Chat App Company Tango, Valued At Over $1 Billion, Makes More Layoffs

Messaging app Tango has made further layoffs as new CEO Eric Setton continues to orchestrate changes in a bid to transform the struggling company’s fortunes.

Setton, who moved from CTO to CEO last month, split the Tango app into two — a back-to-basics messaging service and a social networking app — earlier this month. On Friday, he announced that 20 percent of Tango’s team would exit the company as part of a “new phase” for the U.S. company, which was values at over $1 billion following a $280 million Series D led by Alibaba in March 2014.

“Today we’re taking additional steps to set up Tango for long-term success by making the tough, but necessary decision to restructure the team. A recent review of our operations and finances made it clear to me that we need to align better our expenses with our revenue,” Setton said in a statement.

This restructuring is in line with planned layoffs that we reported on in January, but with one change. Tango was initially planning to shutter its office in Beijing, China, but instead it made these latest reductions from its HQ in Mountain View, including staff working on its mobile games division. Forbes reported that 50 of Tango’s 250 staff will exit, but one source told TechCrunch that the number is actually 70 and there will be reductions from the China office, too, but not right now.

“The layoffs today were in Mountain View. I don’t have anything to share about our other offices at this time,” Setton told TechCrunch when we asked whether the Beijing office would be closed.

We reported last November that Tango quietly let nearly 9 percent of its workforce go after it closed down its e-commerce service, which was launched in partnership with Walmart and Alibaba barely six months earlier.

Tango’s company culture reached a toxic crescendo last year — that was one factor that led to then CEO Uri Raz being replaced by Setton, alongside mismanagement and question marks around previous funding rounds — and there’s concern that these layoffs could trigger problems again. A long-time TechCrunch source inside Tango told us that, with Monday a national holiday, many of the staff affected by the layoffs took a long holiday and weren’t present in the office to hear the announcement first-hand.

In a company blog post, Setton acknowledged that Tango needs to be “nimble” to take on its much larger rivals, and with the messaging industry now dominated by a handful of powerful players, he has his work cut out re-establishing Tango and its service, which enjoyed a meteoric rise when it burst on the scene as one of the first cross-platform video calling apps.

Tango claims 350 million registered users, of which 48.5 million were active each month as of October 2015, according to internal documents reviewed by TechCrunch. That’s compared to one billion active WhatsApp users, 800 million active Facebook Messenger users, 650 million WeChat active users, 215 million active Line users, to name but a few competing apps. There’s also Apple’s iMessage and the humble SMS, which compete with all chat apps.

Setton told Forbes that Tango still has half of the money from its Series D in the bank, so, with these new cost reductions, it seems like Tango isn’t about to go out of business any time soon. Setton and his team will no doubt be back to the drawing board for new ideas to spur a turnaround.