SUP Lays off LiveJournaling LiveJournal Staff: Much Hijinx Ensue

Warning: This post is a hastily rewritten entry due to some actual news instead of a rumour blog.

Let’s start with the rumour:rumour: Unable to truly monetize social networking and facing a slightly harrowing economy; Russian Internet Company, SUP (the recent owners of LiveJournal) this week cut nearly half the U.S. employees of LiveJournal. The employees laid off were the Product Managers and the Engineers. The only staff left are finance and operations.

Now let’s look at a follow-up news story: Cuts are closer to a dozen and development will be centralised in Russia at the company’s main offices. This is taken from the official press release from LJ, Inc.

So the question posed to me in this hasty rewrite is. So… now that the rumour mill has been squashed. Do we feel all better? Sadly, I have to say that the PR only makes me feel like they are trying to slow panic.

Let me address why, I feel that the rumour (taken from a blog) carries some pearls of believability. First, companies that cut large sections of staff with no severance are doing so due to financial difficulty. This means that they are looking to dig out of financial loss and will cut before they analyse. The second issue that concerns me is that the company is fixing the issue (from the PR release) by ‘pooling the talent’ in Russia. Pooling talent means bringing them together. Pooling talent does not mean centralising by eliminating perceived redundancy.

I’ve been in two companies that have done this. One to its entire staff and one to a specific product’s staff. In neither cases did the product survive, much less recover. Now this doesn’t mean that LJ users are going to lose upwards of eight years of work all of a sudden. (But archiving your blog sooner or later with a tool like: ljdump or ljarchive might not be a bad plan.). 15 million users recorded with close to a half million active becomes a huge ship to turn. So in time they could ramp up. However, in the world of software and internet service sites; it’s very hard to recover.

What you typically see in these situations comes in quiet tiers (or Tears for some.) The first thing you notice is that there are no new features. Sometimes there are community or automated features that do continue. A new theme or digital gift for the month. Without the engineering and pm staff there is no one to come up with new ideas nor implement them. So those things you hope LJ would eventually do… They are probably not going to happen.

Second comes the more noticable issue. Bugs. Typically in a layoff of this level one engineer is actually kept but moved to Operations. Operations are the folks who make sure the service keeps running. Of course the belief from the executive management is that bugs only occur from new features that the engineering staff was careful in implementing. The perception is that the only bugs left are very small ones that will only pop up with increased usability. So… they eliminate the bulk of the bug fixers. Bugs however, become exploits. Also, the more bugs that appear, the slower the old ones get fixed. And if they aren’t interested in new features; they’re really not showing a great deal of interest in the product.

If you are seeing a situation where engineers are being kept in one location and dropped from another that basically means that half the employees are being given twice the work. Or the amount of work that is being cut is more severe. In the case of LiveJournal; expect new features to be aimed at the Russian users first and then translated.

Last comes the acutal nail in the coffin. User attrition. Everytime LiveJournal has done something that people don’t like… there’s been a bump in other blogging system’s usership. It’s already happens though many LJ users may not have noticed it. Consider the following question: Are you following Facebook and Twitter more than LiveJournal than you used to? Are you putting your content on Facebook, Twitter, and other blogs more than you put it on LiveJournal?

The Social Networking userbase is both fickle and easy to attract with a new sparkly. And Each new sparkly generates even more users than the last one. I can count at least 5 people I couldn’t get onto LJ or any other SN site that have recently joined Facebook and are at times giddy about it.

But I don’t want to be all gloom and doom. Is LiveJournal dead? No… it’s not. And it’s not likely to just vanish overnight. Granted… the company is Russian now and I don’t know Russian business accumen. In all likelihood there are two paths. In the next 1-3 years LiveJournal will slowly fizzle to the point where you won’t notice it’s faded away. A common death in these services. Perhaps now, people will understand why I often bemoan my small pieces of 70s nostalgia. My son will look at me blankly when I talk about LiveJournal in the exact same way my wife does when I mention Bob Hope .

There is the optimistic side. SUP may be out there shopping the LJ for a bargain price. Hoping to at least recoup some of the financial losses. It’s hard to say how the tax code works in Russia for business loss. Personally, I’d love to see Brad and Six Apart take the assets back on and build it back up again. But I have to say; It’s really not going to happen. Brad sold because the right price tag was offered for a service that frankly doesn’t generate the money to support it. Six Apart got rid of it because of the same reason. People don’t want to pay to be social.

Let’s say for a moment that SUP is just tightening its belt. That is figures it can save LiveJournal by eliminating the developers who’ve worked in the code the longest in deference to the newer highers internal to the company. Unless they can find a way to make more money off the site (and I’ve seen the journal wars that occur over them trying to charge for anything)… I don’t see them getting the ship turned back around.

So… Hate to be the one firing this cannon of alert; but to paraphrase Paul Revere, “The 404s are coming! The 404s are coming!” Personally, you always need to listen for the Tardis Cloister Bell.

Next up… Can you actually monetize Social Networking?

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