Digital media company Refinery29, facing a 5% revenue shortfall for the year, is cutting 10% of its workforce, or about 40 employees.
Company co-founders and co-CEOs Philippe von Borries and Justin Stefano announced the cuts in an internal memo. “While our 2018 revenue will show continued year-over-year growth, we are projecting to come in approximately 5% short of our goal,” they wrote. As a result of its financial pressures, “we will be parting ways with approximately 10% of our workforce.”
Refinery29, which targets a millennial female audience, is going to cut back on content “with a short shelf life,” according to the execs. “While this type of content has been driving views, it has not yielded a great monetization strategy to justify the same level of continued investment.” Von Borries and Stefano wrote that they see sustainable growth in “premium, evergreen” programming, and plan to produce more video (both short- and long-form) on that front.
In another effort to cut costs, R29 will “simplify and standardize” its technology operations. “[P]arts of our technology, specifically our back-end content management system, no longer need to be built from scratch and third-party offerings can serve our needs in a better and more cost-effective fashion,” the co-CEOs wrote.
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Refinery29 also plans to create a single, unified sales group and a sales planning and operations group.
Founded in 2005, Refinery29 has raised $125 million in funding, including a $45 million round led by Turner in 2016. Other investors include WPP, Hearst, Discovery (through its acquisition of Scripps Networks Interactive), Stripes Group, Floodgate, Lead Edge Capital, First Round Capital and Lerer Ventures.
Read the full memo from von Borries and Stefano:
Today, we wanted to share several important announcements regarding the direction of our company, which involve us doubling down on our investment in key growth areas, as well as reducing resources in other areas of our business. This will require the very difficult decision to part ways with members of the R29 team.
As CEOs, it is our responsibility to all of you and the company that we make the necessary changes that will drive the business toward long-term success. This means having a rigorous focus on both our future growth and the bottom line of the company.
It’s important to note that the overall performance of the business this year has grown in a tough environment and that we have successfully diversified our revenue streams. This includes international, which will be up over 100%; our originals business, which has grown 50%; and our direct-to-consumer business, which includes our award-winning live events and will be up over 300%. We expect all of these to be significant drivers next year. While our 2018 revenue will show continued year-over-year growth, we are projecting to come in approximately 5% short of our goal.
We’ve identified areas within the business where we can better direct our resources toward our goal of building a next-gen media and entertainment company that powerfully connects with women around the world. While these changes will affect every division of the company, the areas where we will make the biggest shifts are in our video and product and engineering strategies.
We are focusing on the production of premium, evergreen IP
Content is at the core of what we do. R29 is recognized as a leader in video — from Shatterbox to Shady. That said, the market is ever-changing, so we are putting further emphasis on where we see sustainable growth — and that is in premium IP. This means we will continue to produce more award-winning programming (both short and long-form) with less emphasis on the production of content with a short shelf life. While this type of content has been driving views, it has not yielded a great monetization strategy to justify the same level of continued investment.
We are simplifying and standardizing our technology
On the Product and Engineering side, we will simplify and standardize the technology we use to support best-in-class editorial workflows. As a company, we believe in supporting our own proprietary technology and product where we can gain competitive advantage. However, parts of our technology, specifically our back-end content management system, no longer need to be built from scratch and third-party offerings can serve our needs in a better and more cost-effective fashion. Going forward, we will re-orient tech and product resources toward differentiated data and front-end experiences that serve our audience in truly unique ways.
We are reorganizing our ad sales teams into one unified Customer Solutions Group
We have evaluated how our commercial team is organized and how we can work smarter and more proactively to deliver strong marketing solutions. This will involve key changes in the people, processes and products of our revenue teams, including the creation of a unified Customer Solutions Group and a Sales Planning and Operations Group.
All of this means that we will be parting ways with approximately 10% of our workforce. This decision was not taken lightly; it is hard but necessary for the company. Everyone at Refinery29 is an important part of our community, and we are proud of the work that each of you contributes. The people affected today are no exception, and we know they have bright futures.
To help ensure that happens, we will be working with departing staffers to provide support as they explore their next career move. We have an incredibly powerful alumni network, and we are working with our investors and partners to offer access to their resources and opportunities within their portfolio of companies.
There has never been a time when our content has been more relevant and necessary in shaping culture globally. You have all played, and will continue to play, a critical role in propelling that forward.
The strength of our brand, the creativity and innovation of this team, along with the commitment and love of our audience of hundreds of millions of women, will continue to cement our leading cultural position in the space.
Please join us in expressing thanks to our impacted colleagues for their contributions and wishing them well.
Philippe & Justin