CouchSurfing CEO steps down amid layoffs, uncertainty

After a controversial move to incorporate as a for-profit company, CouchSurfing is reeling from a round of uncertainty. CEO Tony Espinoza has stepped down, appointing community experience manager Jen Billock as interim CEO.

The transition also comes with layoffs, rumored to be around 40% of staff. This would bring the head count to around 20 people, with a rumored 3-person engineering team – a significant drop after two recent financing rounds totaling $22.6 million.

So what happened?

After the latest round on August 22, 2012, the company blogged that the money would be used “to maintain our current staff and add new employees without needing to worry about our finances.” Clearly this increase in staff didn’t work out as intended, and the company was not able to most effectively leverage this new liquidity into the growth they intended.

By the numbers, the CS community doubled under Espinoza.

However, according to unconfirmed sources reported on TechCrunch, the company was facing a $800,000 burn rate with the newly boosted staff numbers. This was clearly untenable, as the cash runway was diminishing very quickly. By laying off a significant number of staff, the company is aiming to have more time to figure out the correct direction for the company.

The identified direction prior to this was fixing the slow, clunky website. As the company mentioned in the aforementioned blog post, the focus was “on making a website that’s a more sustainable home for our community: one that works reliably, and easily.” However, the company now seems to have changed their tune, perhaps suggesting that the all-in investment in the web product was not the best move – and that mobile is the future of the company.

In an email to the CS community, Espinoza pointed to mobile as the new direction. This means that the team can more adequately direct resources and manage the community with a more small-scale investment in technology products.

From Espinoza’s letter, where he explains the choice of Billock for the hot seat:

“Late last year, I realized Couchsurfing’s rapid organic growth required that we crystalize and strengthen our core values — the foundation for everything we do. It was at this time that I reached out to long-time colleague, Jen Billock, whose proven track record as a compassionate startup leader made her the perfect candidate to focus on our community and transform the way we work from the inside out.”

Billock followed the letter with one of her own, speaking to the value she places in technology.

“There is nothing in the world that I value more than the power of human connection, and, like a good tech start-up junkie, I believe in the power of technology to facilitate that and to make the world a more open place. Couchsurfing does that in profound ways. I have the pleasure of seeing it every day. Under Tony’s leadership, the global CS community has doubled, which has been incredible to watch.”

The CouchSurfing “meltdown”

Since transitioning to a for-profit company, there has been plenty of consternation from both inside and outside the community.

In a recent article on Tnooz, contributor Drew Meyers pointed out that the company needed a wholesale shift in strategy because it was clearly losing. Meyers suggested firing the top execs, hiring within the community, and going on a CEO roadshow to more fully engage and understand the community. Two of these happened this week, so there’s the real possibility that this shakeup might lead CouchSurfing back down the virtuous path.

There are other detailed documentations across the Internet of what one blogger calls the “meltdown” of CouchSurfing. Highlighting the stumbles of the leadership trying to navigate how to create a for-profit company out of a community that had been existing as a non-profit for over a decade prior.

From the blogger:

“The level of anger and negative comments on this forum was becoming embarrassing, and they decided to simply delete the whole thing at the end of February, with very little notice or explanation. Instead, they asked that members email them feedback directly, participate in a private “Beta group,” or use other channels that would be out of the public eye.”

This led to certain closures of forums that had previously been used as means of sharing displeasure with the developments in the community. One community manager saved the forum, and reposted elsewhere, only to receive a DMCA takedown notice from the CS legal department.

Other community management strategies left the community disturbed by the company’s actions – including one employee named Sam Houston that was posting on non-CS sites in support and defending the company strategy.

These sorts of machinations clearly have led to a rift in management, and community grumblings likely contributed to the shakeup at the top.

So far, the CouchSurfing transition from non-profit to corporation has been plagued with problems, and, even with a full rebranding, has severely impacted the trust and perception of the brand. Turnaround is the next step, and it will be up to Billock to set that in motion.

CouchSurfing did not immediately respond to a request for comment.

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Nick Vivion

About the Writer :: Nick Vivion

Nick helps brands blog better at Ghost Works, a boutique blog management service. Nick was previously the Director of Content for tnooz, where he oversaw the editorial and commercial content as well as producing/hosting tnoozLIVE.

 

Comments

  1. tamara spieling

    Interesting that Drew Meyers uses his criticism for one exploitative for-profit business to try to drive business to his own for-profit site. Deja-vu.

     
  2. Kasper Souren

    I saw this coming back in 2007. Fortunately BeWelcome is a good non profit alternative hospitality exchange network, that will stay non profit as it’s directly controlled by the community itself (which makes it practically impossible to ever take the for profit route). CS never was much influenced by the community, the community just had more room since there was not enough direction to change anything on the site. The for profit “conversion” would have never happened if CS would have had the slightest input from the community.
    Since CouchSurfing “converted” into a C corporation BeWelcome has seen more growth, for years people were sceptical as “CS was a non profit already”. Now because CS failing BW is getting more and more room to thrive and now has over 50,000 members.

     
  3. Aine Creedon

    Also you should be aware that almost all of the older Ambassadors on Couchsurfing (as well as the hundreds of people I knew in the community) have stopped using the site since the transfer to for-profit. Although the organization will keep denying it, they started deleting negative comments on communities and even deleted profiles of Ambassadors that were trying to voice their concerns about where the company is going – could you imagine if Facebook deleted every post complaining about Facebook? It’s disgraceful as a social network, and violates freedom of speech. I’m an Ambassador myself and for the last eight months I have text at the top of my profile saying I no longer support the company and the direction they are going in…and about a month ago they finally removed Ambassadors and who knows what they will do next. They have completely dismantled everything I loved about the site, that the community itself appointed leaders of smaller communities within cities and the groups where people could plan events and Couch Crashes. I really think there’s no going back, I’d love to see some date on if the website activity is still increasing because I’m sure they have new users trying to get free lodging…but they completely lost their dedicated users and community

     
  4. Alex Bryukhanova

    It’s a bit sad to see such an amazing community catch flames like that. I truly hope they figure it out and recover. Maybe it would have been better if they were integrated into another for-profit company that could support them financially? Although it’s hard to find a company that wouldn’t be tempted to stamp their brand and ideas all over CS. 🙁

     
 
 

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