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Innovation Economy

Social downsizing

One firm's recent layoffs unfold on Twitter, with some people even getting job offers

By Scott Kirsner
Globe Columnist / March 29, 2009
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For several weeks earlier this month, employees at Burlington-based Mzinga Inc. sensed there was some bad news brewing. The company, which sells social media software and services to help businesses with marketing, customer communications, and employee education, hadn't been able to raise a new round of funding. Doors to executives' offices that always remained open were suddenly shut, and a board meeting was set for March 10.

"Everything came to a standstill," says one former employee, who requested anonymity so as not to violate the terms of his severance package. "Everyone knew it was going to be something significant, but we were just saying, 'What's going on?' "

The situation was pretty typical of the tense times that precede any layoff: On March 19, about 40 employees - roughly 18 percent of the workforce - were terminated as part of the company's second round of cuts in 2009. But what was unusual about Mzinga's situation was how widely it echoed throughout the universe of bloggers and Twitter users, since so many of the company's employees and customers - and the analysts who track its ups and downs - are part of the online community that shares morsels of information and "status updates" on a moment-by-moment basis. This was a layoff for our Twittery new times.

The first public hint that something might be up at Mzinga appeared on Twitter. On March 16, a Forrester Research analyst named Jeremiah Owyang wrote to his Twitter audience that he'd been hearing that "Mzinga is having financial difficulties. They need to brief me imme diately." Later that day, Mzinga's public relations manager replied, again publicly on Twitter, that she'd set up a time for Owyang to speak with executives.

Later that day, Owyang posted a short note on his blog, headlined "Expect changes at Mzinga." Without explaining what was happening at the company - he hadn't yet spoken to anyone there - he suggested that Mzinga clients and prospects "stall any additional movement till they brief me," which he expected to happen one week later. The subtext of his post was that signing any new deals with Mzinga would be unwise.

Many of the 80-plus comments appended to Owyang's blog post condemned the vague nature of his warning. "Reporting on rumors before speaking with the company is likely to tarnish unnecessarily both [Forrester's] and your reputation. Ouch," wrote Jim Cashel, founder of an Internet consultancy in Virginia. Mzinga chairman Barry Libert also chimed in, reminding the company's customers that his firm was "one of the most established businesses in the social media space."

The following day, Owyang posted a public apology, writing that "I posted without complete enough information, which was a mistake on my part."

Dozens of Twitter users linked to Owyang's apology, including Mzinga employees like Ashley Quincey, a business development manager.

Two days later, Libert published an announcement on his own corporate blog. (Echoing Owyang's original post, perhaps unwittingly, he titled his dispatch "Changes at Mzinga.") In it, he said chief executive Rick Faulk would be leaving - the two had just written a book together about the business lessons of Barack Obama's presidential campaign - and that he was reducing the workforce by 18 percent as part of a continuing effort to integrate the three companies that were combined in 2007 and 2008 to form Mzinga.

Just before lunchtime, Quincey posted another Twitter message: "Part of the Mzinga layoffs - if anyone needs someone in social media biz dev(elopment) let me know," and pointed people to her profile on LinkedIn, the business networking site. Several other former employees posted Twitter messages, or Tweets, including "I'm gone from Mzinga."

The following day, Libert posted a message on Twitter, offering to add a recommendation to the LinkedIn profile of anyone affected by the layoff. Several other companies involved in social media, including Cambridge-based HubSpot Inc., used Twitter to let laid-off Mzinga employees know that they were hiring. Other Twitter users posted messages touting the skills of former employees they knew. One read, "Need a gifted Social Media Sales Executive?" Many of these messages were "re-Tweeted," or spread by other Twitter users through their own networks.

Mzinga never wound up briefing Owyang this past week. Libert still seemed miffed by the analyst's original blog post - though he said he hadn't canceled his subscription to Forrester's research - and said he planned to brief the firm this summer, when Mzinga releases a new product.

Owyang didn't respond to a phone call last week, but Forrester's chief operating officer, Charles Rutstein, said in an e-mail that Owyang "erred by speculating and not applying the same standards of quality as would be required in a Forrester research report." But he also noted that Owyang's original post "has proven to be grounded in fact."

As for announcing the company's restructuring on his blog (and allowing comments on the post), rather than simply issuing a press release, Libert says, "We tried the very best we knew how to be as upfront and honest as we could be."

But Aaron Strout, a former Mzinga executive who left last fall to join another social media company, noted that the company never announced a smaller round of about 15 job cuts that took place in January. (The earlier layoffs had been reported on Owyang's blog, and a company executive did add a comment that confirmed them.)

This time around, Strout says, "I'm not sure Barry would have posted about them if Jeremiah hadn't forced his hand." (Libert disputes this.)

"Proactive transparency in this new age is the best thing to do," says Strout, who works for Texas-based Powered Inc. "We laid off some people two months ago. It wasn't something we shouted from the rooftops, but I did a blog post and put it up a few seconds after the RIF. I didn't do it in reactionary mode." (RIF is an acronym for "reduction in force.")

Though layoffs are always painful, there's something new going on here - especially in the way these laid-off employees weren't silent, and in the way their network of friends and contacts leaped in to help them.

It's interesting what happened to the former Mzinga employee who described to me the atmosphere at the company prior to the layoffs.

The founder of another social media company had seen his updated Facebook status, noting he was suddenly and unexpectedly in the job market. This entrepreneur got in touch with the former Mzinga-ite through a Twitter message, and this past Wednesday made him a job offer, which he's now considering.

Scott Kirsner can be reached at kirsner@pobox.com.

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