Spiceworks, an online community that offers free help desk and IT monitoring capabilities, has cut 12 percent of its workforce, co-founder and CEO Jay Hallberg confirmed in a blog post on Wednesday.
In some ways, Spiceworks competes with traditional IT management software designed for VARs, MSPs, IT service providers and IT professionals. In other ways, Spiceworks competes with ad-driven IT media websites. The Spiceworks online community and related IT management software are free. Most company revenue comes from ads displayed on the platform.
Spiceworks had about 450 employees in January 2016, according to a company blog post from that month. If that figure remains somewhat accurate that means the company is cutting about 55 positions. Hallberg did not disclose specific headcount figures in the blog disclosing layoffs.
Spiceworks Layoffs: Profits Nearly Arrived In 2010
It's been quite some time since I spoke with CEO Jay Hallberg directly. During a conversation in 2010, he told me Spiceworks was on the brink of profitability and adding more than 1,000 new IT management users per day. At the time he also told me the company was in a "great cash and revenue position" amid $16 million in Series C funding in 2010.
Still, I wonder if Spiceworks got overly focused on growth rather than basic profitability. In April 2011, Spiceworks closed $25 million in Series D funding. In 2014, a $57 million Series E round arrived -- led by Goldman Sachs.
Going forward, it sounds like Spiceworks may try to launch additional IT management tools that aren't part of the existing platform. In this week's blog post, Hallberg said:
"You’ve told us you need more standalone, purpose-built tools that provide impact more quickly. You’ve also told us we can help you by aligning content, apps and community better so you can solve tech problems more quickly. We’re going do both of those and more."
Spiceworks Layoffs: But Why?
The big remaining question: What exactly prompted those layoffs? The answer likely involves Spiceworks' revenue growth rate, profit margins (or losses) and five rounds of venture capital. Those five funding rounds represent $111 million in VC money. It's a safe bet one or more of the VCs wasn't impressed with Spiceworks' latest financial performance...
