Cheezburger_LogoCheezburger today announced that it is cutting 24 employees, or about 35 percent of its staff, as it struggles with the changing economics of more people viewing content on mobile devices.

“We have seen a pretty big transition in our audience from desktop to mobile, and we are going to continue to see that for years to come. We need to restructure the company to be set up for that,” said CEO Ben Huh.

In an interview with GeekWire, Huh said that the Seattle comedy network remains the largest humor site on mobile. But because ad rates are lower on smartphones they’ve not been able to re-position the business.

“Mobile continues to grow, but the revenue we generate from it is significantly less,” Huh said. “We want to take this year and think about how we can generate similar returns in mobile, or else you are going to have the case of one part of your platform subsidizing the other.”

Cheezburger CEO Ben Huh
Cheezburger CEO Ben Huh

Cheezburger raised $5 million last December, which followed a $30 million round in 2011. It now employs a little more than 40 people.

As part of the layoffs, Huh said that they plan to restructure the engineering operations in order to have more of the staff at the company’s Seattle headquarters. The company also recently tapped Jeff Brown, formerly of Valve and Gas Powered Games, as CTO. He replaces Scott Porad, who left the company last year.

Huh said that the company is in a strong financial position, and that today’s cuts will help put it on a more solid footing.

“I want to build a long-term business. I am not here to pump up the numbers, and sell it next year,” Huh said. “This is really hard for everybody and we are letting go of some really good people, but at the end of the day I need to do what is right for the business, and if that means cutting back now to take advantage of the mobile world, I will do it now.”

Cheezburger continues to operate about 50 comedy sites, including Fail Blog and The Daily What. It is best known for I Can Haz Cheezburger, a collection of cat photos with funny captions.

Huh said they likely will not launch any new branded sites, and they are moving away from the “separate site approach.”

“Instead of a creating a new Fail Blog, which is called something else, we will probably end up with more categories,” he said.

Here’s the press release:

Cheezburger, one of the largest social humor sites, today announced its plans to prioritize its mobile initiatives and reorganize its operations into one centralized team based in Seattle.  As a part of this effort, Cheezburger is eliminating 24 positions across the organization.

“Eliminating these positions was a difficult decision,” said CEO Ben Huh. “For Cheezburger to fulfill its promise, we need to be nimble and innovate on one platform optimized for any device, everywhere. Bringing our team in-house and streamlining operations will help us realize that vision.”

Cheezburger’s mobile usage has doubled from last year, achieving the top spot in comScore’s mobile humor category. The company is focusing its revenue model on high-value, marquee partnerships with advertisers seeking to drive deeper engagement with users.

Cheezburger has appointed two new executives to help drive this next phase of operations and strategy for the company. Cliff Sharples, who previously served as Vice President of Product has been promoted to Chief Operating Officer in addition to seasoned technology veteran Jeff Brown, who has been named Chief Technology Officer.

“Cheezburger serves millions of people every day with the best collection of humor sites on the Web,” said board member Greg Gottesman, Managing Director of Madrona Venture Group.  “We are confident that Cheezburger is focused in the right direction and fully support the team.”

Comments

  • James Todd

    Maybe my math is wrong but if you layoff 24 employees out of a little over 40 (lets say 44), how does that equate to 35%. I know if sounds nicer to say 35% but the harsh reality is ICHC is cutting almost half of their staff. Will this be one of the “mobile killed the web star” stories in a year….

    • do the math

      24 / 35% = 68-70 employees before layoff. Now there are ~44.

      • Harrison

        It seems like the author of the story should be more clear about the numbers since he says they employee about ~ 40… either way they will be on Fail Blog soon enough.

        • johnhcook

          Thanks for the comments. I followed up with Ben Huh, and he said the company previously employed 67. Now, given that they have cut 24, the employee count stands at 43.

          That’s roughly a 35% reduction in the workforce.

          Thanks again.

          • http://startedinseattle.com/ ChetCrunch

            It’s frustrating that after a mildly upsetting article about a great local company having a tough time adjusting to the mobile world, some of the comments are focused on fairly irrelevant numbers/percentages. My mom always said if you don’t have anything smart to say on tech blog comment feeds, don’t say anything at all. (Or something like that) :)

          • gingerspice

            Great local company? It’s not an evil empire, but by no means is it a “great local company.” They pay absurdly low wages, offer no job security, and have no respect for their employees (many things were overheard between Ben and his investors basically mocking his employees.)

            But the worst offense was taking something was funny and original, monetizing it, and beating it into the ground till it was a mockery of what was originally great. Ben really is not a funny or creative person, he’s just a smart businessman and capitalist. He just acts like a geek because he found a way to make money off of it. Leeching off a culture for profit.

    • http://www.facebook.com/andyfortson Andy Fortson

      It says now employs about 40. I’m assuming that number is after the layoffs. So eliminating 24 out of 64 jobs means about 35% was cut and 40 remain.

      • johnhcook

        That’s correct. Just got more info from Ben Huh, and included that in the comment above.

        • http://startedinseattle.com/ ChetCrunch

          Wow.

    • friend of a friend

      I know the numbers have since been explained, but it might be worth mentioning that in the months leading up to this layoff, between 10-20 other employees were let go.

  • VCAnalyst

    $30 million and only 40 employees. Your employment costs should be less than $4m a year with those numbers. SO you should have a TON of cash left.

    Dud…

    • daman

      a lot of that 30MM paid off earlier investors. they dont have 30MM in the bank, but a mere fraction of that.

      • guest

        Sounds like Brad Feld and Madrona got a raw deal.

      • VC

        Suckers…

  • UCannotHazChezburger

    Sinking ship. The departures of the executives was an early sign. Strange that he says that their revenue is lower from mobile. CPC on mobile is way higher than web, they should be making a lot more. Furthermore, looking at Zillow, they have seen an increase in mobile traffic.

    The truth is the Cheezburger no longer has the traffic to support its previous valuation. Their traffic has declined significantly in the past year. They have no market share in mobile and are losing market share in web to sites like Reddit, Buzzfeed, etc.

    Perhaps more time spent on running the business instead of trying to do a reality tv show. Opportunity cost of lost time? Priceless.

    • Skeptical

      Of the few employees that remain after this, how many are going to stick around? They now have to do much more work than they did before the restructuring at the same pay. And even if those people leave, Cheezburger is going to have to scramble to find replacements to make this money making transition. I doubt anyone with the least bit of talent will consider taking a job there now — there’s so many thriving companies in the area that will offer better pay and benefits.

  • Former “Burger”

    As someone who was being told they’re no longer working for Cheezburger while this article was being published I’m deeply hurt to know that my former employee cared more about PR.

    I fully believe I dodged the bullet as they say.

  • Squarely

    Excuse me…what do they do?

  • http://www.facebook.com/mark.mackay.5437 Mark MacKay

    I can haz unemployment benefits?

  • NoCheezPleez

    Interesting that Ben Huh was quoted so extensively in this article because he was not available to personally communicate the layoff notices or speak with his remaining team. Apparently, doing trust falls in Belize at a CEO retreat is a better use of time. #leadership.fail

  • Fred Galstrom

    What a liar and a fraud. Mobile makes up less than %15 of their (dramatically sinking) traffic. What an epic failure this is. Ben and his insufferable wife built this POS cake and now they have to eat it.

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