App.net on Tuesday announced some bad news and good news, a least for some. The bad news is that it has to lay off its entire staff, and the good news is the for-pay social service isn’t going anywhere.
App.net’s decision to lay off workers comes from not having enough subscription renewals to keep a fully funded full-time staff. Not only is the company laying off all of its employees, but its co-founders, Dalton Caldwell and Bryan Berg, also announced they’ll no longer take a salary.
“After carefully considering a few different options, we are making the difficult decision to no longer employ any salaried employees, including founders,” the co-founders wrote in a blog post. “Dalton and Bryan will continue to be responsible for the operation of App.net, but no longer as employees.”
App.net’s social network and developer-friendly platform launched in August 2012 with roughly $800,000 in crowd-funding support from more than 12,000 backers. The service borrows from Twitter in style and function but asks people to pay for their freedom from advertisers.
Developers, who are also asked to pay, are incentivized with the promise that, unlike Facebook or Twitter, App.net will never cripple their applications. In fact, developers are encouraged to build applications that replicate and expand on the basic App.net offering.
About a month after App.net’s launch, it debuted a financial incentive plan to persuade eligible App.net developers to build apps on its APIs by offering to pay them $20,000 a month. As part of tightening its belt, the company also announced Tuesday that it’s “winding down” this program. To keep things running, App.net will employ contractors for support, operations, and new development projects.
While the layoffs must come as a blow to the fledgling company, its co-founders appear determined to keep their product up and going. The subscription renewals were enough for the company to stay profitable and self-sustaining going forward and, as Caldwell and Berg wrote, “App.net will continue to operate normally on an indefinite basis.”
“We continue to believe in the usefulness of a sustainable social platform where users and developers are customers, and not the product being sold to advertisers,” the co-founders wrote. “If this were a company without a clear business model, App.net would have disappeared long ago. The market conditions that were the driving force behind App.net’s creation have not changed, if anything, there is more of a role for a social platform like it.”