The bomb-shelter mentality among startups is now so severe that even companies raising money are announcing layoffs in response to diminished economic prospects. Boston-based Helium just closed a $17 million series A financing about ten days ago, and then cut 30 percent of the organization (18 people) last week. CEO Mark Ranalli tells me:
We expect a deterioration of overall ad rates, and a slowing of the economy in general. Our approach was to take a third of every group across engineering, customer service, and sales.
Ranalli has been raising the $17 million piecemeal over the past year from hedge funds, family trusts, and wealthy individuals. The last $2 million came in two weeks ago. Combined with the current cuts, Ranalli believes he has enough to make it to profitability.
Helium is a reference site filled with general-information and how-to articles. It competes with About.com, but instead of hiring professional writers, Helium’s articles are written by members of its community. The best articles are voted to the top by the community, but in a way that makes it difficult to game the system. Instead of being able to vote up your own articles or those written by your friends, readers are given a random sample of articles and asked to compare them in pairs. This A-B approach filters the best articles to the homepage. (Helium spinoff OurStage applies this same system to finding the best raw musical talent.)
Since it launched two years ago, Helium has attracted 130,000 writers who have contributed 1.2 million articles. Most of those people only write once or twice and then go away, but Helium has managed to cultivate a core of about 10,000 active writers. And it has pared down that 1.2 million articles to 800,000. About a quarter of the submissions are just not even worth keeping. The writers get a split of ad revenues on their pages, which isn’t a lot given that the site gets on average $2 for every thousand pageviews. Ranalli plans on rewarding top-rated writers a little bit more by paying star-rated writers a token amount up front (50 cents to $2.50 per article), in addition to the revenue split.
According to comScore, Helium attracts only 859,000 unique visitors per month in the U.S. (Ranalli says the internal number is closer to three million a month). Traffic flattened for a few months when Ranalli decided to let the site grow organically instead of pumping up the numbers with marketing dollars. Now, he says, October looks like it is going to be Helium’ strongest month ever.
But advertising is not the only way Helium makes money. It also hosts a marketplace for freelance writers where publishers, newsletters, and even offline newspapers and magazines can bid for talent. Helium members can go there and offer their writing services and typically get anywhere from $30 to $300 per article, with Helium collecting a 20 percent fee. Says Ranalli:
It is only about six months old, and it just eclipsed our ad revenue.
These days, every penny counts.
See all
Post
The layoff was first mentioned here;
http://www.fuckedstartups.com/.....ge-layoff/
Sounds interesting, actually - I mean, Helium’s business model, not the layoff. This is the first time I’ve heard of Helium & I’m interested in trying out its service - but only if they don’t charge registration fees to the writers like Blogit.com
I’m a long time writer for Helium. I’ve had great experiences with it… there are no registration fees. I have about 300 articles published on the site and earn about $50/month. However, I’m a highly rated writer in well paying areas… so not everyone will see that income. Good luck!
I have to wonder if the RIF was demanded by the funders.
Helium in many ways is a good service but it didn’t let me save my half finished articles. Maybe I am missing this but often I would like to write something but don’t have the time to write, edited it and then publish it at the same time. A save for later option would be money. Furthermore the profit sharing sucks. You could wirte 10 articles and paid nothing for it. They should go 80/20 for the user which would increase the incentive for people to put the effort in.
If you are a good writer you might as well just blog where you get all the ad dollars.
I’m looking for writers…anyone interested?
Can you name any really successful websites that use a black background with off white text? Seriously it is hard on the eyes. Looks cool for a second but not very functional for reading.
I know what you mean and that’s why I’m in a process of re-design it it. Thanks for the feedback.
Just my 2 cents, but I prefer off-white text on black or dark grey backgrounds. I have some of my oft-visited sites set up that way: wikipedia, google etc. I find the darker backgrounds easier on my eyes compared to white backgrounds.
Helium had 110 employees?! This is a fabrication spun by management to attempt damage control in the press. (After all, they let their PR person go too.) I was one of those let go. They had 40 employees, on a “good” day. More like 35. They let 18 people go. Do the math. 18 out of 35-40, is more like 50-51% laid off. Helium has several dedicated community members who (virtually) volunteer their time to help the site run, but they cannot be considered employees - after all - no overhead, no benefits, no salary!!! I suspect including these helpful community members/site stewards is how they came up with the other 80+ employees to give that bogus number. Spin spin spin… (shaking head)
they make about 8M page views/mo
@ $2CPM that’s about $16k/mo revenue - so they only need to fire 95% more of the remaining staff
Makes sense though. Investors nowadays want to make sure the company they’re putting their cash into is a lean organization.
I wrote over 200 articles for Helium before I realised how poor the earnings were. I now write on HubPages instead, where the earnings are significantly more and you keep control of your articles (unlike Helium, where you can never delete them).
The site does rely very heavily on volunteer stewards who virtually run the forums, and manage and mentor the writers. I’m surprised they had as many as 40 staff!