Open Thread: How to Fix BitTorrent, the Startup?

Update, Thursday 3 p.m. PST
: BitTorrent confirms layoffs, but not everything else.

There are rumors that pink slips have been handed to some of the employees of San Francisco-based BitTorrent. The problems stem from their ill-fated consumer distribution effort, which competed with richer, more deep-pocketed rivals. They were trying to hawk the division to Best Buy for about $15 million, but the deal didn’t work out.

So far it’s all hearsay, but NewTeeVee’s Liz Gannes is trying to get to the facts of the story. If true, then it would be yet another tumultuous twist in the life of this company, which at times has reminded me of a daytime soap. (Not that there’s anything wrong with daytime soaps.) And like daytime soaps, its popularity, especially with file-sharing folks, has remained consistent.

I think BitTorrent can save itself. Such popularity means it can become the infrastructure player that allows for the efficient distribution of big video files. Its BitTorrent Delivery Network Architecture can be put to good use, especially with partners. As noted in a post last year, BitTorrent has been working with a handful of set-top box makers such as Pace Micro, and is trying to embed its technologies into other devices. The funny thing is that even carriers want to work with them. All of this makes this company salvageable.

It’s all a matter of adopting a lower — almost invisible — profile, something startups find hard to do. BitTorrent is clearly dealing with bloated and untenable expectations set by megamillion-dollars in financing — roughly $29 million in two rounds — and the accompanying unrealistic valuations. It should have stayed focused on its core technology.

Open question: How would you fix BitTorrent?

Photo of BitTorrent founder Bram Cohen getting a shave at FoundRead launch event courtesy of Joey Wan via Flickr