Flipagram, a storytelling app that attracted two of the biggest VCs, has cut 20 percent of its staff
The axe fell October 1 when 17 employees were told they were being let go, a former employee who attended the meeting said.
Flipagram is a mobile "storytelling" app that lets users stitch together photos, videos, and music into short 30-second stories. The social network took off with more than 120 million users and more than 300 million videos.
"It looked to us like a monster," investor and board member John Doerr of Kleiner Perkins said in a Bloomberg interview. "On the order of an Instagram." Sequoia Ventures founder Mike Moritz is also on the board.
The company had 33 million monthly active users in 2014, its CEO Farhad Mohit told Business Insider in July, but there's no new numbers from the company for 2015.
User growth had stalled, but it didn't sound like it was a make or break situation, a former employee said. A source inside the company called its initial growth "unsustainable" but in a vein similar to Facebook and Twitter's early days as well.
Meanwhile, the company had hired too fast (and is still hiring), but it hadn't increased its efficiency alongside its headcount, according to an inside source.
Part of Flipagram's virality is being able to match hit music to your videos and photos. The startup worked hard to obtain licensing deals from music giants like Universal, Sony, and Warner so its users could legally add the music as a backdrop to their photos. It incurred large legal fees as a result, but sources close to the company said that it was only a fraction of the venture capital raised.
In July, Flipagram announced a $70 million funding round from prominent investors, including Moritz and Doerr, and the pair joined the board together. The last time they did that, they were on the board of Google.
However, that round actually took place in February 2014. Flipagram still has money in the bank, according to a person familiar with the company.
A company spokesperson told us:
Flipagram has grown at a pace very few companies have experienced. At this pace, we continuously need to evaluate our organizational structure and processes. We recently reorganized to give greater responsibility to leaner engineering, product and design teams, so we could be more nimble and iterate faster. That said, we care for all who were affected and are working to ensure a smooth transition for them. Meanwhile, Flipagram continues to hire world-class talent to support our growth.