After CEO Departure, Mobile Video Startup Viddy Cuts Staff By More Than A Third

It was less than a year ago that Viddy was flying high, quoting massive user growth and raising a massive $30 million round of funding from NEA, Goldman Sachs, Khosla Ventures, and Battery Ventures. Now the company is cutting back, as it seeks to regroup and figure out this mobile video thing.

Viddy confirmed that it reduced its workforce, specifically in the areas of marketing and operations. The company has cut 12 positions, which is more than a third of its staff based upon what we’ve heard. Viddy claims that its core engineering team is still in place. The cuts come after the departure of CEO and co-founder Brett O’Brien.

Last year was a whirlwind for the company. In February, Viddy raised $6 million to take on mobile video competitors like Socialcam. Then in May, bolstered by Facebook’s acquisition of Instagram for about a billion dollars, the startup raised another massive $30 million round. But a lot of things have changed since then. Viddy had relied heavily on Facebook’s Open Graph to juice its user numbers ahead of its big funding round early last year. But changes to Facebook’s algorithm mean fewer people discovering the app, which in turn meant stalled user growth.

At the same time, many are beginning to question the whole idea behind an “Instagram for video” in the first place. And the absolute value of Viddy also came into question, as its closest comparable — Socialcam — was acquired by Autodesk for about $60 million, which was well below Viddy’s valuation. The result has been a re-org of the company.

Earlier this month, O’Brien stepped down from day-to-day operations. Rumors have it that part of the reason  was an acquisition offer from Twitter that Viddy declined. But Twitter ended up acquiring Vine and releasing its competing mobile video app instead.

A representative from Viddy sent the following statement about the cuts:

As the board continues to review Viddy’s business, we’ve identified specific ways to streamline costs which include eliminating some positions. These changes will allow the Viddy team to be focused on bringing the most innovative and engaging social mobile video product to market. Viddy has a strong balance sheet and an exciting product roadmap ahead, including an upcoming new product release, and we have the right team in place to execute moving forward.