The founders of Rec Room say they cut the staff by half.
A blog post entitled “A Hard Day at Rec Room” by Cameron Brown, also signed at the bottom by co-founder Nick Fajt, explains the company’s new focus. Employees departing will be paid in health benefits for up to six months for three months, according to the Post, they can maintain their computers.
The post says it aims to “turn it into a sustainable business” while improving Rec Room Originals, like paintball. They also plan to work much with manufacturer tools for mobile devices, acknowledging their efforts to “make AI unhappy with more impactful creators.”
You can visit the Rec Room website to read the full post, but I also pasted the following copy:
what’s happening?
Today, Nick and I had to make one of the toughest choices in Rec Room history. We say goodbye to about half of the Rec Room team. These are the incredible people who have put their talent, heart and creativity into this company. They have shaped our culture, built features loved by millions of people, and have made Reckroom better in many ways. We are heartbroken to see them go – this is a painful day for many people.
The REC Room is more than a game, more than a company. It’s a community and one of the best teams we’ve ever had the privilege to work with. It only makes this moment difficult. This is not a reflection on the talent and dedication of those leaving. Once again, to make this clear, I intend to make it clear that this is not just “one thing you say in the layoff message.” I really hope that we can keep all of these people on our team.
But we can’t. This reflects the harsh reality we face as a business and the changes needed to give Rec Room the opportunity to thrive in the coming years.
This decision will affect people who consider their colleagues and friends. People we have shared years of work and life. Rec Room-line-by-line, Asset-by-Asset, and people who created tests for each test. This is not the outcome that any of us wanted, and Nick and I take full responsibility for the position we are in.
For the rest of this memo, I want to open up about why I had to take this step, the mistakes I made along the way, how to help those who leave, what’s next for the Rec Room, and why I’m deeply committed to building the REC Room in the future.
How do you support those affected?
First, I want to say how grateful we are to those who helped to build the REC room in our place today. This is a difficult transition for those leaving and we want to do everything we can to help them move on to the next chapter.
Everyone departing will continue to be paid for the next three months and receive health benefits for the next six months. Also, they feel that computers are an important tool for finding new jobs, so every starting employee has the option to maintain a laptop or desktop.
If you want to reach out to someone, you need to do it casually. Please note that this is a challenging time for them. So, be aware that you may need additional space and time to process it now.
How did you get here?
A few years ago, we raised a lot of money to build a huge vision. It is a social UGC platform that anyone can create anything.
We invested heavily in creating tools via PC, VR, console and mobile. However, the reality was harsh. The most impactful creations come almost entirely from the creators of PCs (with mouse and keyboards, studio) and VR.
I’ve seen creation happen on mobile and consoles, but I wasn’t good at devices that were suitable for building what other players were engaged in. And some of our efforts to close that gap (e.g., Maker AI) have irritated our more impactful creators.
At the same time, these low-power devices still produced millions of content. This puts a huge strain on the team. The team had to find tools and steps to see everything. Doing all this on all devices has been a massive technical challenge and burden. Our most skilled creators cleverly optimized their content, but most creators didn’t – because they didn’t actually provide the tools they needed. Supporting all of this scopes stretched us too thin and attempted to build one big scalable platform (Room 2.0) didn’t land as needed. The vision makes sense, but it was crushed under the scale.
So we ended up in a tough place. It’s too small to realize the vision of “anyone can build anywhere” but too big to pivot into a more focused experience that is more responsive to what players want and pay for. As a result, we began digging a growing financial hole every day.
intersection
For the past few years, we have been stuck in this unpleasant middle ground. Pushing on a huge vision that we were unable to realistically offer, disappointing existing players who want us to provide an amazing experience like before, and fixed many bugs they encounter.
We struggled with this dilemma. Are we continuing to push our big UGC vision, increasingly frustrated by our players and teams? Or will you scale back your vision, cut your beloved team in half and focus on what you can do well?
Both passes were painful. But I finally reached the point where maintaining the course revealed low growth, high burns and no clear path to advance. In a nutshell, it’s unsustainable. It’s become very clear what to write on the wall.
What now?
We are continuing to be committed to supporting and building REC rooms to make the most of that potential. As you move forward, you focus on two things.
Empowering our best creators.
Securing a REC room is a great experience for players.
Empowering our best creators
This means:
Less work on wide range of UGC extensions – for example, mobile/controller manufacturer pen, manufacturer AI.
More support for our top creators. These people are already driving a large portion of their growth and revenue. In July, players spent more on UGC content than ever before. The creators have won the best operating month ever. This segment is actually growing well, but it focuses on PC. Therefore, we will focus on UGC’s efforts.
More investment in what players show us what they like and want — (a) to make them better, (b) revisiting the originals of our Rec Room in the view that they turn them into sustainable business. For example, expect new features (free, some paid) for Paintball in the short term. If the financial model works, it may expand to the new RROS. For the past few years, I had to use UGC tools for RROS. This has resulted in much higher production costs. This work will be carried out in person in the future.
We have not abandoned UGC. But we narrow our focus from “everyone can create” in favor of serving our best creators.
The closest analogy is Sega, who leaves the hardware to focus on the game. It’s big and painful, but necessary changes.
Securing a REC room is a great experience for our players
This means:
With an increase in investment in monthly events (“Fests”), Rec Room always feels fresh, providing specific reasons for players to return regularly to check out activities and rewards offered.
Players can expect an increase in investment in RRO if we can make our top creators, fewer algorithmic churn, more curated experiences tied to fests, and economics work.
Client ships are not frequent. Over the past few years, we have done a lot of work moving different types of content (e.g., avatar items) away from our clients. Delivering too often makes the app stable and intentional with changes that affect creators and players.
The goal with the player is simple – get excitement and engagement with quality rather than quantity.
lastly
The reality is that what we’ve been doing in the last few years is that we haven’t worked for our team, our company or our players. It’s Nick and me. It was our job to adjust those needs and we failed. This change, no matter how imperfect and shocking, gives you the opportunity to reset and correct the course.
I’ll smoke today. For Nick and me. For everyone remaining in the REC room. And we are especially saying goodbye. We hate it that came to this. We hate to let go of so many talented people who worked so hard. And we hate to leave the enormous vision we strongly believe in.
If you’re in the industry, look at the amazing people on our RIF list. They are some of the most talented developers, builders and teammates we have ever worked for. We really hope we can keep them all. You will be lucky to have one of them on your team.
For those who leave, you will always be part of the Rec Room story. We thank you all and wish you the best for your next chapter.
For those staying – we know this smokes. We know this hurts. Thank you for moving forward – we strive ahead, but we strongly believe we can build together in the future with a new focus.
With a heavy heart,
Cam and Nick
