On June 12, 2024, VRChat announced they were laying off 30% of their staff, and they posted a letter to all employees sent from CEO Graham Gaylor that said, "We’re reducing the size of our team by around 30% and saying goodbye to many talented team members in the process. This is the hardest change we’ve had to make at VRChat, and Jesse and I take full responsibility for the decisions that brought us here." VRChat listed the four main reasons for the layoff in that they added too many individual contributors to their development team without a management layer to prioritize efforts, which meant they needed to reduce their headcount to folks who were more directly working on features that would lead to a path of profitability over the next five years.

VRChat has taken a long time to launch their creator economy, which is still in closed beta, and their VRChat+ subscription models doesn't offer all that many differentiated features to drive users to join beyond a signal of patronage to support the platform. I wanted to gather some active VRChat community members to talk about the burgeoning creator economy as well as other potential pathways to profitability around streaming avatar streamlining, events, contributor / group subscriptions, and emerging features like increased instance size caps.

The VRCSpaces community on X (formerly Twitter) held a Space on the day of the announcement discussing the layoffs, and I invited participants Table, yewnyx, and Miss Stabby as well as qDot who wrote up a really great thread breaking down some of the Silicon Vally startup dynamics. More than anything, I wanted to get their take about what VRChat is getting right, and where the most viable pathways for them might be on their road towards profitability.

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Music: Fatality