As reasons for start-up layoffs go, it’s almost near mantra status: We’ve grown so much in recent months that it’s time to stop and trim. The Electric Sheep Company is the latest to pull out that explanation as a reason for firing 22 employees, nearly a third of its staff, and shifting gears. Electric Sheep began 2007 with tons of Second Life hype, an on-stage appearance at CES with CBS (NYSE: CBS) CEO Leslie Moonves and an investment from CBS. (The $7 million round also included Gladwyne Partners.) But the machinima company also is restructuring because of a slowdown in an area that propelled much of its growth — companies marketing within Second Life. CEO Sibley Verbeck told ClickZ: “Marketing by outside brands in Second Life is something that is not seeing as much excitement [as there] was nine months ago, and that’s appropriate because the active usage base is not growing rapidly right now in that virtual world. We’re seeing a natural shake out of what projects and applications make sense using virtual worlds as a whole and Second Life in particular.” Electric Sheep has canceled its SL ad network and search engine but will continue some investment in SL services including its OnRez viewer. It’s also pulling back on virtual worlds events, outsourcing rather than keeping it in house. COO Giff Constable blogged about the moves.
Virtual Worlds News: Valerie Williamson, VP of Marketing and Business Development: “We have seen tremendous growth over the last year and this is a right-sizing of the company. … The company is very healthy and not in financial trouble.” Williamson said Sheep will be investing in its own content in 2008: “We’re also developing our own strategic content and proprietary technology.” Those efforts probably will start on SL.
In the meantime, the only recruitment ad on the company site is for an accounting professional — “Initially … the only full-time accounting professional in the organization as current transaction volumes are relatively low.”