Crushed by Facebook, StudiVZ teeters on the brink

Updated: Four years after it turned down a buyout offer from Facebook (s fb), reports suggest that German social network StudiVZ faces a radical, life-saving revamp — or even closure.
Comparison of early StudiVZ page with FacebookThe site, which was started by a couple of students in 2005 and counted the Samwer brothers as early investors, quickly grew to become Germany’s largest social networking service but it has been in trouble for some time. With rapidly declining traffic and a relaunch last summer that failed to end its difficulties, there has been a succession of rumors circulating about the site’s future under current owner Holtzbrinck Digital, which bought the site for €85 million ($107 million) in 2007.
But now evidence is slowly trickling in to suggest things are reaching a critical point.
According to Gruenderszene, 20 of the site’s 70 staff have left in recent weeks — though whether they went of their own accord or were fired is not yet clear. And that comes ahead of another redesign planned this summer by the current owners, Holtzbrinck Digital.
And at the same time, traffic is continuing to hemorrhage: single-serving website wannstirbtstudivz (“When does StudiVZ die?”) had been tracking the site’s declining traffic, with the prediction that the site would close this spring. Although it’s recently been taken down, the graph tells its own story.

And while anecdotal evidence may never be entirely accurate, this kind of feedback from users is not good, either:


I’ve contacted StudiVZ for comment on the reported job losses, but the company has yet to respond.
Whatever the case, it’s a torrid state of affairs — and a long way from where the company once was.
Back in early 2008, Holtzbrinck reportedly turned down an acquisition offer from Facebook because they were holding out for more money. What seemed like a bluff in fact turned out to be very dangerous: Facebook followed its failure to purchase by launching a number of lawsuits against the company for cloning, and though it didn’t really get very far it tied the German company in knots: while StudiVZ was embroiled in legal concerns, Facebook’s growth team were pushing hard with a very hungry and very smart international expansion.
As Berlin startup blog Venture Village points out, when Facebook overtook StudiVZ the end seemed to be in sight — and the entire affair leaves Holtzbrinck looking very tired while the Samwer brothers sit pretty.

Without the hustle of the original investors the Samwer brothers on board, it almost seems that Holtzbrinck is having more difficulty than ever making successful exits. The three brothers are likely to enjoy themselves even more knowing that they realised their own early exit from StudiVZ successfully.

It’s always easy to look back and wonder what if… but in retrospect, rejecting Facebook’s advances looks like a very, very poor decision.
Update, June 8: It seems the rumors were correct. According to Venture Village, Holtzbrinck has confirmed that 25 development staff were laid off and the rest are to be moved elsewhere in the umbrella company as it undergoes another restructuring.