To most Wired watchers, Wednesday's announcement of mass layoffs at Wired Digital was business as usual. Ever since the summer of 1996, when the company abandoned its attempt to go public, the economic news about the high-profile cyberspace player has plummeted from bad to worse.
But Wednesday's layoffs of 33 people, one fifth of Wired Digital's staff, mark a key juncture. One year ago, a consortium of private investors bailed out Wired's various enterprises with a desperately needed $20 million. This week, the bill for the rescue came due.
"The investors specified that certain milestones had to be met in a year's time," said one layoff victim. "And they weren't met."
The punishment was also a little harsher this time. Past layoffs at Wired Digital never reached above the producer level. This time, top management felt the hit, with David Weir, HotWired's vice president for content, being the first to go. And in addition to the layoffs, the HotWired Web site is to be dramatically cut back. Gone is Synapse ("where technology and culture meet"), though one of its star writers, media critic Jon Katz, will continue to contribute to HotWired. LiveWired, a sophisticated screen saver, will no longer carry original content, and a college-oriented project with Pointcast, the Push Software Company, has been ended. Wired News, the company's ambitious online venture with the Reuters news agency, will lose at least one manager and two reporters.
For the time being, Wired, the highly profitable print magazine and forerunner of the various online spinoffs, is safe, as is HotBot, the company's Internet search engine. But while simple economics is the chief reason for the latest purge, internal power struggles played a part, especially in the dismissal of Weir.
"The necessity put down by the board," said the ex-staffer, whose view of events is supported by other sources inside Wired, "gave cover for the handling of political moves that had been playing out for some time."
To be specific, say these sources, Weir, one of the few Wired Digital employees who reported directly to Wired Ventures chief Louis Rossetto, lost a power struggle with Wired Digital President Beth Vanderslice.
"Basically, what's happened is that Beth has managed to placate the investors with these layoffs, and she's done it by getting rid of any people who had more ties to Louis than herself," said the source. "Anybody who had the power to go over her head, or otherwise represented a threat to her, is gone."
Neither Vanderslice nor Weir could be reached for comment Wednesday evening. Andrew DeVries, a spokesperson for Wired Digital, denied that the layoffs were in response to investor demands.
"The investors are very happy with our progress, and the trajectory we're on," said DeVries. "These cuts are solely based on our realistic goal of making a profit by the second half of 1998, probably the fourth quarter."
DeVries also denied that there was any specific reason why Weir was let go. "There was no performance reason or philosophical reason. He was our vice president of content management. Basically, as we have streamlined our content processes, the position itself became a little less needed than in the past."
But the consolidation of power at the expense of Wired Digital employees has already spawned a new piece of jargon at the Wired Digital offices -- the "Bethmarch" -- used to describe the spectacle of employees trekking to Vanderslice's office, only to learn that they've been fired.
For the rank and file, the political infighting is just one more example of how HotWired and Wired Digital has consistently failed to focus on the underlying financial problems that have plagued the online venture from the get-go.
"If the company exercised more fiscal smarts year-round, we wouldn't have to have the annual Thanksgiving layoffs," said one staffer. "This is the second time in two years -- you'd think the suits would learn."
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