What happens at Native Instruments?

JEPA

Senior Member
I have a question: dropping 100 employees means a strategical move to save the company?
 

TigerTheFrog

Froganthropist
I think this story may have begun in October of 2017, when NI got a $59 million dollar investment from the private equity firm, Digital Growth Fund.

I don't know anything about the details of that investment, but I do know something about private equity investments in other entertainment companies. In most cases, the equity firms don't "invest" anything. They borrow it all. And the deals are extremely expensive to execute. Usually there is a very small group of people who get HUGE checks out of making the deal. Again, I don't know anything, but if it's like hundreds of other deals, then a few people at NI and Digital Growth Fund got extremely wealthy from this deal at signing.

As there never was any money, and so much of what was borrowed is already spent by the time the deal goes down-- what is left is monumental debt. So you have to pay that off by either increasing profits or firing people. Perhaps you begin by spending on R&D to see if profits can increase. But if that doesn't work, you fire. Less people, same income, more profit. And you send out PR statements about how you are reorganizing the company so less people are needed. It's going to be much better.

A lot of firing can lead to a downward spiral in profits. This leads to more firing, more automation and more offshoring. Eventually you reach a point where you can't cut any more people. Then the equity firm starts selling off valuable things. Anybody want to buy Kontakt or Komplete Kontrol? Everything is sold to the highest bidder--never to the companies who can do the most with the products.

Surprisingly, by the time the emails go out to everybody telling them to clear out their desks by noon, the equity company sometimes has done remarkably well. As long as the debt gets paid off, they have the huge checks they wrote to themselves at the beginning of the deal. Maybe even some gravy on top from selling off the company in pieces.

This is how Mitt Romney made his money at Bain Capital.

In fairness, it doesn't always work this way. Sometimes equity firms can make companies more profitable. And I have no way of knowing if DGF is anything at all like equity firms I'm familiar with.

I sure hope that the situation at NI is nothing like this, because I love my NI products so much.

But I am concerned.
 

JEPA

Senior Member
why should they have to do the deal in first instance? where was the need of growing at huge paces? competition? they are already big enough...
 

Manaberry

Active Member
A friend do work at NI but he sent his resignation notice last month. He say's that there is too much dramatic situations in the company. He cannot handle more.
 

JEPA

Senior Member
Is there the case of surpassing the "greed threshold" where you can't go back? What is your greed threshold?
- $10.000
- $50.000
- $100.000
- $200.000
- $500.000
- $700.000
- $1 million
- $2 million
- $5 million
- $7 million
- $10 - ....
- $50 - ....
- $100 - ...
 

TigerTheFrog

Froganthropist
Is there the case of surpassing the "greed threshold" where you can't go back? What is your greed threshold?
- $10.000
- $50.000
- $100.000
- $200.000
- $500.000
- $700.000
- $1 million
- $2 million
- $5 million
- $7 million
- $10 - ....
- $50 - ....
- $100 - ...
You might think you are exaggerating, but I know of a recent multi-billion dollar merger where one guy cashed out to over $100 million when the deal went through.
 

JEPA

Senior Member
You might think you are exaggerating, but I know of a recent multi-billion dollar merger where one guy cashed out to over $100 million when the deal went through.
- $1000 mll.
- $2000 mll.
- $10.000 mll.
- $50.000 mll.
- $1000.000. mll. and counting

where is the greed limit? Ask for example corrupt politicians?
 

chimuelo

Star Of Stage & Screen
Interesting, they hired a DSP GuRu thats been sending me devices for years and moved to Berlin at the same time they layed off people.

Maybe we should ask ourselves how many people they hired.

Im always dogging him that I want free stuff, and he gets all company like as if hes wearing a Camera and tracking device.
Just weeks ago we were making fun of our own platform and how many years it took to get new W10 drivers.
Now he sees policemen in his soup...
 

gsilbers

Part of Pulsesetter-Sounds.com
I think this story may have begun in October of 2017, when NI got a $59 million dollar investment from the private equity firm, Digital Growth Fund.

I don't know anything about the details of that investment, but I do know something about private equity investments in other entertainment companies. In most cases, the equity firms don't "invest" anything. They borrow it all. And the deals are extremely expensive to execute. Usually there is a very small group of people who get HUGE checks out of making the deal. Again, I don't know anything, but if it's like hundreds of other deals, then a few people at NI and Digital Growth Fund got extremely wealthy from this deal at signing.

As there never was any money, and so much of what was borrowed is already spent by the time the deal goes down-- what is left is monumental debt. So you have to pay that off by either increasing profits or firing people. Perhaps you begin by spending on R&D to see if profits can increase. But if that doesn't work, you fire. Less people, same income, more profit. And you send out PR statements about how you are reorganizing the company so less people are needed. It's going to be much better.

A lot of firing can lead to a downward spiral in profits. This leads to more firing, more automation and more offshoring. Eventually you reach a point where you can't cut any more people. Then the equity firm starts selling off valuable things. Anybody want to buy Kontakt or Komplete Kontrol? Everything is sold to the highest bidder--never to the companies who can do the most with the products.

Surprisingly, by the time the emails go out to everybody telling them to clear out their desks by noon, the equity company sometimes has done remarkably well. As long as the debt gets paid off, they have the huge checks they wrote to themselves at the beginning of the deal. Maybe even some gravy on top from selling off the company in pieces.

This is how Mitt Romney made his money at Bain Capital.

In fairness, it doesn't always work this way. Sometimes equity firms can make companies more profitable. And I have no way of knowing if DGF is anything at all like equity firms I'm familiar with.

I sure hope that the situation at NI is nothing like this, because I love my NI products so much.

But I am concerned.

I think similar. But more like the $59mil investment most likely came with strings attached and those came to fruition when they fired people but also the new stuff ahead.
Those large companies take a while but they do the planning and execution very good. Normally it’s common to fire people but most of the times issues of redundant depts, personell and also ni came from a smaller company so maybe the old hires didn’t make sense and stuff like that. Always too many details. We get to see the ugly side of lay-offs but it’s hard to tell if it will make sense later w new services and products.
Which btw- I’m pretty sure they will go subscription route.

Also... I hope the guy who decided Massive X should be atc compatible and leave macpro 5,1 out left the company and that thing doesn’t happen and again but that’s so petty of me :)
 

chimuelo

Star Of Stage & Screen