After big layoffs SoundCloud founder says its strategy is to ‘take back control’
I can&#x27;t help but feel badly for SoundCloud and their CEO. Over the years I&#x27;ve seen dozens of companies get to a point where its clear that the future is not what they had envisioned. It&#x27;s that moment of facing reality of &quot;If we were likely to win, we would have by now, but we didn&#x27;t so really what is next for us?&quot; It is that point where the investors have seen perhaps three or four internal projects that haven&#x27;t pushed them into that accelerating growth point, and there really isn&#x27;t enough money to go further. So the investors have said to themselves, &quot;I&#x27;m thinking this one isn&#x27;t a winner.&quot; Let&#x27;s focus on some of the more promising companies in our portfolio.<p>The CEO is massively constrained in what they can say when a company reaches this point, so they all say the same thing, &quot;We&#x27;ve got great things happening, really hated to have to let go some great people, we&#x27;re aligning the company on this awesome plan to take us to the next level.&quot;<p>The alternative is saying &quot;Nothing we&#x27;ve been able to think of to date has created a viable business. We&#x27;re now at the point that we are losing money so fast that even our most optimistic ideas about what might work were beyond the point where we cross $0 and go negative. We&#x27;re laying off a bunch of staff which will slow are burn rate enough to pursue both a &quot;Hail Mary&quot;[1] strategy and look for a way to liquidate the company and claim victory anyway.&quot;<p>Hedge funds and other private equity firms will come out and review what things they have and how they might be re-packaged or sold, internal investors will squabble over terms and conditions of bridge (aka Debt) financing to let them live long enough to get there, management will be constrained by this effort to focus mostly on selling the company and less on actually making it a viable proposition. It sets the clock, and when the debt financing runs out, everyone goes home sad.<p>But nobody ever says that. They say &quot;We&#x27;ve got this new direction we are super excited about.&quot;<p>[1] &quot;Hail Mary&quot;, made popular by quarter back Roger Staubach (<a href="https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Hail_Mary_pass" rel="nofollow">https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Hail_Mary_pass</a>) is a plan that conceptually can be successful but is probabilistically unlikely to succeed.