With More Investors in the Tent, Motricity Undergoes Painful Changes

DURHAM - As the news broke Friday about soon-to-be announced massive layoffs at Motricity, The Skinny couldn’t help but think about the old Arab proverb about the camel and the tent.

If the camel is allowed to get his nose in the tent, watch out. His huge body is soon to follow.

So it is at Motricity, which has continued to evolve as more and more investors have been taken into its collective tent with $300-million plus in venture financing.

While Ryan Wuerch, the chairman and chief executive officer as well as founder of the company that became Motricity, remains in charge, few people know how assertive new investors such as Carl Ichan are being behind closed doors at board meetings.

Word leaked to WRAL Local Tech Wire and WRAL.com about massive layoffs across Motricity’s holdings. In a company of 600 people or so, layoffs in the three figures is huge. Plus there’s talk that Motricty’s still-new tent – er, headquarters - is in play with the possibility it might be relocated to Bellevue, Wash.

That city is where the mobile business unit of InfoSpace is located. Motricity bought the group last year and made its chief, Steve Elfman, Motricity’s No. 2 guy.

Unfortunately for many Motricity workers who signed on before the InfoSpace buy, the acquisition led to a jump in headcount to more than 600, reportedly a huge increase in the company’s cash “burn” rate, and much duplication in effort.

Now that the merger is complete, Motricity management is preparing to trim expenses.

The company has gone through jarring changes before, including a previous layoff of some 16 percent in personnel.

Why so many cuts? Well, Motricity is changing a business that is a moving target. Content for mobile devices is hardly a stable market, and every time someone breathes a new mobile device is being created. Since Motricity provides application to get providers’ content to those phones, smart phones, BlackBerries and more, its development team is working at one furious space.

When Motricity closed on a whopping $185 million last fall and used much of that to buy InfoSpace, the company seemed to be preparing itself for a Wall Street exit – an initial public offering. But first the company has to reduce the burn rate and adjust its focus even more tightly on its core business – application services, not content.

That message isn’t new. It’s been sounded since even before Motricity recently sold its eBook unit.

But many more changes are afoot as the investor camels work their way ever deeper into the Motricity tent and Motricity management prepares to move the corporate tent to stay with the evolving mobile market.

Unfortunately, it appears a lot of people will be left behind.