22 January 2009

LiveJournal on the Verge of Collapse

At the midst of the terrible recession, on the day, when Microsoft announced 5,000 employees workforce cuts, information on the 12 to 20 employees lay offs by LiveJournal does not look neither surprising, nor unexpected. However, if think about the total number of employees in the LiveJournal San Francisco office as 28 employees only, you understand that this cut might be really fatal for the LJ bloggers platform functioning. Valleywag reports that the social-media pioneer laid off all of its product managers and engineers, “leaving only a handful of finance and operations workers - which speaks to a website to be left on life support.” Matt Berardo, a Yahoo executive hired on last summer, has also left.

Founded in 1999 by Brad Fitzpatrick as a way to keep his friends from high school updated about his activities, LiveJournal was among the first blogging services and social networks. The company was bought in 2005 by blogging-software company Six Apart and then sold two years later to Russian online-media company SUP.

According to the statement from LiveJournal, the company’s servers, technical operations, administration and customer-service teams will remain in the United States. However, global product development and design now will be coordinated out of the Moscow office.

The company’s Moscow-based management has told employees it blames the "global economic downturn" - the kind of pat excuse every boss is giving for layoffs, even when mismanagement or a bad business plan is really to blame.

The brutal, abrupt cuts suggest something different: That Sup founder Andrew Paulson (above), who paid an estimated $30 million for LiveJournal a little over a year ago, has realized his expensive mistake in buying at the top of the bubble. Someone familiar with the company tells us Paulson lost the CEO job last summer to Annelies van den Belt, a former News Corp. executive, and was given the meaningless title of chairman; he’s essentially out of the company now.

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