With less than 50 days to go, Chance the Rapper may very well save SoundCloud.
Yesterday, citing unnamed sources, TechCrunch published a damning article. SoundCloud founders Alexander Ljung and Eric Wahlforss made a stunning confession at an all-hands meeting. After firing 40% of its staff (173 employees), the company had only fifty days left in cash reserves.
Now, to avoid seeing the company close its doors, Chance the Rapper may save the company.
On his Twitter account, Chance the Rapper wrote,
I’m working on the SoundCloud thing
— Lil Chano From 79th (@chancetherapper) 13 de julio de 2017
The vague tweet quickly set off a firestorm on social media. Several people believed that the rapper may have a plan to save SoundCloud. Adding fuel to the fire, the rapper didn’t provide any additional details.
Earlier, Chance the Rapper has donated heavily to public causes. That includes more than a million dollars for the Chicago Public School system.
But how bad is the situation at SoundCloud?
Following the initial article’s publication, SoundCloud quickly spun the news in a positive light. In a statement to Variety, the company claimed,
“There are a number of inaccuracies within the TechCrunch article. They seem to stem from a misinterpretation of information by one or two laid off employees during a recent all hands meeting.”
Taking a closer look at the statement, however, SoundCloud has failed to cite the article’s “number of inaccuracies.” It also spun its recent dismissals of 173 employees, stating that it had only laid off “one or two…employees.” In addition, company representatives stayed silent on the recent closure of its London and San Francisco offices. Instead, and without providing clarification, the company simply stated,
“To clarify, SoundCloud is fully funded into the fourth quarter.”
Pushing back against the company’s “fake news” claims, TechCrunch writer Josh Constine slammed SoundCloud.
“SoundCloud has clumsily attempted to refute our TechCrunch article on its financial and morale problems by issuing a statement to Variety saying our post contains ‘extensive inaccuracies.’… We never said it wouldn’t support these employees, merely that it uprooted people’s lives by hiring them and then laying them off weeks later. TechCrunch stands by its reporting.”
This isn’t the first time that the company has denied damning news stories.
Underscoring the company’s poor business model, multiple important executives have jumped ship this year alone. Several months ago, the German streaming platform lost its COO along with its finance director. In an attempt to save face, the platform released a statement over the departures:
“After five or so years, they felt it was time to move on to new adventures.”
Most recently, top executive Stephen Bryan suddenly, and inexplicably, resigned from the company. He joined YouTube as the Head of Label Relations.
In February, a source close to a top German investment bank spoke to the Financial Times. SoundCloud had reportedly begged investors for $250 million in a desperate fundraising attempt. One year ago, the company was reportedly valued at $1 billion. Again, as with the TechCrunch article, the company simply called the Financial Times report “fake news.” In yet another attempt to save face without properly clarifying the story, it slammed the reputable newspaper.
“The Financial Times relies on one anonymous source to tell an inaccurate story about SoundCloud. SoundCloud is currently fundraising, which is typical of most startups of our size and in our phase of growth. That the Financial Times would compromise its journalistic standards to include an anonymous quote characterizing this normal course of fundraising as ‘desperation’ is disappointing and surprising for a newspaper of record.”
As of this writing, SoundCloud faces a bleak future. The company currently operates under the weight of a very heavy shadow. Earlier this year, Alexander Ljung admitted to investors that the company may very well soon go bankrupt.
“SoundCloud may run out of cash earlier than December 31, 2017… These matters give rise to a material uncertainty about the Group’s ability to continue as a going concern.”
Will SoundCloud close its doors? Deezer has emerged as a “frontrunner” in possible acquisition talks. Should the talks fall through, and without a sustainable business model, Ljung’s threat may come true. It appears that it’s only a matter of time.
Digital Music News has reached out to SoundCloud for comment. As of this publication, they have yet to issue a formal statement.
Image by Julio Enriquez (CC by 2.0)