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Many of you might have already heard of Cheezburger, (no not the eating one)! For those away from the internet for the longest period, Cheezburger is one of the biggest troll cat meme network on the internet. Cheezburger popularized the troll cats and rapidly became one of the biggest destinations for internet meme’s and ‘Lol’s’. But now, its time for the scaling down of Cheezburger.
Cheezburger scaled rapidly into various different sections. Got millions of registered users and increasing number of traffic and shares. So these guys went for VC funding so that they could scale the company effectively. Here comes the main story:
“It was always profitable-until we took venture capital investments. We raised $30 million in 2011, and our company went from 45 to 90 people in nine months, and we started spending more than we were making.”
Their investors wanted at least a cut of 10% losses sooner. Ben Huh decided the best would be to scale down back to what was working best. So, Cheezburger decided to scale back–same destination, smaller boat. The morning of the layoffs, the executives informed their teams as a group and then met with each person individually to discuss retention or severance.
Twenty-four people were let go, bringing their head count to 42. So, here are some of the hey take-off’s startups can learn from Cheezburger’s down scaling.
As a founder, as an entrepreneur, and before that, as a human, it is difficult to fire one’s own employees during hard times. It takes a lot of courage to do such a thing and entrepreneurs need to be bold at such times.
Building a brand is not just enough, you must be bold enough to fire employees during hard times.
“It was the most difficult week I’ve ever experienced. Often, when faced with a problem, you want to run in the other direction. It’s like seeing a lion in the jungle. But I have to do what is best for the company, even if it sucks emotionally.”
Image courtesy: Forbes
Entrepreneurs and founders, especially the ones who take venture funding are always at their toes and decisions should be swift. They don’t a month’s time to decide what to do, everything needs to be done immediately. It takes a lot of courage and prompt decision making when a situation arises.
Learn to take decisions as needed in spite of what situation you are in. Choose what is best for your company always in the first place. Even if it means to fire your best employee.
I always tend to focus on this particular issue with all startups. The main problem with startups these days is they receive lots in VC funding. Now that they have power and money, they tend to spend and use every penny in the betterment of their company. This is not bad, but proper use of the funding resources is a must.
Even the same happened with Cheezburger, they got $30 Million in VC funding. They scaled it to 90 employees, which wasn’t needed in the first place. Now they have scaled down back to 42 employees. So, never spend your VC’s money relentlessly on becoming the next Facebook or Google.
This just shows how difficult it is for startups to guess how to protect their startups from dying.
What do you think of Ben Huh’s story of the scaling up and scaling down of Cheezburger? Share your thoughts and comments below.