5 ms·

Article is bs. they lost 44m in _2014_. Raised 77m last year. They may need to raise more in 2016. Nothing else. No other facts. No info on their balance shee

Article is bs. they lost 44m in _2014_. Raised 77m last year. They may need to raise more in 2016. Nothing else. No other facts. No info on their balance sheet, etc. Doesn't even know if they're growing, what their revenue or losses for 2015 were. And based on that, Fact thinks that's enough to say they "may be forced to close".

raesene4 11y ago
I'm not sure I'd agree there's no other facts. links from the article include excerpts from their financial accounts which don't look good (losing 39M on a 17M turnover is not healthy). And the quote from the auditor is significant, auditors don't put that kind of thing in unless they have to as it annoys their customers to be reminded that there's significant concern over their ability to continue operations.
- rgbrenner 11y ago
  one excerpt of their P&L does not equal "excerpts from their financial accounts" (plural). And again, it's from 2014. For all we know Soundcloud was profitable last year. Maybe it's not likely.. but the article has no information at all on last year, yet they feel comfortable making this statement. The auditor statement is standard boilerplate. It applies to every company that is losing money. That's right -- if the company is losing money, they may need to raise money in the future to continue. No kidding.
  - raesene4 11y ago
    there are two excerpts from their financial accounts in there if that makes you any happier (and justifies my use of the plural :) one from the P&L and one from the staffing section The article is working on what's publicly available (there's a surprise), as they can hardly work on what Soundcloud hasn't released! My guess would be that if Soundcloud had managed to get into profitability that quickly then soundcloud would've got a press release out to say that. edit - didn't realise they were a UK company. So the full accounts and company filing history are https://beta.companieshouse.gov.uk/company/06343600/filing-history https://beta.companieshouse.gov.uk/company/06343600/filing-h... definitely their cash position at the end of 2014 was not of the best...
    - kevcampb 11y ago
      Wait... _BETA_.companieshouse.gov.uk? Company records available for free? A website that is online 24x7 and doesn't close at night? I've obviously been living under a rock
      - raesene4 11y ago
        yeah it's super useful, nice interface and all the docs are hosted on S3 which is interesting...
- pbhjpbhj 11y ago
  Do they have public accounts? I can't understand what SoundCloud could spend $60M USD on? Apparently they have over 300 employees, what do they do all day? Clearly I don't understand their operation.
  - TheOtherHobbes 11y ago
    According to the 2014 accounts the employees earn a little less than €100,000 each, on average. So there's a huge wage bill. I have no idea what they do either. Legal compliance - DMCAs, and avoiding DMCAs - seems to be a big problem. But I don't understand why they need 300 people to work on that. if they raised $77m last year that gives them another year or two of runway. But given the continuing losses the current business model doesn't seem to be working, and the burn rate is too high for long term survival without real income growth. As a user, I love finding music on SC. But I worry they'll try to make the site yet another pay-to-play streaming service, which will kill most of the interest. Becoming a sales site seems like a better move. IMO there's a big niche for a Bandcamp-but-better site just waiting to be filled.
  - zdkl 11y ago
    I'd guess interfacing with music labels and copyright holders must be a special kind of tedious. Seems to be a recurring problem of music platforms who don't fit the industry's royalty model
zekevermillion 11y ago
Agree. The article could just as well be written about any other successful high-growth company. Continued survival will require further capital investment...no sh@*t! Obviously the author is just trolling for views. If SC announces another round, and then turns a profit in 3 years, someone will write another article about their "amazing turnaround".
- x1024 11y ago
  Just like how we're now writing about Twitter's 'amazing turnaround' after only 10 years of losing money. Oh, wait...
  - zekevermillion 11y ago
    Twitter is a public company now, not a high-growth company. It's quite fair to criticize Twitter, or Zynga, for selling to the public at an inflated price based on hype -- after which their respective stock prices have languished. Keep in mind that there has been plenty of criticism of twitter from the very beginning, all while they went from being worth zero to $20 billion. The point is, criticizing a high-growth, privately-backed company like SoundCloud for losing money only makes sense if you want to criticize the entire model of venture-backed entrepreneurship.
    - x1024 11y ago
      Yes, that's what we want to criticize.
      - zekevermillion 11y ago
        OK, but that wasn't the gist of the article. The article was only about one company as if the author is unaware of how VC works, for better or worse.
        x1024 11y ago
        If we listen to you, it would seem that SC is both blameless, and - in fact - not in trouble at all. And that's all fine and well. It sounds plausible. But it seems like every company is "blameless, and things are actually going peachy... but we still need more funding". And at that point the whole thing starts to become unraveled.
npalli 11y ago
The auditor has clearly stated that it has doubts about the company as a 'going concern'. This is a technical term in auditing that implies the auditor has doubts that the company will survive (i.e, will have to liquidate) another twelve months. It's not a willy nilly "growing company is losing money" type statement, it means there is a fundamental problem in how the company is financed and operated. https://en.wikipedia.org/wiki/Going_concern https://en.wikipedia.org/wiki/Going_concern
- rgbrenner 11y ago
  By reducing the statement to that, you're overstating what the auditor actually said: KPMG said in the report that the need for more investment represented “a material uncertainty which may cast significant doubt on the company’s ability to continue as a going concern.” And again, this was in their 2014 report. So clearly they've last more than a year at this point.
- 4ndr3vv 11y ago
  I think you've misinterpreted this From your link: "This accounting principle assumes that, a company will continue to exist long enough to carry out its objectives and commitments and will not liquidate in the foreseeable future."
  - reitzensteinm 11y ago
    You've missed a negation.
- taylorwc 11y ago
  Auditors are required to issue such statements when there is no line of sight to the company being solvent (and no one can guarantee that the company can close a financing round.) I'd venture a guess that almost every startup at a similar stage to SoundCloud would have the same issue if they are audited.
  - TheLogothete 11y ago
    Soundcloud is almost 10 years old. At what point a company stops being a startup? At what point it stops being feasible for a company to operate at a loss?
camillomiller 11y ago
The problem is that now investors are asking themselves more frequently, after a few years of sight-unseen venture investing, if it really makes sense for them to keep funneling money into companies that might never turn a profit, let alone have a profitable exit at the horizon. The talk around here (let me say that again: "the talk") is that investors are getting tighter and tighter and money is not so easy to get anymore. If you follow the startup scene here you can certainly spot some worrying indicators that confirm that sentiment. Add to the mix that the traditionally conservative German/European investor is reading the same news we're all reading about the imminent burst of the Silicon Valley hyper-valuation bubble.
- rgbrenner 11y ago
  Where is the evidence that Soundcloud is or will have trouble raising money? Pandora just raised $300m in December. Deezer (france) raised €100m less than 2 weeks ago. And Spotify is looking for $500m (just 8 months after raising ~$500m) right now.
  - camillomiller 11y ago
    No evidence yet. I stated pretty clearly that it's "talk" I was writing about, and it was centered around the Berlin scene. Which is global, of course, but has its own peculiarities.
vox_mollis 11y ago
The story is larger than soundcloud. This is data point #8794390820385 that the bubble has been pricked.

raesene4 11y ago

I'm not sure I'd agree there's no other facts. links from the article include excerpts from their financial accounts which don't look good (losing 39M on a 17M turnover is not healthy). And the quote from the auditor is significant, auditors don't put that kind of thing in unless they have to as it annoys their customers to be reminded that there's significant concern over their ability to continue operations.

rgbrenner 11y ago
one excerpt of their P&L does not equal "excerpts from their financial accounts" (plural). And again, it's from 2014. For all we know Soundcloud was profitable last year. Maybe it's not likely.. but the article has no information at all on last year, yet they feel comfortable making this statement. The auditor statement is standard boilerplate. It applies to every company that is losing money. That's right -- if the company is losing money, they may need to raise money in the future to continue. No kidding.
- raesene4 11y ago
  there are two excerpts from their financial accounts in there if that makes you any happier (and justifies my use of the plural :) one from the P&L and one from the staffing section The article is working on what's publicly available (there's a surprise), as they can hardly work on what Soundcloud hasn't released! My guess would be that if Soundcloud had managed to get into profitability that quickly then soundcloud would've got a press release out to say that. edit - didn't realise they were a UK company. So the full accounts and company filing history are https://beta.companieshouse.gov.uk/company/06343600/filing-history https://beta.companieshouse.gov.uk/company/06343600/filing-h... definitely their cash position at the end of 2014 was not of the best...
  - kevcampb 11y ago
    Wait... _BETA_.companieshouse.gov.uk? Company records available for free? A website that is online 24x7 and doesn't close at night? I've obviously been living under a rock
    - raesene4 11y ago
      yeah it's super useful, nice interface and all the docs are hosted on S3 which is interesting...
pbhjpbhj 11y ago
Do they have public accounts? I can't understand what SoundCloud could spend $60M USD on? Apparently they have over 300 employees, what do they do all day? Clearly I don't understand their operation.
- TheOtherHobbes 11y ago
  According to the 2014 accounts the employees earn a little less than €100,000 each, on average. So there's a huge wage bill. I have no idea what they do either. Legal compliance - DMCAs, and avoiding DMCAs - seems to be a big problem. But I don't understand why they need 300 people to work on that. if they raised $77m last year that gives them another year or two of runway. But given the continuing losses the current business model doesn't seem to be working, and the burn rate is too high for long term survival without real income growth. As a user, I love finding music on SC. But I worry they'll try to make the site yet another pay-to-play streaming service, which will kill most of the interest. Becoming a sales site seems like a better move. IMO there's a big niche for a Bandcamp-but-better site just waiting to be filled.
- zdkl 11y ago
  I'd guess interfacing with music labels and copyright holders must be a special kind of tedious. Seems to be a recurring problem of music platforms who don't fit the industry's royalty model

zekevermillion 11y ago

Agree. The article could just as well be written about any other successful high-growth company. Continued survival will require further capital investment...no sh@*t! Obviously the author is just trolling for views. If SC announces another round, and then turns a profit in 3 years, someone will write another article about their "amazing turnaround".

x1024 11y ago
Just like how we're now writing about Twitter's 'amazing turnaround' after only 10 years of losing money. Oh, wait...
- zekevermillion 11y ago
  Twitter is a public company now, not a high-growth company. It's quite fair to criticize Twitter, or Zynga, for selling to the public at an inflated price based on hype -- after which their respective stock prices have languished. Keep in mind that there has been plenty of criticism of twitter from the very beginning, all while they went from being worth zero to $20 billion. The point is, criticizing a high-growth, privately-backed company like SoundCloud for losing money only makes sense if you want to criticize the entire model of venture-backed entrepreneurship.
  - x1024 11y ago
    Yes, that's what we want to criticize.
    - zekevermillion 11y ago
      OK, but that wasn't the gist of the article. The article was only about one company as if the author is unaware of how VC works, for better or worse.
      - x1024 11y ago
        If we listen to you, it would seem that SC is both blameless, and - in fact - not in trouble at all. And that's all fine and well. It sounds plausible. But it seems like every company is "blameless, and things are actually going peachy... but we still need more funding". And at that point the whole thing starts to become unraveled.

npalli 11y ago

The auditor has clearly stated that it has doubts about the company as a 'going concern'. This is a technical term in auditing that implies the auditor has doubts that the company will survive (i.e, will have to liquidate) another twelve months. It's not a willy nilly "growing company is losing money" type statement, it means there is a fundamental problem in how the company is financed and operated. https://en.wikipedia.org/wiki/Going_concern https://en.wikipedia.org/wiki/Going_concern

rgbrenner 11y ago
By reducing the statement to that, you're overstating what the auditor actually said: KPMG said in the report that the need for more investment represented “a material uncertainty which may cast significant doubt on the company’s ability to continue as a going concern.” And again, this was in their 2014 report. So clearly they've last more than a year at this point.
4ndr3vv 11y ago
I think you've misinterpreted this From your link: "This accounting principle assumes that, a company will continue to exist long enough to carry out its objectives and commitments and will not liquidate in the foreseeable future."
- reitzensteinm 11y ago
  You've missed a negation.
taylorwc 11y ago
Auditors are required to issue such statements when there is no line of sight to the company being solvent (and no one can guarantee that the company can close a financing round.) I'd venture a guess that almost every startup at a similar stage to SoundCloud would have the same issue if they are audited.
- TheLogothete 11y ago
  Soundcloud is almost 10 years old. At what point a company stops being a startup? At what point it stops being feasible for a company to operate at a loss?

camillomiller 11y ago

The problem is that now investors are asking themselves more frequently, after a few years of sight-unseen venture investing, if it really makes sense for them to keep funneling money into companies that might never turn a profit, let alone have a profitable exit at the horizon. The talk around here (let me say that again: "the talk") is that investors are getting tighter and tighter and money is not so easy to get anymore. If you follow the startup scene here you can certainly spot some worrying indicators that confirm that sentiment. Add to the mix that the traditionally conservative German/European investor is reading the same news we're all reading about the imminent burst of the Silicon Valley hyper-valuation bubble.

rgbrenner 11y ago
Where is the evidence that Soundcloud is or will have trouble raising money? Pandora just raised $300m in December. Deezer (france) raised €100m less than 2 weeks ago. And Spotify is looking for $500m (just 8 months after raising ~$500m) right now.
- camillomiller 11y ago
  No evidence yet. I stated pretty clearly that it's "talk" I was writing about, and it was centered around the Berlin scene. Which is global, of course, but has its own peculiarities.

vox_mollis 11y ago

The story is larger than soundcloud. This is data point #8794390820385 that the bubble has been pricked.