The Russian Bear Slashes a Social Network
The bubble in social networking has burst, decisively. LiveJournal, the San Francisco-based arm of Sup, a Russian Internet startup, has cut 12 of 28 U.S. employees — and offered them no severance, we're told. — The quirky site …
Context & Ripple Effects
LiveJournal's U.S. operation has been on borrowed time since Six Apart sold the service to Russia's SUP in late 2007, a handoff that put a beloved, community-driven blogging platform under new ownership with little apparent feel for its users. The layoffs land amid a broader retrenchment in consumer web startups — Veoh had already cut staff and closed its own Russia office months earlier — as the post-2008 funding climate forces social companies to shrink fast.
First-order effects
- Twelve of LiveJournal's 28 U.S. employees lose their jobs immediately, reportedly with no severance, gutting the San Francisco team that runs the site's day-to-day operations.
- SUP signals it will run LiveJournal primarily from Russia, concentrating control of the platform's product and policy decisions in Moscow rather than San Francisco.
Second-order effects
- A thinner U.S. staff means less capacity to moderate communities and manage user trust — risky for a site whose earlier mass deletion of sex-themed journals already triggered an unprecedented user revolt and forced a public apology.
- Other struggling social platforms facing the same funding squeeze face pressure to make similar deep cuts or pivot, as Seesmic later did when it laid off half its staff to refocus.
Third-order effects
- If ownership keeps consolidating around SUP, LiveJournal's community norms and content policies increasingly answer to Russian jurisdiction rather than American ones — a trajectory that points toward eventual server relocation and terms-of-service changes constraining political speech.
- The episode foreshadows a structural pattern in social media: once-dominant community platforms decay under owners who misread their cultures, hollowing out until only niche loyalists remain.
The trend: The social networking bubble is deflating into a consolidation phase where undercapitalized platforms get absorbed by foreign owners and stripped down, trading community trust for survival.