Trutap decimates headcount, keeps skeleton staff, looks for sale

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Trutap, a leading UK mobile startup, is to let go almost 80% of its staff after failing to hit its window for a second round of funding. The blow comes only a month after the launch of its latest software application for aggregating social networks on the mobile, the milestone of over 250,000 users and the launch of a revenue-raising advertising platform.

Trutap is headed-up by co-founder, CEO and Chairman Doug Richard, best known as a former Dragon on the BBC’s Dragon’s Den programme. Although the company is not commenting officially on the moves, a reliable source told TechCrunch UK that the company was “cutting back and aiming to keep the service running with a skeleton staff to reduce the burn and keep the service live”. That will mean keeping on around 4-5 staff out of the original 30 to keep the application available while the company looks for a sale or new investment.

I understand there are a couple of potential investors still interested, and one might be an acquisition. But there are of course no guarantees in the current climate.

Trutap had been doing the rounds of investment houses looking for £2-4m in a second round of funding, after securing initial investment in 2006 from private equity house Tudor Ventures, a hedge fund, believed to be in the vicinity of $5m. But it became an “orphan startup” when Tudor withdrew from the investment market after the global financial crisis.

It’s bad timing for the actual application itself (see video below). Version 2 of Trutap’s software now supports a host of IM protocols, accessible from within a pretty slick Java app which runs on hundreds of handset models, especially in emerging markets like Brazil and Russia.

Trutap, the free mobile social network – video demo from Trutap on Vimeo.

Since the new version 70% of users have updated their status and location and overall usage is on the up. Trutap also recently launched their “Hornet” content platform that allows for advertising and channel sponsorship revenues. There are also plans for a virtual currency with “digital-gifting” which were slated for mid-next year.

Currently Trutap – a TechCrunch40 finalist from 2007 – is the only mobile social networking app on the Sony Ericsson download store, and it had other handset distribution deals about to go live; a distribution deal with a “major” mobile content aggregator; and it was one of first apps on the Eplus German mobile network which does not charge for data use.

Yup, it’s bad timing.

However, Trutap may also be a victim of the perfect storm of a down market, a competitive mobile environment and mobile operators’ slowness to embrace social networks out of fear it will impact their business. Competitors to Trutap include Fring, which recently launched an iPhone app and opened an API to developers, but Trutap also competes on different levels with startups like Mig33, Nimbuzz and MXit in South Africa. There is also Google of course, which is increasing it’s hegemony to the mobile world.

UPDATE: If you are a former Trutap employee, put yourself on CrunchBase and I’ll add your profile to this post. It may help you find more work…

  • Jof

    Sorry to hear it. They have a great product, great opportunities in foreign markets and a loyal fan base so I’m sure something positive will come of it.

    Is this the first high-profile UK start to be hit in this way?

  • Paul Golding

    Out of 250K users, it would be interesting to know what the active use is. I suspect very low, as in less than 1%. Unfortunately, anyone trying to build a community of users based on a downloadable mobile app is going to have problems for the foreseeable future.

    Apps like this need to be always on, which is a major problem with today’s mobile phones. It will be interesting to see how well 3 UK’s INQ1 does in terms of active usage of the social apps, which are built in.

  • Dominic Travers

    This is truly shocking news. Trutap are a good example of successful traction in the mobile space. Seems nothing is safe these days.
    Not sure how Google can be criticised for creating an open and easy development platform for mobile. They’re hardly competing with Trutap. The beauty of Trutap is it’s traction with ordinary mobile phone users around the world. How is this worth so little?

    • luke Jansse

      You are kidding aren’t you? To me this is a great example of things done the wrong way. I reckon what happened was:
      1. pick a hot area (social networking) within a hot sector (mobile)
      2. get impressive people on board
      3. get money because of 1, and 2 (don’t worry, you don’t need a profitable business model or good company fundamentals
      3. hire lots of people with the money you raise (remember to pocket some too!)
      4. fire them all again when it turns out the company doesn’t work and you don’t have any more money to pay what are probably over-inflated salaries anyway.

      These companies need to be left to die. OR fight their way out of it.


      • Newscorp


        I agree with your comments 100% here. That is what VC’s always do. It is the classic VC tech model. 1 out of 10 of these companies work for the VC’s sometimes it is 1 out of 70. But the 1 that works, more than pays for the rest of the failures.


  • Ben Darlow

    Decimate, from the latin phrase, means to remove one tenth. This is a bit more than a tenth by the looks of things.

    • Maxone

      No, Decimate actualy means to reduce *to* one tenth, i.e. to reduce drastically

  • Scott Jones

    Very shocking news.

    Of all the UK mobile start-ups I never thought this one would be suffering.

    All the best to those that may be leaving.

  • Bus Dev Girl

    Bad timing for Trutap. They have great technology and it’s sad that their new version launch came a bit too late and too closely on the heels of the global economic downturn. It will be interesting to see if Trutap users migrate to other IM clients like eBuddy, Nimbuzz or Fring. 250,000 mobile users is a drop in the global ocean of total mobile handsets though. Especially when you consider other mobile IM clients like eBuddy (over 3 million global unique mobile users) or Nimbuzz which are typically the most downloaded applications on GetJar every week.

    Great technology and great plans to scale but timing is everything and your comment about the “perfect storm in a down market” is spot on.

  • Manoj Ranaweera

    Sad as it may be, this demonstrates the problem of taking VC funding and requiring number of further rounds to get to a point where free cash flow and debt finance are sufficient to continue trading.

    Perhaps the model ought to be take a round (or two) of VC money + use low cost offshoring and get to a revenue generation capability as quickly as possible – so that inability to raise further rounds has no significant impact on the business.

    Survivability is the No. 1 priority right now for many tech startups. Anything else is a bonus. Those who survive and can grow has huge potentials when good times return – read Nigel’s guest post

    Good luck to all of us who remain somewhat optimistic!

  • Paul Walsh

    I’m so sorry to hear about Trutap’s layoffs. Let’s hope the guys pick themselves up quickly and move onto another great project. Good luck guys. I’m available for a coffee if they want to catch up for a chat.

  • Paul

    “Decimate, from the latin phrase, means to remove one tenth”

    Actually, if you check the OED you’ll see that decimate can also be used to mean “to subject to severe loss” if done so in a rhetorical or loose sense.

    As for TruTap’s demise, it’s hardly surprising (though unfortunate for the people I know who work there) as like many startups they didn’t seem to ever have a viable business model.

  • tomas

    Its sad. I am surprised, they have only 250000 users and they had investment.
    All companies doing mobile apps will have difficult times. I myself have developed mobile app/platform for multiplayer games, we got about 160000 users, but its not a business and its hard to sell the as the whole project.

    Dones anybody know of any mobile app which makes money?

    • luke Janssen

      Yes, we have some. They make money from sponsorship. Its the only model that is really working at the moment for apps (other than games or iPhone apps).

      The problem is the porting. Its a nightmare. Apps for all mobiles are expensive to build and you need alot of money. Trutap should have spent their money on marketing to get more users. I agree that probably 1% are actually doing anything.

  • Stewart Townsend

    This is sad news, and I think we shall see more to come unfortunately, time to bottle down the cash reserves, and be creative, use as much as you can from other resources to push forward

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  • Zoe

    This is terrible news! I’m a loyal fan of Trutap and love the application. Let’s hope an investor comes out of the woodwork pronto!

    • john

      if you enjoy trutap, you may also like this silicon valley communications start-up called VingTalk:

      everything is still in beta, but it appears promising

  • Jamie

    It’s a real shame and I hope they find some way to continue. It’s an app that is popular with our users on Phoload. There seem to be a lot of mobile app startups out there that are still living off the VC funding. I hope that many can survive the crunch as they are producing some really innovative software.

  • Bus Dev Girl

    eBuddy is making money but they also started with an aggregated, web-based IM application first which makes money off of online advertising. They launched a mobile IM app about 18 months ago – after the web application was already making money. Seems like a smart move after reading what happened with Trutap. Sad as it may seem, you can have all the amazing technology in the world but if it doesn’t produce revenues quickly and you’re burning through VC cash, you’re likely going into the deadpool in this economy.

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  • Daniel

    I apologize if this is breaking any guidelines as it is not my intention. In the midst of all these sad news about layoffs Spotify is recruiting quite heavily. Please go to our Jobs site if you are interested:

  • AndyP

    Sure it’s not the last anyone will see of Trutap. Doug Richard won’t let it go down and will probably bail it out if they fail to secure funding else where. What it does highlight is that it’s difficult to realize high returns in the mobile app’ space if you are an investor down turn or not.

  • Its not all about Apppe!

    The market for mobile apps is opening. Does anyone really expect Nokia let the Apple App Store to be the only source of mobile apps?
    Trutap has critical footpriint in markets where there is no 3G an no one wants an iPhone.
    These are the same markets where AdMob and others report large growth and market share and we know that the buk of mobile ads are for mobile content!s
    Can it be a coincidence thererfore that these are the very markets that the $billion mobile entertainment heavyweights are investing heavily?
    Apps such as Trutap offers an opportunity for brands and mobile entrtainment venfdors to intercept users with contextual/non-contextual marketing messages to sell stuff.
    Selling stuff is a good old fashioned thing . In fact most ads try to entice us to buy stuff.
    Trutap and its likes might be scaling back but there is nothing like recession to stimulate products and co’s like Trutap that help sell stuff lower marketing costs.

  • Jesse

    U.K has been innovating with new stuff and products I know someone who is in UK does well in aff marketing. On my website I have a mobile search for anyone to use. It very helpful to search for any phone rec ads and info on the particular phone you are insterested in seeing. Just click on my name to see.

  • The Spy

    Doesn’t everyone, who’s anyone, just own an iPhone now? So this app/service is a waste of time.

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  • raddedas

    The Spy: no, the portable coke mirror is favoured by those sitting in the overlap between the marketing, fashion victim and/or gay demographics, along with a fair spattering of those who spend most of their time at work on YouTube; amusingly enough they total quite a small percentage of world mobile shipments, though the members of these communities appear not to socialize with others much so often don’t realise this.

    Which doesn’t change the fact that the demise of Trutap was predictable from the start (we posted about that when they first launched), the only surprise being how they managed to spank their way through so much cash in such a short time with so little to show for it…

  • acai berry diet

    sorry to hear

    • misspiccolo

      me too! sorry to hear this.

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