Location-based wireless marketing and content play Sonata Monday confirmed reports that it has laid off one-third of its workforce amid a rough season for ad-dependent Internet companies.
The Alley-based company, which is backed by Flatiron Partners, Prospect Street Ventures and Citigroup Venture Capital, handed out pink slips to 11 of its 33 employees Monday in a move aimed at “outlasting the current storm,” said chief executive officer Owen Davis.
Davis said the staff cuts affected the production, engineering and sales departments.
“These cuts allow us to have enough money in the bank to last, at the very minimum, for another year. It adds real survivability to the company,” Davis told Internet Advertising Report sister publication atNewYork. “It is miserable to go out there and get funding. This move ensures we last through this tough period.”
But the cut doesn’t indicate that the company is giving up hope in the future of the wireless advertising business.
“This is a segment of the industry that is ripe for takeoff and we are excited about our future,” said Davis. “We have a really strong bank account and we are concentrating now on building our revenue base before we go back to the private equity market.”
Despite Davis’s optimism, the staff cuts at Sonata is yet another indication that advertising-related Internet businesses continue to feel the heat from the ongoing dot-com shakeout.
Two other cutting-edge ad-supported start-ups that were part of Flatiron Partners’ “pervasive computing” practice — that is, emerging media — have also suffered in the current environment. Scout Electromedia, which offered a hardware device on which users could obtain lifestyle information, went out of business only a couple of weeks after it officially launched. Internet Appliance Network, which sought to help its clients provide consumers with branded Internet appliances, recently radically cut its staff and shifted its business model.
Sonata was launched one year ago by Thinking Media, a rich media technology company founded by Davis and his partner Vid Jain with some $5 million in start-up funding.
Several other firms are in the location-based wireless marketing space, including Stamford, CT-based i3 Mobile, and WindWire, out of Research Triangle Park, NC.
Ryan Naraine is an Assistant Editor at internet.com’s atNewYork.
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