Crisis at Steemit Inc (STEEM) : 70% Employees laid off

Steemit Inc announced that 70% of their employees were laid-off due to the company restructuring. It is clear that there are major issues at the company. We did some analysis on the reasons for the layoffs and also took a deep dive into the future plans of the company. 

Reasons for the Lay-offs

• Market Collapse – Unfortunately, the price of STEEM dropped 97% (from $7.31 dollars in January 2018 to $0.24)
• Budget Shortcomings – Steemit Inc held substantial amounts of the cryptocurrency STEEM. As employees are paid out in fiat, this meant the company couldn’t cash out enough STEEM to pay for the employees
• Company direction – the company focused on two fronts – blockchain development AND website development. Unfortunately they couldn’t master both. 

Long Term problems

• The company is doing too much blockchain development – developing blockchain features (Database migration, Smart media tokens (ie ICOs on Steem)), Developing DAPP (steemit.com),
• Costs of API maintenance – the company maintains APIs for free (Steem API) which is expensive
• Steemit.com is a full-blown social media project and is hard to maintain.
• they don’t have resources/management skills to manage both sides well

Solutions

• Cut down the scope of new features (Steem Media Token ~ lite edition). 
• Sunset on Steemit.com website / Dapp.
  • Ned said the infrastructure of can never scale to compete vs Instagram 
  •  “Destiny” a new app to solve core issues with steemit.com is now abandoned because of the lack of resources

Future Goals 

• Goals to improve the adoption of blockchain – transfer of value / store of value
• encourage other applications on steemit that further censorship resistance
• Increase usage of Steem as currency. how to grow the currency

Competitors

Various competitors in the social media space have also sprung up this year. One of them is Mithril, an ethereum based social network which focuses on fair-reward for content creators. Other social media services such as Dlive have migrated away from the Steem blockchain in favor of alternatives like Lino. 

Conclusion

Steemit Inc had to make some tough decisions. After setting the core direction of blockchain development, everyone else was cut. Moreover,CEO Ned Scott was unnerved during the livestream Q & A session, especially considering a majority of their employees are leaving leaving. This sets a dangerous precedent at the company and goes to show that financial management and prudence – including not speculating on their own currency is key to the successful running of any company. Questions over how the company can generate income to sustain long-term development remains.