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(Source enr.com - Date 3/23/03)

By Judy Schriener

Blue Monday hit Internet company Buzzsaw.com on May 14 when it laid off 70 employees or nearly one-third of its workforce. About 170 people remain out of 245 employed last week.

The San Francisco-based dot-com unloaded people across the board, up to the level of vice president. Buzzsaw's chief financial officer, Paul Farmer, also asked to be among those let go, because the company was no longer of a size that warrants a CFO, says Carl Bass, Buzzsaw's chairman, CEO and president.

Buzzsaw had to lay them off "to raise money in this environment and to get closer to profitability," says Bass. Buzzsaw is trying to raise $20 million in the next month or so, and the layoffs were part of the deal with prospective investors, he adds. That infusion "should last until we get cash flow positive" early next year, says Bass. Therefore, Monday's purge should be the end of the layoffs, he believes. "We're still a fairly large company," Bass points out.

The company has already received $90 million in venture capital, $15 million in its first round and $75 million in its second round. The last $20 million is "more than a promise" from current investors, Bass says.

"Last year it was 'grow, grow, grow--be as big as possible.' Now it's 'be as frugal as possible.' The competition has gone away, so you no longer have to 'outcompete' them," he says.

Buzzsaw is going to focus its energies on collaboration and reprographics services, diminishing its efforts toward e-commerce, says Bass. "They're both doing very well," he claims. "We have 5,000 to 10,000 people a day using our collaboration services...they move around between 20 and 50 GB of data per day. This is not a Web site [where people come in to read something]--this is people actually using the application." Total users exceed 125,000; total projects are more than 30,000, he says.

Buzzsaw has been accused by competitors of giving away its services, which it did initially. Users are now charged by amount of storage and number of users, with a free trial of 30 days. "Some people are grandfathered in, anyone who got in with under 25MB [of storage space]; we've honored that commitment," says Bass.

The e-commerce portion of the business is not progressing as fast as the industry first thought. "We are no longer seeing it measured in months, but years," says Bass. "We also felt that we could no longer spend money evangelizing and educating and building the market." He is leaving the advancement of e-commerce services to BuildPoint and others. "We saw the same thing in the market that they saw, but we concluded different things. BuildPoint concluded that more technology was needed; we concluded that more time was needed."

Laying off people is always tough. Buzzsaw has held two meetings in the last two days, the "before" and the "after." People are coping as best they can with the news. They are doing "whatever we can" to rebuild esprit de corps. "Yesterday most of the people went drinking, old and new," says Bass. "They're going to movies and baseball games together. They can do that [all they want], but ultimately it is a business."

(Bass also confirms that the e-mail as quoted on the renegade Web site www.f#&*edcompany.com--only really spelled out--really did come from him.)

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