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Patreon lays off 13% of workforce

techcrunch.com

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Re: Patreon lays off 13% of workforce

#11

Post by harryh »

tempsy wrote: post #4

This company never made sense to me from a “venture scale” perspective. It’s big, sure, but are the financials really ever going to be strong enough to go public? I guess I don’t see it. Also annoying to basically admit that layoffs were basically avoidable given the “strong cash position” but made anyway to give the company a little more runway. Doesn’t look too great.

$100M in annual revenue is generally considered the rough bar to go public. Various estimates put them somewhere between $30-50M in revenue for 2019. Another 2-3xing doesn't seem out of the question.

Re: Patreon lays off 13% of workforce

#12

Post by harryh »

icelancer wrote: post #8
foota wrote: post #5

Earlier quoted context omitted.

That's a fiscally wise decision. Better for the company and employees to let people go now to avoid having to do mass layoffs later if shit really hits the fan.

Especially while unemployment is paying $2400/month on top of your normal payment. Many workers are better off just being temporarily laid off and getting a pay raise.

$2400/month is less than $30k/year. I highly doubt any of the people getting laid of from Patreon are getting a raise by going on unemployment.

Re: Patreon lays off 13% of workforce

#13

Post by slg »

tempsy wrote: post #4

This company never made sense to me from a “venture scale” perspective. It’s big, sure, but are the financials really ever going to be strong enough to go public? I guess I don’t see it. Also annoying to basically admit that layoffs were basically avoidable given the “strong cash position” but made anyway to give the company a little more runway. Doesn’t look too great.

>This company never made sense to me from a “venture scale” perspective. It’s big, sure, but are the financials really ever going to be strong enough to go public? I guess I don’t see it.

It looks like the company's biggest creator brings roughly $5k a month for Patreon and only one other creator has their financials public and brings in even 40% of that [1]. There is certainly money to be made in that business, but I just don't see how they scale revenue in any large way without pissing off either patrons or creators.

[1] - https://graphtreon.com/patreon-creators

Re: Patreon lays off 13% of workforce

#14

Post by harryh »

ravenstine wrote: post #10
readhn wrote: post #3

unfortunately this is just the beginning

Why unfortunately? This all seems like ultimately a good thing, although it may be unfortunate for some individuals in the short term.

It's a good thing that millions of people have lost their jobs at what were otherwise well functioning businesses because of a global pandemic that also, by the way, is going to end up killing hundreds of thousands of people?

Uh huh.

Re: Patreon lays off 13% of workforce

#15

Post by Trasmatta »

Nextgrid wrote: post #9

I don't really understand why Patreon needs so many employees. We're talking about almost 300 people to just supervise a fully automated process. The tech has already been built almost a decade ago and hasn't changed much, so it can't require that much engineering work. It's also an easy problem (take X amount of money, divide it between Y people, pay them out) and they ironed out any potential issues over the years.…

* Product is successful

* Hire lots of people because that's what successful companies do

* Product development slows way down, because you hired too fast (Mythical Man Month stuff kicks in, where adding more people to a team can slow development down, if not done carefully and thoughtfully)

* Notice that development is slow, so you hire even more people to try and speed it up

At least that's been my experience at 3 different companies.

Re: Patreon lays off 13% of workforce

#16

Post by Retric »

slg wrote: post #13
tempsy wrote: post #4

This company never made sense to me from a “venture scale” perspective. It’s big, sure, but are the financials really ever going to be strong enough to go public? I guess I don’t see it. Also annoying to basically admit that layoffs were basically avoidable given the “strong cash position” but made anyway to give the company a little more runway. Doesn’t look too great.

>This company never made sense to me from a “venture scale” perspective. It’s big, sure, but are the financials really ever going to be strong enough to go public? I guess I don’t see it. It looks like the company's biggest creator brings roughly $5k a month for Patreon and only one other creator has their financials public and brings in even 40% of that [1]. There is certainly money to be made in that business, but…

Patron seems like a classic long tail situation. The fall off to 100th place is only 1/7th the number of subscribers and 1000th place ~1/37th the number of subscribers as first place.

Patreon’s fees range from 5-12% so they could easily be making more make more money from the 10,000 to 100,000 creators than they do the top 10,000. Further, people can hide earnings which makes estimates of their finances difficult.

Re: Patreon lays off 13% of workforce

#17

Post by mdorazio »

This is interesting given that, like the article suggests, patron contributions were still growing last month. Seems like they either wanted an excuse to "right-size" and this is a great opportunity, or they're expecting a significant hit to patron contributions on the back of mass unemployment, which would make the rest of the year rather painful.

Re: Patreon lays off 13% of workforce

#19

Post by eganist »

Nextgrid wrote: post #9

I don't really understand why Patreon needs so many employees. We're talking about almost 300 people to just supervise a fully automated process. The tech has already been built almost a decade ago and hasn't changed much, so it can't require that much engineering work. It's also an easy problem (take X amount of money, divide it between Y people, pay them out) and they ironed out any potential issues over the years.…

Some of the services Patreon offers bring them dangerously close to being regulated as a lender, or even a bank. Wouldn't surprise me if some number of their staff are retained to meet any such compliance needs.
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