Native Instruments last week cut 20% of their workforce, as part of a “One Native” strategy that is leaving some customers and media uncertain about the direction of the company and its products.
Here in Germany, news of the layoffs spread quickly. On top of a handful of layoffs over the past couple of years, roughly 100 staff were cut in a single-day reorganization. (Closer to 150, or 30%, have been cut this summer, according to sources familiar with the layoffs.)
Over the course of Thursday, those employees learned the news, most in the Berlin headquarters. With cuts this deep, news spread to social media, but in absence of a public statement, there was little to report.
Native Instruments delivered a statement to CDM on Monday, included unedited below.
It’s murky on details about products, however. I am in touch with NI about the reorganization, and requested more clarification from NI and its executive team. I haven’t yet received that information.
The summary, as we wait:
Revenues continued to grow for NI through 2019, so any snap analysis you may have read online that this is in response to financial trouble are likely misguided. NI says they made these cuts as part of a refocused emphasis on a “new, unified, and fully integrated platform” coming next year, and what it terms their “One Native” strategy.
So, NI has silos and divisions in their organizational chart that don’t fit their future product plans. This has happened in NI’s portfolio before, for those of us who have followed the company for many years.
The challenge is, the current cuts NI is making – across Sales & Distribution, Marketing & Product Management, Administration, and Engineering, according to the statement – reduce some of the talent inside the company. They have an ambitious plan, in other words, and now with fewer people remaining, all reorganized into new teams. I expect that will raise some questions among both customers and partners in their third-party ecosystem about their ability to deliver.
It’s also unclear what this platform will be. It’s not sounds.com, exactly – the press statement says it will “include” elements of that. It may also include technology or elements related to recent acquisition Metapop, a collaborative online space for sharing tracks and holding competitions. The statement says this online service will connect the company’s “existing ecosystem of … software and hardware” to some kind of “centralized online platform.” For those invested in current products, though, that doesn’t provide a lot of clarity – least of all when some of the people developing those products you use were just laid off.
To state the obvious, this has come as a blow to many in the tight-knit community around music production technology. These are partners and friends to basically anyone working closely with this industry. The tools in question are an intimate part of music making for many of you.
I will keep asking questions in the hope that we get a clearer picture of where Native Instruments, the organization, and NI’s product lines are headed in the future.
I’ll share answers as soon as I have them, as accurately as I can.
Here is NI’s initial statement:
Native Instruments centralizes organization and reduces global headcount to focus on platform strategy
Berlin, August 29, 2019 – Native Instruments, the world’s leading provider of software and hardware for computer-based music production, announced today a plan to centralize their global business operations, which includes a headcount reduction of 20% across all locations. The key reason for this difficult decision is to create the right organizational setup to focus on the development of a new, unified and fully integrated platform on which the company’s entire portfolio of products and services will be available next year. This change comes despite growing revenues in 2018 and the first half of 2019, but as a response to an increasing cost structure due to the company’s previous divisional setup and multi-brand approach.
“Today is a very emotional day for the Native community. We’ve been driving innovation in music creation since the 1990s. First through software instruments, then by expanding to an integrated ecosystem with complementing hardware and now by creating a unified platform experience for the modern music producer,” said Daniel Haver, the company’s CEO and co-founder. “To make this transformation successful, we needed to adapt our strategy, including a centralized functional setup that can support our vision of ‘One Native’. Unfortunately, this also means we had to make some tough decisions and part ways with a number of employees. This has been the hardest part of this transformation,“ he added.
Global headcount reduction of 20%
As a consequence of the company’s newly centralized organization to focus on its future strategy, Native Instruments had to make the difficult decision to reduce its workforce by around 100 employees across all sites. With most of the affected employees located at the company’s headquarters in Berlin, the departments that were impacted by the consolidation include Sales & Distribution, Marketing & Product Management, Administration and Engineering. All employees were informed about these changes on Thursday, August 29, 2019. The company regrets the impact this has on their employees, their families and the community. In addition to severance packages and outplacement services, Native Instruments has also established contacts with other Berlin-based companies that are currently looking for highly qualified personnel.
“This was the most difficult decision we had to make in our entire history, as our past successes have been enabled by the work of some of the best and most passionate people in the music industry. We thank all employees for their commitment, hard work, and their high degree of loyalty to Native Instruments. We are fully committed to doing all we can to take care of our employees impacted during this difficult time,” said Daniel Haver.
New platform starting in 2020
Recognizing changing customer behaviors worldwide, the aim of focusing on a unified platform strategy is to create an expandable commercial and technological basis for future growth in the digital music production area. For that, a new platform is currently being developed with the goal of offering new ways of accessing the company’s core products and services, as well as complementary ones from third-parties. The centralized platform will also include the company’s expanded portfolio of loops and samples, which is currently part of sounds.com, and will launch in 2020. The company’s previous divisional structure, functional and brand silos, did not allow for a successful implementation of this strategy up until this point.
“Customers today are expecting a seamlessly integrated experience when consuming and accessing creative goods and services. We are confident that we can offer music producers worldwide a unique and premium experience by connecting our existing ecosystem of award-winning software and hardware to a centralized online service,” said Mate Galic, Native Instruments’ Chief Innovation Officer and President. “In the past, we expanded in different product lines, which was also reflected in our organizational structure. Our platform vision, however, requires a much more collaborative approach, having all parts of the company work together towards one common goal.”
Updated: Native Instruments have responded officially to some of these concerns, and we can provide some additional background and information on what these cuts represent and what the larger context looks like: