Berlin headquartered music streaming service SoundCloud announced Thursday that it is cutting its workforce by 40% as part of a wider effort to become profitable.
The nine-year-old venture capital backed company is cutting 173 positions at the company, which currently employs 420 people across four offices: Berlin, New York, London, and San Francisco.
The London and San Francisco offices — home to around 20-25 people each — are shutting down as part of the restructure.
SoundCloud cofounder and CEO Alex Ljung, who is due to appear on stage at the Tech Open Air conference in Berlin next week, broke the news to employees via a video call on Thursday afternoon, a SoundCloud employee told Business Insider, adding that he'd "been better".
Two SoundCloud employees said the announcement came as a shock, adding that they hadn't anticipated anything like this happening in the near future. "It was a sudden announcement," one employee said. "Nobody saw it coming."
The person added: "The employees know as much information as what is available in the media. We do not actually know what is going on or what the next steps will be."
The job cuts were made public in a blog post by Ljung on the company's website.
Here is the full blog post:
More than 150 million pieces of content have been uploaded to its platform, including music from some of the world's biggest artists.
But SoundCloud's future has been a matter of debate for some time as the company struggles to find a reliable revenue source. SoundCloud started out as a free streaming service, which helped make it popular among new artists. It introduced advertisements in mid 2015 ahead of the launch of its subscription streaming service, which launched in March 2016 to compete with Spotify, Apple Music, and Amazon Music.
The job cuts come after reports suggested that the company, which has been valued at $700 million (£557 million) by investors, could be about to sell at a knockdown price, possibly leaving early shareholders with little to cash in.
SoundCloud — which has raised $298 million (£238 million), including around $70 million (£59 million) from Twitter, according to startup funding tracker Crunchbase — was in talks to sell for $1 billion (£800 million), according to a Bloomberg report last July. But that figure could now be as low as $250 million (£199 million), according to a Recode report in March.
The job cuts also come shortly after a number of high-profile executives left the company. SoundCloud veteran David Noël, one of SoundCloud's first employees, left in March, while in February it was reported that SoundCloud's COO and finance director had both left the company.
One employee added: "I think they are starting to cut costs so they can be acquired."