true of my perspective as well so perhaps it’s a wash. I do think the editorial staff were more important to some genres than others.

> they sure like to sell their companies to them

I might suggest that this is a case where upper management’s desires directly conflict with the people making the noise (staff and users)

I have used the platform for years and have purchased quite a bit of music on it. I didn't even know there were articles.

> while people might like to make public noises about hating PE, they sure like to sell their companies to them.

I suspect that there's not a lot of overlap between people who publicly fume about good companies being ruined by profit-hungry buyers, and people who start companies explicitly so they can flip them to profit-hungry buyers and ditch.

Does anyone still start businesses with the intention of building and maintaining a really excellent product/service in the long term? Do any of them hold on to that ideal after a few years?

>Does anyone still start businesses with the intention of building and maintaining a really excellent product/service in the long term? Do any of them hold on to that ideal after a few years?

Define "a few". You can't expect most company owners to want to continue running that company for decades on end; eventually, they want to do something else or retire. So at some point, they have to sell. Who's going to buy an existing company that's profitable? Someone who's "profit-hungry" usually. If the company is just a passion project, no one buys it and it just goes under when the owner gets tired of it.

> You can't expect most company owners to want to continue running that company for decades on end

That's not actually weird, though. The idea that everyone should be expected to change jobs every few years is very recent.

> Who's going to buy an existing company that's profitable? Someone who's "profit-hungry" usually.

I didn't think this needed specifying, but there's a large difference between the goals "Create a great, enduring service and make a profit doing it" and "generate as much short-term profit as possible regardless of long-term consequences."

I know companies that exist for years and years and even get inherited. I even work in one.

It exists, just not in SV

Inheritance assumes that the founder's kids actually want to run their parent's company. Many times, they don't, so they sell. Running a company is a pain in the ass, so it's understandable many people don't want to be bothered.

There's a middle ground between giving a company to your kids and selling it to someone who you know will suck it dry for short-term gains. You can also give (or sell) it to someone that you know and trust to keep it sustainable.

Who? Where do you find this person? Do you have any experience in running a business and selling businesses to others?

And why do people assume that the kids are going to run it well or the same way the founder did? If anything, it seems like the kids of highly successful people are usually spoiled brats, and nothing like their parents. Did Bill Gates' kids create any successful software companies?

You seem to be trying to rebut several things I didn't say.

The first paragraph was a direct response to your "you can give it to someone you trust" claim.

The second paragraph wasn't related to your response, it was related to prior posts by others and just an add-on for the discussion at large (in case anyone's even still reading it, which I doubt).

If they sell it, it was still inherited. But I literally seen handover to younger family member to happen.

Depending on the size, the city/state could purchase the company and loan it to the employees.

If the the loan gets paid off, boom... co-op equally owned by the workers.

And if the loan doesn't get paid off? That city/state is now in a huge hole, having spent money that could've been used to build schools and maintain roads on buying companies off their retiring owners.

In any case I don't see why you would need the detour via local government? A bank could lend the money to the group of employees just fine.

Sounds like the perfect recipe for corruption.

As cheap money era seems to be ending, long term quality product/service might be the only viable strategy going forward.

Inshallah.

It doesn't have to be the choice between "sell to profit-hungry buyer's and ditch" and keeping a company forever.

Sometimes people just want to do something different with their time after running their business for a long time and a PE deal is the easiest and most structured way of doing that.

Sure. But (assuming you'd reached sustainable profitability, as BandCamp reportedly had) you can choose whether you sell to someone who intends to maintain what you've built, or someone who you know will suck it dry for short-term profits.

> So I use bandcamp all the time, I have purchased tons of music on it, and the articles have not made any difference to me as a user at all. The only thing I care about is the band I'm purchasing from! I use bandcamp for three reasons: lossless audio, no DRM, fair payments to the band. None of those are at all relevant to their article efforts.

Just to add a conflicting opinion, I love the articles and often use them for music discovery and purchases. Of course, the primary function is to purchase music from known entities but the discovery part keeps me coming back. In terms of ROI, to me the articles seem like a pretty smart marketing move…without them I would not have discovered all kinds of artists and made numerous purchases.

I'm sure you're right and some do find bandcamp through them. The really hard part is quantifying that though. Does it generate enough business for six writers? If it does, awesome, and I'm totally wrong.

My guess is the big content initiative was someone's brain child, and once companies get past a certain size, it's very hard to pull the plug on a leader's baby. Until the company changes hand and the next set of leaders want to eat the previous young and put their own babies in there.

> But most software company exits are now PE deals (something like over 75%)

Can you provide a source for this? I don't doubt it, but I'm wondering if this is accurate for startups that have raised seed+ funding.

> Bandcamp has been successful because of the trust they have within the internet music community.

Hahaha I don’t think that they have as glowing reputation as you think. I’ve heard creators complaining about lack of transparency, lack of communication, poor customer service, arbitrary decision making with no reason given, etc.

Those two things aren't mutually exclusive.

They could be trusted by a bunch of people to probably screw things up less than alternatives and to at least be -trying- to care about the community, while still having made more than enough mistakes to generate a bunch of justifiably unhappy people.

Think about how e.g. your favourite hosting provider nonetheless has a bunch of unhappy ex-customers.

(I'm not asserting what -is- the case here, mind, just trying to flag up a part of the possibility space that I've seen quite a few times over the years)

I work with the parent commenter above and have overseen 500+ tech diligence projects. We get to see a whole company's tech operations, so our views aren't necessarily just "consultant in a suit".

> Your view of bandcamp seems like a cartoonishly perfect representation of a consultant’s perspective with very little understanding of what the company actually does beyond the balance sheet.

And your comment reads like a typical HN armchair technologist.

> It’s not a very complicated product,

Yup, here we go. Classic "I could build this in a week".

>and it’s why most folks absolutely abhor private equity.

Actually it's not. Much of PE is what is driving people to start companies, because it provides a reliable exit path. I know many tech founders who are grateful PE exists, otherwise they would not have the capital available to them to grow their companies. People typically abhor large cap PE which focus on financial engineering. Many growth PE firms (the ones the parent and I usually work with) are value focused, which means focusing on profits (EBITDA) and growth.

> Bandcamp has been successful because of the trust they have within the internet music community. It’s not a very complicated product, but people buy music there because the whole thing feels like it’s a part of the music scene, not the tech or business scene. Given that the Daily is well regarded in that community, I highly doubt those six writers, who were likely paid significantly less than the median staff member, were the problem here. Even if they didn’t have the purely trackable ROI, they were a huge part of the platform’s only moat: its goodwill with the artists and listeners who used it.

To provide an opinion from a user of the platform with "no skin in the game" regarding non-technical aspects of the platform, the social presence of Bandcamp was a significant portion of its appeal to me. I did not (and generally do not on other platforms) regularly seek out new media, and instead tend to rely on on various social media feeds and suggestion algorithms to help expose me to new music. I used to follow Bandcamp on multiple platforms until their acquisition by Epic, when I stopped following them for ideological reasons. The headlines/titles/posts that Bandcamp produced up until that point were far more alluring and generally attractive than any other music platform that I also followed, and their articles were generally of a significantly higher quality than others as well, with a large focus on the artistry present.

I discovered several artists through this form of interaction that I otherwise wouldn't have, and haven't since I began avoiding Bandcamp after their acquisition. I can't imagine that layoffs are targeting purely technical staff (as technical staff are the backbone of the observable functionality of the business), and I fear that the strategy taken by Songtradr will result in a tremendous detriment to the marketability and external usability of the platform. This cost-cutting measure seems to signify either a terribly-fated problem regarding changes to the company, or yet another act of private capital tearing down its competition. Given that Songtradr is in the market of licensing music, I am strongly influenced to believe the latter; using a buyout to cripple _the_ commercially-successful indie music platform (which serves as a competitive and independent means of releasing and licensing and distributing music) seems like a logical way to further capture a part of a market that has historically been dominated by media giants that use legal precedence to dominate.

Interesting little aside for those reacting to the fact that it's PE who pay our bills. While the world of vampire PE certainly exists, most of the time the clients I interact with are genuinely concerned with how to make the business better. And we are far more frequently telling acquirers to spend top dollar on new hires than advising on who to cut! The expectation is that the company needs investment, and that they will get 20% year over year growth for about five years. While the bad rep of PE certainly came from somewhere, in my expereince over the last five years of working in the field, I would way rather be at a profitable, sensible, PE owned company than a VC funded "disruptor" gunning for the big IPO or google acquisition. Our world is positively normal compared to the FAANG scene. We see people who have been at at the companies for 10 to 15 years all the time.

Seriously, I feel like a broken record when I say "Hire a top drawer test automation engineer to lead the company in how to run QA properly - this should be a senior developer" etc.

> we are far more frequently telling acquirers to spend top dollar on new hires than advising on who to cut

Please tell that to Apollo Global Management as loudly as you can. I mean, if they're one of your customers.

"Hire a top drawer test automation engineer to lead the company in how to run QA properly - this should be a senior developer"

Trouble is, they are few and far between and PE doesnt know how to find them...they only understand money they dont understand talent. Furthermore, when they do stumble upon talent they dont know how to leave it alone and won't trust it.

PE mistakenly tends to think that they are there for more than just what they are...money.

They need to understand that they are just people with money. The same way I understand that I am just a techie that produces things.

I bought a loaf of bread today, but that doesnt make me a baker or an expert in baking or running a bakery.

Same applies to PE. Just because they buy businesses and invest in them, doesnt make them experts in whatever they buy.

You are misunderstanding the dynamic. I mean, sure, that sometimes happens, but usually if they pay us for a report, the recommendations are shared. Either with the target company or the portco buying the target. So what we say is going to the CTO or VP Eng.

Very frequently what we are doing is providing an outside voice with a direct line to the top to recommend things the CTO or VP Eng already knows and wants to do. I have had many technical leaders personally thanks us and say how relieved they were to have diligence done by real hackers, and how much this was going to help.

Why can't a PE firm hire an actual super-genius, who can understand things with a fraction of the usual effort?

Sizable firms can easily afford a seven or eight figure compensation package for someone really really competent.

Some do, that is becoming more common. There is, understandably, a huge variety of approaches from funds. Some are very hands on and have on staff technical folks who were previously CTOs or VP Eng, others are hands off and just take care of finance.

Any "profitably" run PE company is being sold for parts and its wiring is being stripped. Good job being better than a charlatan startup. Your employer provides nothing of value to society.

This is just completely and laughably wrong. You have no idea how many companies are now owned by PE, and the vast majority of them are run as solid, sensible businesses for five years and then sold again. You have bought into some caricature of what the PE world means.

I wonder if it's also simply selection bias, they only see the failures, because the successes are invisible. I know some tradespeople who set up their own practices and sold it to PE, and the practices are running similarly as before.

Of course if they are doing really well, than their infrastructure/scaling problem could be the big issue (and thus the big expense), and it could be at the point where improving those margins is worth throwing developers at it.

I have also seen some eye watering monthly AWS bills where it makes total sense to hire a bunch of devs to bring those down by even a few percent.

This is the point where I wonder if partnering with quinnypig's crew might not make sense in terms of effectively serving those clients.

Accounting, human resources, sales (different than marketing), managers, security, operations, analysts, C-Suit, customer service, etc not including technical teams developers, sprint masters, qa, analysts, data warehousing, networking, support, devops, thought leaders.

Yeah, we know all that, I mean that's literally what we do. But I can tell you that I have seen companies with the same feature scope range over an order of magnitude in seats. There's a lot of overhiring in this business.

We often look at private companies going from initial bootstrap to their first exit, and I'm telling you, those are a whole different ball of wax. They manage to do a shit ton with not very many people.

You really don’t need a ton of staff dedicated to those things in a 100 person company. This is still a small business by most measures. A C Suite? It could be a sole owner still at that size, though it is stretching the margins. Roles tend to be less differentiated in small companies, and many of those functions are filled informally.

That being said, 118 still sounds pretty lean for the scale they are operating at.

You dont have all this in most small sized companies. Silos exist only when you grow big.

I’ve never seen these kind of roles even in huge companies. “Sprint master” as a job description? Can’t be serious.

Well, I've heard of 'scum masters' (sorry, scrum masters) as a job description. So 'sprint master' doesn't sound too ridiculous by comparison.

They run something equivalent to Spotify at a much smaller scale.

You work for private equity. Private equity is the problem. You work for vampires.

Bandcamp was profitable. Clearly songtradr thinks they can be more profitable. Assuming average comp of $100k x 60 employees x 1.3 for taxes and additional expenses thats about $7.8MM revenue.

Songtradr just did a series D in 2021 for $50MM and recently acquired 7Digital for $23.4MM. I couldn't find a statement on how much it cost to acquire bandcamp, but it seems this might be motivated by Songtradr being cash poor and not wanting to dilute further.

"But within this discrepancy lies a paradox: Bandcamp, as comparatively threadbare as it may seem, with about $20 million in net revenue in 2022, is almost certainly profitable—based on the fact that the company has stayed lean and taken on no new funding since 2010"

https://www.fastcompany.com/90951664/bandcamp-spotify-vinyl-...

Songtradr - 45MM revenue / 157 employees = $287k/employee Bandcamp - 30MM revenue / 118 employees = $254k/employee

https://www.zippia.com/songtradr-careers-1401192/revenue/ https://growjo.com/company/Bandcamp

Interesting, thanks for posting. So what could also be going on is "synergies" as they call them. It is quite possible that Songtradr has staff/functions that they think they can share across the acquisition. This happens a lot when a portco (what Songtradr is to whoever owns them) buys an adjacent company.

Of course it's also possible that that it's specific places (i.e. the content) that are being gutted as they aren't seen to be worthwhile.

The things is that once a company sells, it keeps the name, but can instantly become a different company as far as culture goes. If we want to complain about bandcamp being crappy to its people, the finger should be pointing at the owners (whatever round it was) who a) made the hires and b) made the decision to sell. You are throwing your employees to the wolves when you do that. Once you've sold, the decisions are now ultimately made by a new entity with new priorities (for better or for worse).

This is one of the reasons I advise any younger devs I talk to to understand their employer's ultimate game plan. If the employer is hoping for an exit in the period during which you plan to work for them, you should be under no illusions that your job is safe or will stay the same, and you should be getting compensated accordingly. This is the cost of working in the gravy train - we get the high salaries, but we also get the uncertainty that comes with working in a business where exits are so frequent. The two are connected. (And I have been on the employee side during an acquisition twice now, so I've been there.)

> You are throwing your employees to the wolves when you do that. Once you've sold, the decisions are now ultimately made by a new entity with new priorities (for better or for worse).

At its heart, tech is adapting to change and uncertainty through the fusion of creativity and process. Job changes are just another input.

You don't know Bandcamp's revenue, so how on earth could you smell their bloat?

Whatsapp was <50 people when it got acquired for ~$19bn and they had the ability to turn on $150million in revenue at the drop of a hat.

It's interesting people are talking about bloated software in this thread and their love of lean software. Large teams often lead to bloated software.

On an internet with billions of users online, there's a legit argument that most if not all technology companies are severely bloated.

Bandcamp has (or had) 118 people. Their business is music, not a chat app, so it will have different needs, both technical and non-technical. Maybe their engineering team is slightly larger than WhatsApp, but not by orders of magnitude.

Now maybe their business model was flawed (I heard it was profitable, but perhaps not profitable enough). But otherwise 118 people for a global brand-recognized business is pretty lean already: I have worked for medium sized businesses around the same headcount you have never heard of, which don't even operate outside their home country.

It’s all about the evaluation chart you take. It’s easy to pick random criteria to justify any of the following claim. Humanity is bloated. Mammals are bloated. Multi-cellular organisms are bloated. Eucaryote are bloated. Life is bloated.

Salary to ARR is only one metric for bloat. but yeah, absent that, as I said, it's some guess work.

compare this to instagram before being acquired for $1B

Instagram had no revenue at acquisition.

Headcount always grows disproportionally whenever you start dealing with payments.

Not just directly taking them but all of the associated compliance and legal issues.

Ah good point! I didn't think about international payments in my first WAG - you're right that that would certainly need some people. So I would up my initial guess based on that, like maybe up another 25-30%, but that would still land us at around where songtradr is going if they are laying off 50%.

Have you used Bandcamp? It's a way larger feature set than an iOS app for picture sharing.

Yes I used it, it looks like a website from 2004, clearly their core competencies can not be about building their own file upload, payment etc. but creating Customer Friendly Sexy Branded landing, working with labels etc. which they failed to do with 100 ppl

Ah yes, the halcyon days of 2004, when websites were all…minimalist?

Bandcamp has been one of the most functional and user-centered designs on the web for a long time now. They asked for far less commission on sales, and they provided options for downloading music in FLAC and even WAV formats, and were well ahead of the curve with “pay what you can” pricing. I have been a musician all of my life. I used Bandcamp exclusively to distribute my music online, and every musician I have ever known prefers it over every other option—by wide margins. Part of what we liked was how little it engaged in feature-creep and bloat.

This website from 2004 is more usable than many of the websites from 2023, it is clearly working well enough (or I guess those other websites aren’t doing their jobs right.)

What are you talking about? They work with a ton of labels. The landing page is tailored to discovery... they are long past the sexy branding stage, having millions of users and being the most loved independent music platform.

People came to Bandcamp for music, not some fancy eye popping website. I'm glad they have not redesign their website.

I actually like Bandcamp website, its fast and efficient.

Instagram was an outlier, and I think you know that.

it smells a little bloated

there's certainly operations that are leaner than that. a little down the thread there's people saying they could build bandcamp in a weekend, which is probably fanciful but also not completely off base. just on a pure technology level, bandcamp seems like a 3-4 developer sort of project. so they've got ~110 people running sales and support?

This is HN. Start a thread about anything and someone will say they could build it in a weekend. Completely off base.

Counterpoint: https://simonrepp.com/faircamp/ already exists and is a self-hostable FOSS Bandcamp clone. Does it clone every feature? No. And it definitely has taken longer than a weekend to get to where it is. But it's a one-man passion project that clones enough to be a viable enough replacement for amateur musicians that I jumped to it immediately when Epic bought Bandcamp.

While a very nice project, Faircamp doesn't come close to offering what Bandcamp does. It's self-hosted, requiring the artists to have the technical knowledge to both customise the platform and run the infrastructure themselves, and it doesn't support any payment options other than a barebones liberapay implementation.[0]

It's also most importantly not a single trusted entity that people can trust with their payments like Bandcamp is.

[0] https://simonrepp.com/faircamp/manual/payment.html

Infra. The "non-functional" requirements are going to be expensive and need a solid team. Scaling, reliablility, availability, dealing with huge amounts of bandwidth and storage, all that crap. I'd guess a dozen infra people minimum.

Can’t you outsource all that to AWS? Bandcamp seems like an extremely simple site to me. It has some customizable artist pages, static file hosting for large music files, a web music player, and some e-commerce features for buying music.

I wouldn’t call it “one person and a weekend” simple, but the site has been around since 2007. A dozen people could have built it fairly comfortably from a basic site at the start to the scaled up version of today. 118 people just sounds like “hiring for the sake of hiring” to me.

Yes you can, but it gets very expensive in a hurry if you have a ton of load. So one justified place for head count is to bring down AWS bills. At the beginning, it makes sense to outsource it as much as possible, and later, a developer's salary to move the needle on your million dollar AWS bill is a no brainer.

I have no idea where they are in that scale of course.

> Can’t you outsource all that to AWS?

At a large enough scale you will still need a lot of people dealing with infra. AWS is not magic

> 118 people just sounds like “hiring for the sake of hiring” to me.

You'll need 20+ people just to deal with copyright issues on a daily basis.

prior to this, bandcamp was owned by Epic and lord only knows why they bought them or what their bigger plan was. i also have no idea how much they staffed up under epic rule since they went from a small business to being owned by the fortnite money man. Entirely possible it's something like:

1. bandcamp is a sustainable normal small-to-medium business growing healthily

2. Epic has tons of fortnitebux and is feuding with apple so they buy bandcamp as some kind of tangential play should they end up as a big alternative store on iOS. so they could have a music store offering (to compare to itunes? not that apple gives a crap about itunes anymore??) in addition to an app store?

3. the money music stops and everyone races for a seat. bandcamp is left hanging.

4. epic sells bandcamp to whoever just to get it off the books so they can focus on fortnite lootboxes

5. songtradr or whatever their name is tells the union to pound sand and cuts bandcamp down to a core team because they're planning to just gut the product and transition all these indie artists over to whatever platform they were running before. This is a music IP company. I don't think they want to handle B2C purchases or provide streaming music. They just wanted to buy a big pot of artists and IP to add to their collection.

Alternate, equally speculative but less cynical take on 4-5, largely advised by Songtradr's announcement here: https://twitter.com/songtradr/status/1709986126117630051?s=2...

This may have been a last-minute accelerated deal process where Epic would have all but shuttered Bandcamp if a buyer couldn't be found, before they needed to announce massive layoffs to assuage investors. Songtradr is given an opportunity to see the deal, wants to ensure Bandcamp's survival in its current form (because its demise would hurt the entire ecosystem Songtradr depends on).

But Songtradr isn't given time to put together a transition plan or identify the exact legal path to deal with the union (especially given that they're in an entirely different country with different labor laws!) and not expose themselves to liability. So they announce conditional openness to the acquisition (per the link above, the transaction hasn't closed yet), and this at minimum gives Bandcamp a stay of execution while they identify next steps.

Now, they've identified at least one next step - how much of the current Bandcamp costs they can carry during the transition - and that's 50% of current staff. A tough call to make, but if the alternative was shuttering the service, a very justifiable one.

Epic is private, Tim Sweeney owns >50%, and their only real rival in the game engine space had recently torpedoed themselves which caused a large amount of gamedevs and even some publishers to swear off Unity.

There was no investor pressure.

Tencent owns 40% of Epic, and Epic lost most of its legal battle against Apple.

Epic is underperforming

Except Bandcamp wasn't at risk of shutting down before Epic. If it's being run unsustainably now, that's on Epic.

That's largely a distinction without a difference while Epic still owned (owns? seem deal isn't closed yet) them. If Epic is in peril, Bandcamp is in peril since they owned Bandcamp up until recently, and we know Epic is in financial trouble because of the Epic Games Store.

Their entire minimum revenue guarantee scheme to lure over indies and publishers is apparently extremely expensive for Epic and the store has yet to turn a profit on the whole. Before, they could run it off of Fortnite profits alone. That said, Sweeney has admitted that well is basically running dry and it's why they've been doing layoffs and the like everywhere.

If a company is in trouble, the first thing on the line are the subsidiaries and Bandcamp is a questionable acquisition on the Epic rep sheet, being a music store for a company whose main business is making videogames and selling a gaming engine to people. That means it either goes under or is sold off because it's seen as an irrelevant "aside" subsidiary.

Was anything in danger of shutting down before Q1 2022? All time tech market highs were ~3-6 months beforehand and presumably the acquisition negotiation took time.

Self-replying to retract the above. From https://www.404media.co/bandcamps-entire-union-bargaining-te... it seems that Songtradr leadership had explicit knowledge of the members of the union bargaining team, lied about it, and laid every single one of them off. I no longer think it likely that Songtradr is operating in good faith.

What do tech unions even do? Doesn’t seem like they can prevent this at all

They would have to do what any union does - leverage worker power. If the majority of Bandcamp engineers agreed to halt work until x demands are met, it would drive Bandcamp as a service into the ground. Tech workers also hold the keys to everything - they could take the site down, lock up the music, etc.

They maybe can’t prevent it, but they could leverage BC/Epic/whomever into providing some kind of decent severance for those left out in the cold. In theory.

bandcamp was owned by Epic and lord only knows why they bought them or what their bigger plan was

this is incorrect. in addition to whatever lord you are speaking of, I also know. (unless you meant me, but even then, I think others share this knowledge.)

Epic bought Bandcamp to use it as a weapon in various lawsuits against Google and Apple over their pricing models. Bandcamp joined a suit against Google over its Play Store pricing in particular.

it didn't go anywhere, because Bandcamp already qualified for media app pricing, which rendered its role in the suit meaningless. but that was why Epic bought Bandcamp.

Yep, that's the one. Just a weapon to be used and then thrown away.

On point 5, bandcamp doesn’t own any rights to the music on the site. The artist agreement is limited to the service of selling music, if that changes the artists can revoke their agreement.

Pretty sure there's value in owning a platform where small independent ("undiscovered") artists release their work and where listeners go to find that work. In particular, it seems likely that having the metrics and historical data could give SongTradr insight into which artists seem likely to catch on, etc.

AI training set

That can change.

It can, but not retrospectively.

"By continuing to use Bandcamp, you agree..."

What's an artist who depends on the platform to do?

That would be the worst move Songtradr could make here. The ability to distribute your music while maintaining the rights to it is one of the main reasons - hell, if not the main reason - artists and labels (and fans like myself) love Bandcamp. Making such a change would, to my mind, royally piss off the entire community and, in particular, the artists that make the platform as successful as it has been. I can only imagine the negative press that such a move would generate.

Move their music off it. It happens a lot. If a band's earlier Bandcamp album gets picked up by a label, they will insist on exclusive distribution, so the band will remove it from BC.

To where? Because as a buyer of music I like BC's deal and would love to make sure alternatives have similar arrangements?

If Bandcamp were to try such a move they would destroy the value of their business overnight. Retroactively changing the agreement with your customers about their IP is the best way to permanently destroy trust.

It would be a more dramatic overnight loss of customers than Unity. It's entirely laughable, and given that laws restrict the licensing and royalties of music, it might not even be legal.

Labels can only write up contracts giving them rights because they pay for studio time (given them a financial buy-in to the creation of the music) and pay advances against royalties. Not so for indie distributors. I don't know if there are specific applicable laws, but it's absurd enough that everyone would immediately drop Bandcamp.

Music royalty rates, for physical records, radio and internet streaming, are also determined by a panel of judges: the United States Copyright Royalty Board.

"Pray we do not alter it further..."

I guess that only works for Darth Vader.

Not saying they won't try, but there are enough label-represented bands on Bandcamp that they would obliterate their back catalog (along with any network effects they're enjoying) overnight.

Technically Bandcamp is a very simple payment and file host.

A small team can quickly copy how it works and get all the artists to move platform if they were to shoot themself in the head. Right now this doesn't happen because Bandcamp functions and exists and has a reputation for musicians.

Lose that, all the artists start looking for a new home and someone will make an alternative quickly.

Leave.

See: Unity

If it did, I'd probably stop using Bandcamp.

4 should be - bandcamp employees vote to unionize. Epic can't let that cancer spread to the game devs so they sell it off as quickly as possible.

I totally agree.

In corporate environment, people really must be fooled by two numbers: head count and budget. This is true for other walks of life, too.

I initiated and lead a platform in Financial Service Industry which lead to massive productivity gains. Through standardized processes we could use an inhouse build No Code editor instead of individual app development. Costs went down from 1.5 Mio to sub 10k USD, time to market from 4 1/2 month for two dev teams to a couple of hours for a non-developer per app.

Reaction: "Dude, you are destroying careers. We get paid and promoted by budget and head count. We artificially inflate budgets and projects so that we get promoted."

I was stunned. We could do so many other things with the free capacity or help build value for the company.

Lesson: People are sometimes able to comprehend abstract stuff ("Software can be used to automate processes and can scale. It serves 1000+ customers worldwide 24/7. We have 10 people employed."). Mostly decision makers sadly prefer power ("Woooha, your company has 1.000 devs?! How cool, you must feel like superman!")

Lesson still not really comprehended, but somehow ingested.

Isn't the pre-IPO / pre-acquisition playbook to cut staff lower than the optimum level to show profitability?

But I'm spitballing here, anyone know more about whether Bandcamp was bloated?

Bandcamp was shown to be profitable quite recently. Hard to justify slashing staff in half with that in mind.

From what I see, it's exactly the opposite. It's more like we hired all these people because we're growing so fast, so please give us money

That doesn't sound like a powerful negotiating position, though; it sounds like desperation. Why would you do that intentionally?

If the top line is also growing fast, and you have a good story on the unit-economic, part of the narrative is that you can eventually reduce costs and increase margin. It is hard from the outside to distinguish between Amazon style "we are investing all our profits back into R&D so we can take over the world" and "We are bloating our team to grow at all costs and don't know what levers to pull"

> It is hard from the outside to distinguish between Amazon style "we are investing all our profits back into R&D so we can take over the world" and "We are bloating our team to grow at all costs and don't know what levers to pull"

Considering Amazon was building physical warehouses, buying land, literally delivering to people, executing deployment of AWS which Netflix was famously using, all while being a publicly listed company with audited public financials I think Amazon’s style is easy to distinguish from the outside.

It really doesn't sound easy to me to tell this from the outside. What if the R&D investments are all garbage? It is hard to scale an engineering org effectively, it can take off and start building some microservice fortress that never yields any business value if it has the wrong leadership.

Because they were publicly listed with public financials, you know they were not losing money:

https://www.macrotrends.net/stocks/charts/AMZN/amazon/profit...

You also know from using Amazon that they were near flawlessly executing 2 day shipping across the US with prices competitive with Walmart and other successful retailers.

They also had a pricing advantage against incumbents due to not having to collect sales tax in all states until 2016.

It’s mostly the verifiably not losing money part though so you knew they weren’t overextending, and they were delivering what people wanted.

There are third party appraisals for the value of physical things, and even quite a bit of software stuff nowdays.

There are a lot of counter-intuitive pre-IPO behaviors. Another one is to raise a huge amount of cash through unnecessary funding rounds.

You would think that massive dilution for no gain would be a bad idea, but there are usually a lot of perverse incentives at play

Could you give an example of 1 of the perverse incentives that could cause that? It's very interesting.

A lot of the time IPO investors, both public and institutional, value company cash on hand at more than $1 per dollar during an IPO. An extra 500 million in the bank might make the company IPO for a billion dollars more.

Peloton is an example of a company that did a huge unnecessary fundraise before IPO. I'm sure it makes a bunch of numbers and ratios look better on paper. Psychologically, I think it also helps companies lock in evaluation closer to their IPO Target for when people look back at the history of the company.

It's pretty similar too the idea of inflating employee head count. You can say "we made $10 million with only 10 employees last year. Wait until you see how much money you're going to make now that we have a hundred employees"

You want to sell when you can show growth because that justifies a higher multiple. If you're cutting people, it means you don't have enough growth opportunities to use those people for. It's the opposite signal.

You might need to sell, which may change the calculation.

At one point - in the not too distant past - a common way of valuing tech startups was $1M per engineer...

You can see why companies might have been incentivized back then to hire anything with a pulse that claimed to be an engineer.

Honestly, it's all over the map. Depends on the reason for sale and the reason for purchase. They are looking for "synergies" and a very common one "you already have this thing, so you can cut it out of this company after you acquire and use yours". It is very possible that Epic had plans that involved hyper-growth, now realized those are not going anywhere, and is happy to demonstrate that a chopped up Bandcamp is a good deal.

I have literally done diligences where part of our role was to weigh in on how much could be slashed, which is not very pleasant, but like I said, when the growth was dumb in the first place it can be the right call.

When a company isn't profitable you hire developers to build a product which can make you profitable. When a company is profitable, you fire all the developers and start collecting dividends.

Agreed but from what I've seen most layoffs were on the content/writer/social side of things.

Sounds to me that the focus is now on being a platform and not an outlet.

I still have no clue what Epic wanted to do with it.

Shown how? I keep seeing reference to a webpage on Bandcamp that was published over 5 years ago.

A founder friend confided in me years ago, "It is MUCH easier to raise more money than it is to fire someone... I just keep raising and hiring and eventually everything will get done"

No surprise that this approach was very much a "Low-Rates Phenomenon"

Why is it hard to fire? I thought it's super easy in the US.

Legally perhaps, but firing people particularly en mass is hard to do right, unless you don't care and you are just prepping for a fire sale.

You can lose people who might be key contributors. You can destroy morale in the rest of the company. Everyone else knows they might be next, so they will leave first chance they get. Finally, it signals to the market you are in trouble (hence why a lot of companies are doing it now: better to be just one more company doing layoffs when everyone else is doing it).

This was the point that founder friend was making.

It's hard to look someone in the eye and say they're done

He mentioned several points, all different from what you said

Legally yes.

Morale-wise no.

> I think it is naive to assume that Bandcamp was wise to be employing all these people

It probably was stupid, but stupid isn’t illegal, and companies will hide behind that fact to issue mass layoffs (which can be even stupider when they result in an inoperative team).

The financial argument behind a layoff is today made more irrelevant when the employees are smart and creative enough to be the key to company success. Good employees won’t take stupid, no matter how legal stupid is.

> sometimes it's entirely motivated by putting lipstick on a pig in order to look like a runaway growth success thing

The same can be said for the CEO and Board who created the mess. Except they get a big payoff no matter what, and have much larger leverage over the lives of the employees.

I think your right about them focusing on the wrong thing. Content writing instead of sales. There music discovery is horrible and they don't push any of their artists. I mean they only make money when their artist do. You would think that they would promote them better or have a Spotify like interface to push they artist music.

> like a runaway growth success thing.

is this because employee growth is easily verifiable? Put another way, don't companies ask for accounting statements etc to figure out if the target company is worth acquiring? (context - I have no idea how one company accquires another, so this is a noob q)

> Background, I work in diligence for software aquisitions.

It shows. I don't see lay-offs from this perspective. Instead, I think about each of the employees impacted by the company's reckless behavior. Did the employees have any say in this matter? No? Then who cares if the job they were there to do was unimportant in the first place? That is absolutely the fault of the company.

Your stance is not effective when treating human beings like human beings and not some `num_workers` configuration in some kubernetes yaml.

Your calculation falls apart if you are comparing it against no business - which is what happens when a non-sustainable business eventually runs up against economic reality. The whole business of not-profitable companies growing for years and hiring people on imaginary future money is tech industry magic beans shit. It's divorced from the reality of the rest of the world where people have to really work for a living and don't get paid our astronomical salaries.

I work as a consultant in tech diligence, but previous to that I worked for many many years for small, profitable, Normal Businesses. And the company I work for is a normal business that watches the bottom line and doesn't over hire because we have to be profitable. If you go work for a magic bean company that doesn't think being a sustainable business matters, you are, unfortunately, part of a ponzi scheme that can fall apart any time.

I hated my life when I worked at this style of company.

When I worked at (a beverage company), one of the unfortunate realities was that the company did not really compete to make their money. The profit at the entity I worked at was completely based on the price of ingredients that was set by a parent company. We could have reduced complexity and improved efficiency by large margins easily, but it didn't matter because the parent company would have clawed back a larger share and pumped their profits, while our efforts were of no benefit.

In this aimless zombie corporate mode, they hired people without much thought, and everyone was busy looking busy (8 hour meetings were common for "developers"). However, if you are doing something for real, people don't see any point in helping you out; so even if you really do want to improve things (in my case, I wanted to help the poor souls on 2ch who had to work on the weekend because of poor internal communication that prevented hand-offs), no one wanted to lend a hand.

Since profit is not a big deal, and everyone simulates being busy, no winds up in charge, and the inmates run the asylum. If you are the guy in the unimportant job, you suddenly realize it is a bullshit job and are constantly in fear of your job vanishing. Moreover, since you cannot accomplish anything, it is nearly impossible to find a new job when the company inevitably encounters reality.

> I think about each of the employees impacted by the company's reckless behavior.

The "reckless behavior" in the above quote was not committed by the acquirer, but by whoever was responsible for leading + growing Bandcamp off this cliff.

In the same way you want to treat humans like humans, you need to treat businesses like businesses – i.e., if you're not making money or growing revenue fast enough to justify hiring the marginal employee, as a hiring manager, you're gambling with the prospective hire's career in pursuit of a collective gain.

If you're an employee joining an unprofitable company, this is part of the package and should be really clear in the interviewing/onboarding. If it isn't, again, the blame falls at the feet of the CEO, ultimately.

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