NEW YORK, NY (October 15, 2008) – Digital Railroad informed their members, customers, and partners today they recent efforts to find additional funding "required to sustain its current level of operations" have been unsuccessful, and as a result there will be staff reductions and greatly reduced spending.
But the story behind today's announcement is that Digital Railroad may be in the process of liquidating itself, or being shopped around for sale, because reportedly it has retained the Diablo Management Group (a firm known for selling entire "troubled" companies, or piecing off its parts).
Digital Railroad CEO Charles Mauzy wrote on his Facebook page today that he's no longer the CEO and that he's left his position with the company, and Digital Railroad president Maris Berzins made a similar change in his Facebook profile to say that he's left his job with Digital Railroad as well.
Mauzy wrote on Maris' Facebook wall, "I think we should start a wine bar ..."
Digital Railroad went through a restructuring in January that reduced the staff by approximately 20 positions, about half the employees, only a few weeks after it received $15 million in new funding.
Digital Railroad was founded in 2003 by Evan Nisselson, who changed roles at the company in 2007 when he was named chairman of the board and Mauzy was named CEO. Nisselson has been based in Milan, Italy, recently and has been a public face for the company, championing Digital Railroad's launch of Marketplace earlier this year.
Digital Railroad's goal was to provide Web-based archiving and marketing services globally for the professional photographer. A chief competitor, PhotoShelter, cut back to being only a photo hosting service in September when it abandoned a year-long effort to be an online stock photography agency.
Digital Railroad told members in an eMail today that they are "committed to the continued support of its customers through this period and has retained adequate staff to support both member archives and image licensing sales through Marketplace."
The notice also said, "We will have further information shortly and expect to provide an update to you next week. In the meantime, we are grateful for the loyalty and support that you have demonstrated and thank you for your patience during this transition."
Photojournalist John Harrington, a Digital Railroad member, wrote on his Blog today, "If I were a Digital Railroad customer ... I would be making darn sure I was downloading all of my needed files immediately, if for no other reason that to have a back-up of them (even if they remain in operation) ...".
In addition to founder Nisselson, Digital Railroad's board of directors were Peter Nisselson, his father, chairman of Star Struck Ltd., a firm that invests in small companies; Mike Brooks, a general partner in the venture capital firm Venrock Associates; Ken Gullicksen, a general partner in the investment firm Morgenthaler Venture; and Steven Schlenker, chief investment officer and a managing partner for DN Capital Limited.
