Analysis: Oversee.net Cutbacks a Sign of the Times
Monday, August 18th, 2008
Oversee cuts 10%; domain companies need to tighten the ship.
It’s never fun when companies lay off staff. The first company I worked for out of college called a Saturday meeting to lay off 33% of the company. Worse, I was on the finance team that had to figure out how much fat to cut.
The news today that Oversee.net cut 10% of its staff isn’t a big surprise to me for a number of reasons:
1. The company acquired Moniker and SnapNames. There are overlapping roles there that were planned for consolidation in the financial models that made those deals profitable.
2. The company took on $150 million in investment and investors always want lean operations.
3. The domain parking business, a large part of Oversee.net through DomainSponsor, is in the tank.
4. The company really got soaked on SnapNames since it lost Network Solutions and Enom.
What’s the next shoe to drop? I think it’s sponsorship of conferences. For a long time domain companies haven’t calculated the ROI of plunking down cash for a booth or sponsorship or sending 10 people to the show. I’ve talked to the heads of a couple sponsors of conferences who say “yeah, it’s not worth it anymore”. They used to get a lot of people to sign up for their services at these shows, but now everyone knows about them. They get very few sign-ups. It may be worthwhile for companies new to the scene, but not very important to other companies.
The excesses of domain parking have made it such that companies haven’t thought twice about dropping $10k on a party or $25k on a sponsorship. But that will change.
The companies that will weather the storm are the ones that diversify and run themselves like real businesses. Don’t look at Oversee.net’s cuts as a sign of weakness; look at it as a sign of strength.