Motley Fool Web-Site Forced To Cut Back Again

by Mike Godfrey

01 October 2001

The most famous investor web-site, Motley Fool, has said it will lay off about half of its employees, saying its business plan is too ambitious in the current weak advertising market. The company told its 187 workers on Friday that it will lay off 75 of them, effective November 30. Also, C. Patrick Garner, the company's chief executive, is leaving the company after just more than a year in the job.

This is the third round of layoffs this year after the company shed 115 people in February and another 45 in June.

The Motley Fool web-site carries a letter from founding shareholders, brothers David and Tom Gardner, saying that the move necessary if the company was to achieve long-term profitability. "Our plans have proven too optimistic to withstand the current business environment, and so now we are hunkering down and battening the hatches," it says.

Motley Fool is a popular site for visitors to exchange stock picks and financial chatter, but relied almost totally on advertising revenue for income. Problems in the financialo markets have cut into that revenue this year, and as well as shrinking its cost base the company tried to diversify into becoming a personal finance web-site. Just last month, the Motley Fool launched a new service that would charge investors an annual fee for personalized investing guidance from a professional financial adviser.

There is considerable tension between a publishing model that provides unbiassed and often irreverent commentary to investors, and one that seeks to profit from advice, as well as a regulatory aspect to be dealt with, not to mention the great difficulty of 'monetising' non-paying 'eyeballs', in the jargon of the trade.

There is plenty of affection for the Motley Fool, so everyone hopes it will survive; but perhaps it should stick to its original model until times improve . . .

Motley Fool's investors include the venture arm of AOL Time Warner Inc., the Softbank Finance Group unit of Softbank Corp., Mayfield Fund and Maveron LLC.

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