Austin-based Spiceworks cuts workforce by 12 percent

Layoffs are related to a new strategy, CEO says

Posted June 23rd, 2016

Austin-based Spiceworks, which runs a social network for IT professionals, is reducing its workforce by about 12 percent.

In January, the company said it had about 450 employees, and planned to hire another 100 workers this year. Based on 450 employees, the layoff could affect roughly 55 employees.

In a letter to employees, co-founder and CEO Jay Hallberg wrote: "Today is the most difficult day in our 10 year history - we've had to make the decision to let go nearly 12 percent of our workforce. This decision did not come lightly."

Over the past decade, Spiceworks has built one of the industry's largest IT networks, which is used by millions of IT professionals and thousands of technology companies. Users can connect with one another, exchange information and research the tech products and services needed to do their jobs.

The service is free for users. Spiceworks, which does not disclose financial information, generates revenue through advertising.

Hallberg said the company made the decision because it is "embarking on a strategy we believe will add even more value to your day while positioning us for more focused growth." 

He said the strategy involves more standalone tools and better alignment of content, apps and community so employees can solve tech problems more quickly.

Spiceworks, which was founded by four executives of Austin-based software maker Motive Inc.,  has raised $111 million in venture capital through five rounds of funding. It last raised $57 million from backers including Goldman Sachs in 2014.

Other investors include Adams Street Partners, Tenaya Capital, Institutional Venture Partners, Shasta Partners and Austin Ventures.