StumbleUpon Lays Off 30% Of Staff As It Restructures Company Into A Profitable State

StumbleUpon today laid off 30 percent of its staff, the company has confirmed to TechCrunch. The move, which brings StumbleUpon’s employee count from 110 to 75, is part of a larger restructuring plan that will bring the web content discovery company to profitable operations in the first quarter of 2013.

“The main drive here is to become more streamlined and to better execute against our goals for 2013,” StumbleUpon’s CFO and interim CEO Mark Bartels said in an interview this afternoon. Now that 40 percent of StumbleUpon’s traffic is from mobile devices, he said, a “rebalancing” of the engineering team was in order. While the bulk of today’s layoffs impacted non-technical company divisions such as marketing and community, some desktop-focused engineers were also let go.

Bartels was keen to note that StumbleUpon is not having trouble on the top-line part of its income statement. The company’s revenue has grown by 300 percent in the past three years, and it now has 80,000 paid advertisers including the likes of Procter & Gamble and Kraft Foods. “The company is in a healthy financial state,” Bartels said. “What this change does do is it brings us into a profitable situation.”

It seems that StumbleUpon’s newfound profitability could make the company more attractive to a potential acquirer. But when asked if that was a factor in the restructuring, Bartels said a sale was not a priority at the moment. “The way I see it is that profitability allows us to experiment more,” he said. “The board and the leadership team here want to be an independent entity. We’re not looking at strategic options right now. We want to continue to grow and continue to hire.”

A look back

StumbleUpon has had a unique history: The company was co-founded in 2001 by longtime CEO Garrett Camp while he was pursuing a post-graduate software engineering degree in his native Canada. Shortly after taking on just $1.5 million in seed funding in 2005, the company was acquired by eBay in 2007 in a splashy $75 million deal. The post-deal integration did not go as planned, though, and in 2009 Camp and one of his original co-founders Geoff Smith bought the company back with the help of a group of investors, with Camp reassuming the role of CEO.

For the first couple of years after the buyback, things at StumbleUpon had apparently gone swimmingly. The company boasted growing user numbers and engagement, brought on $17 million in fresh funding, and attracted a number of talented staffers to join the fold.

Recent stress

But the past year or so has brought some well, stumbles. Newcomers in the content discovery and sharing space such as Pinterest took off with amazing success. After a big redesign in December 2011 fell flat with users, Camp stepped down from the CEO role in May 2012 to focus on other projects.

Another major Pinterest-like redesign in September once again drew mixed reviews — and according to some metrics, its traffic was feeling negative effects.

Profits — and a more stable future

Bartels acknowledged today that the first half of 2012 did bring a “softening” in user growth, but he said that reports of the company’s demise in user growth were exaggerated, as many third-party data sources on app growth do not accurately monitor mobile users. Regardless, he said, being profitable should bring the flexibility needed to make sure StumbleUpon’s mobile users are better served.

And despite today’s turmoil, StumbleUpon’s interim CEO says that he is committed to building a stronger future from this point on. “This is on a one-time event. This is not going to be a slow-drip effect” into a series of layoffs and cost-cutting moves, Bartels said. As StumbleUpon continues to be a very fun app to use, and a favorite destination for many people on the web, here’s hoping that is indeed the case.