SmartNews, a news aggregator startup that has defied the long-standing reign of Apple and Google in this business, is reportedly trimming its workforce in the United States and China according to sources that spoke to TechCrunch earlier this week.
“Unfortunately, we are not immune to the current economic conditions that have negatively affected so many businesses. In order to maintain the health of our company and to ensure future growth, we decided to conduct a reorganization that has impacted many of our incredible employees”, a spokesperson from the company told the tech-focused magazine.
Engineering, product, and data science positions within the company were affected by the decision. The company blamed a deteriorating macroeconomic backdrop as tech firms and early-stage businesses have felt the sting of central banks’ hawkish policies.
SmartNews employs approximately 900 people which means that the layoffs are affecting at least 360 workers within the company. The firm is reportedly proposing a voluntary departure program alongside this measure but details about the benefits that those who opt for this alternative would get have not been informed just yet.
The announcement comes roughly three months after the company launched a US-focused advertising business that seeks to expand the firm’s footprint in the North American region.
Tech Firms Keep Being Slammed by a Challenging Macro Backdrop
Most tech companies increased their headcount aggressively during the pandemic as the demand for their services skyrocketed. However, shortly after the health crisis ceased, central banks were forced to increase interest rates in an effort to reduce inflationary pressures.
These decisions sparked fears that the global economy could enter a recessionary cycle and have already led to a slowdown in economic activity in most developed countries, including Japan, the United States, and the European Union.
Even though companies like SmartNews may have hoarded enough cash to withstand the current turmoil, they may also opt to reduce their overhead to make sure those reserves last for a while as it is unclear if the measures adopted by policymakers thus far will effectively stabilize the economy.
What is SmartNews?
A news aggregator is an application that compiles and organizes articles created by a large number of publishers and displays them based on the user’s preferences. SmartNews uses machine learning and other similar technology to customize the user’s experience as much as possible.
This is what differentiates SmartNews from other services such as Apple News and Google News – the long-standing leaders of this space. The company is Japan’s #1 news aggregator. It partners with over 3,000 publishers from all across the world and it already covers thousands of US cities roughly 8 years after it set foot in the North American country.
The firm reportedly serves more than 5 million users from more than 150 countries. The service is available in a web and mobile version for both Android and iOS devices. In the Apple App Store, it has received a 4.6-star rating after more than 700,000 reviews while users within the Google Play Store have rated it with 4.1 stars.
SmartNews was founded in 2012. Since its creation, it has raised more than $400 million from private investors including $230 million it received during a Series F funding round that took place in September 2019.
Back then, the firm was valued at $2 billion. The round included both existing investors including ACA Investments and SMBC Venture Capital and new ones such as the US-based VC firm Woodline Partners.
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The company generates money by selling inline and video ads. Publishers get a cut of these advertising revenues depending on the arrangement they make with SmartNews. According to some statistics, even though Apple and Google News reach a larger audience, the Japanese company’s users reportedly spend many more hours per day on average.
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