The Sound Board

Native Instruments centralizes organization and reduces global headcount to focus on platform strategy

Berlin, August 29, 2019 – Native Instruments, the world’s leading provider of software and hardware for computer-based music production, announced today a plan to centralize their global business operations, which includes a headcount reduction of 20% across all locations. The key reason for this difficult decision is to create the right organizational setup to focus on the development of a new, unified and fully integrated platform on which the company’s entire portfolio of products and services will be available next year. This change comes despite growing revenues in 2018 and the first half of 2019, but as a response to an increasing cost structure due to the company’s previous divisional setup and multi-brand approach.

“Today is a very emotional day for the Native community. We’ve been driving innovation in music creation since the 1990s. First through software instruments, then by expanding to an integrated ecosystem with complementing hardware and now by creating a unified platform experience for the modern music producer,” said Daniel Haver, the company’s CEO and co-founder. “To make this transformation successful, we needed to adapt our strategy, including a centralized functional setup that can support our vision of ‘One Native’. Unfortunately, this also means we had to make some tough decisions and part ways with a number of employees. This has been the hardest part of this transformation,“ he added.

Global headcount reduction of 20%

As a consequence of the company’s newly centralized organization to focus on its future strategy, Native Instruments had to make the difficult decision to reduce its workforce by around 100 employees across all sites. With most of the affected employees located at the company’s headquarters in Berlin, the departments that were impacted by the consolidation include Sales & Distribution, Marketing & Product Management, Administration and Engineering. All employees were informed about these changes on Thursday, August 29, 2019. The company regrets the impact this has on their employees, their families and the community. In addition to severance packages and outplacement services, Native Instruments has also established contacts with other Berlin-based companies that are currently looking for highly qualified personnel.

“This was the most difficult decision we had to make in our entire history, as our past successes have been enabled by the work of some of the best and most passionate people in the music industry. We thank all employees for their commitment, hard work, and their high degree of loyalty to Native Instruments. We are fully committed to doing all we can to take care of our employees impacted during this difficult time,” said Daniel Haver.

New platform starting in 2020

Recognizing changing customer behaviors worldwide, the aim of focusing on a unified platform strategy is to create an expandable commercial and technological basis for future growth in the digital music production area. For that, a new platform is currently being developed with the goal of offering new ways of accessing the company’s core products and services, as well as complementary ones from third-parties. The centralized platform will also include the company’s expanded portfolio of loops and samples, which is currently part of sounds.com, and will launch in 2020. The company’s previous divisional structure, functional and brand silos, did not allow for a successful implementation of this strategy up until this point.

“Customers today are expecting a seamlessly integrated experience when consuming and accessing creative goods and services. We are confident that we can offer music producers worldwide a unique and premium experience by connecting our existing ecosystem of award-winning software and hardware to a centralized online service,” said Mate Galic, Native Instruments’ Chief Innovation Officer and President. “In the past, we expanded in different product lines, which was also reflected in our organizational structure. Our platform vision, however, requires a much more collaborative approach, having all parts of the company work together towards one common goal.”

Indecisive c-level management. New projects get cancelled last minute resulting in massive layoffs (3 in the past year!). People are quitting in hoards resulting in a very serious brain drain. Global headcount reduced to around 400 from a high of 650. Overall lack of motivation in the office. Lack of career opportunities for ambitious and hardworking people. Pay is low (expect 15-20% under current Berlin market rate) and no performance benefits (bonuses, etc) resulting in no reason to overachieve. Sexist work environment.

bryla wrote: ↑Sep 03, 2019 2:49 pm Or whether it's in some way connected to Spitfire for example turning to own platforms in a way of controlling your own future.

Ashermusic wrote: ↑Sep 04, 2019 1:44 am And this folks, is why I am always preaching that whatever you see as it's advantages over its competition, it is not healthy for one sample engine to be too dominant. We learned this with Gigatstudio.

That's why saying "I will only buy Kontakt libraries" is just, well, let me not use terms that will offend people and just settle for unwise.

Being longer with the company you get used to the constant change and the slow decision making processes by disempowered and mistrusted middle managers and directors (not blaming them). Every new management philosophy which passes a certain threshold in the industry gets a tryout (Matrix Organization, Process management, Agile, SAFe, Design Thinking, Inkubator, OKR’s etc.). Very good one might think but not when applied practically wrong and without allowing the time that the „newest“ method actually works. There is always the feeling amongst the employees and also the promise of top management that the next new thing will better the current situation but nothing changes. Ambassadors and so called „champions“ of these methods come and go. Often times they don’t even trust their own employees to implement the methods and rather hire expensive consultants or agencies. Driven by short term financial success and fiscal years, decisions are short sighted and roadmaps constantly overthrown. This leads to products with a lot of legacy code and no innovation in Software and Hardware. The times of releasing game changing products to market are long gone. High sales expectations (which get amended by the executives themselves) that are far from reality, lead to false assessment of the success of products and blaming teams. Often times poor and uniformed decisions on features and products lead to already outdated products when they hit the market. The teams are just seen for the purpose of implementing the decisions and have no real voice in the development. Which is one of the patterns that the top management don’t understand: how to empower the teams right and how to trust their employees. The greatest asset of the company is not utilized. Another pattern is that Native still think they can live from their „coolness“ factor and doesn’t need to pay you a competitive salary that match the market standard or lives up to the increased cost of living. When you work at Native personal development is not pursued as there is currently no budget for trainings available. Recognition for your work from top level management is inexistent. Gemba-walk is a foreign word to them. The biggest negative change began with the funding two years ago. After failing miserably with the first attempt of digitalization the top management is now in panic mode of loosing their shares and powers to the investors and try to change the company disruptively by following the newest management trend „OKR’s“. The executive board was extended over the past year with so called „champions and specialist“ in their respective field. The only specialty they all have in common is that they did not stay long in their previous companies and have no clue about the music industry. A new level of management buzzwords hit the company and you can read their style in the company reaction comments of some of the reviews here on Glassdoor. Starting the disruptive change with stopping product development very late and poor conducted, mostly illegal lay-offs in Hardware and other parts of the company they generated an environment of fear among the remaining employees. As there is no workers council which fights for you the ones they fired are not properly compensated and the whole process is astonishing amateurish. One anecdote to describe how far the exec boards live from reality or how they have no sense and empathy for the current situation: While some parts of the executive board made an announcement in Berlin of firing people and the respective people in the departments where anxious and had no clue who would be layed-off and who not, other parts of the exec boards flew (probably first class) to the Los Angeles office to celebrate the summer event and party with the LA colleagues. There is an ongoing knowledge and talent drain in the company as good people are leaving or getting fired. It seems that the „everyone is replaceable“ mindset is in full effect. It’s constantly cited by the executive board and the investors that the company is too expensive, don’t generate enough revenue for the amount of people that are employed. What's not understood is that constant change of direction and an unstable environment which doesn’t allow things to settle and actually work creates waste and leads to this massive unprofitability. The last announcements of the executive management is telling the employees that they’ve listend to the team survey which exactly said the above. The reaction is the roll out of the next "new savior" - the OKR's, followed by the biggest layoff spree in history of the company…

Rat an das Management

You did a good job in bringing this company to the current size. To rescue this company and save your lifetime achievement, pay out the investors and let people run the company who have the proven ability to actually do it."

posted 1 month ago on glassdoor. Harsh.

FriFlo wrote: ↑Sep 04, 2019 3:41 am

Ashermusic wrote: ↑Sep 04, 2019 1:44 am And this folks, is why I am always preaching that whatever you see as it's advantages over its competition, it is not healthy for one sample engine to be too dominant. We learned this with Gigatstudio.

That's why saying "I will only buy Kontakt libraries" is just, well, let me not use terms that will offend people and just settle for unwise.

I don't think, people would generally exclude other players for their samples.

Lawrence wrote: ↑Sep 04, 2019 11:13 amI cannot imagine anything they would come up with not being Kontakt compatible, at least in terms of backwards compatibility. That would produce an unearthly din of howls and shrieks.

wst3 wrote: ↑Sep 04, 2019 7:05 pm The cost to port all the third party libraries over to a new platform would be rather large I think. Backwards compatibility is all but mandatory, or as others have suggested, there will be a mutiny.

Hi everyone,

We’ve been reading your responses and questions based upon the tough news about changes inside of Native Instruments. And we understand the doubts and fears that may have arisen. Our press statement was aimed at business media, so we want to speak to you directly here.

I can’t answer every question, but I hope I can at least give you some more information and reassurance.

Let’s just get this out of the way: Native Instruments is a healthy business. We’re not going anywhere, and neither are the products that you have.

Going forward, our priority is to listen to your requests, and to deliver the key features you want. This doesn’t mean we are going to be able to build every feature our community asks for, but we are listening. Our Product Managers are keeping track of the most requested features. And those of us in management will support them to ensure these features are built. In short, we will be focusing a lot more on software, and in turn making the hardware you have even better.

We also want to be more community-focused. But we are aware that in the past, we’ve promised things that we couldn’t always deliver. Instead of promising things now, we understand we have to build your trust by “doing” rather than “talking”.

An example of this are the arranger features currently in development for Maschine. We appreciate that this has been an important topic for many of you, and this is currently a top priority for us. If you want to see how this is taking shape, then I highly recommend joining our MASCHINE Beta group, where you’ll soon be able to test the first parts yourself and give us feedback. It’s a big task and we want to get it right, so we are building this step by step, and sharing this with you in the beta environment so that we deliver what you need.

Another example of where we are actively working with you, our community, is for Massive X. We are regularly updating the roadmap there and will be rolling out new features on a regular basis. Please join the beta or follow the forum to see more.

Many people were confused by the phrase “One Native” and you've probably seen this term being used in our press release. Firstly, it's not some kind of new product. To hopefully end speculation, this refers to how we work inside of Native. In the past, some of our teams have been working fairly separately and products have sometimes been developed with not enough collaboration and integration aspects in mind. By taking a unified approach inside the company, we believe we can make our products and services work together more smoothly and provide better communication to you, the musicians who are using Native. And it’s not just about connecting our own products, but also the wider world of sounds and music making tools out there. NKS is a great example of this, and we want to do more.

We’ve seen the term “platform strategy” brought up a number of times, with some believing this translates to “subscription”. It doesn’t. Native is already a platform provider. Examples of our existing platforms might be KONTAKT or REAKTOR. These are “authoring platforms” or tools which allow third parties to build instruments and make money from them. And we’re proud there are so many amazing instruments built on those platforms, many of them supporting the NKS standard, which we consider to be part of our platform experience. Naturally, we want to see more. So this is an aspect of our business that we believe we can strengthen, be it in developing existing products, or in larger ideas for the future.

On the subject of subscriptions, we understand some people feel strongly about this. Please let me reassure you that we’re not about to charge you subscriptions for the products you already own. One of Native’s aims is to remove barriers for people who want to make music. And for some people, that barrier might be financial. We’re exploring lots of different ways to address this including (but not limited to) subscriptions. A recent example of how we’re doing this is the introduction of PayPal installment plans in our online shop. But we want to do more.

Of course we can’t share everything that we’re working on. But I hope this gives you some insight into what’s going on at Native.

Best,

Paul
Last edited: Today at 11:50 AM
Chief Marketing Officer & SVP Sales
Native Instruments GmbH

On the subject of subscriptions, we understand some people feel strongly about this. Please let me reassure you that we’re not about to charge you subscriptions for the products you already own.

Lawrence wrote: ↑Apr 14, 2020 4:47 am Why would that be a problem, Daryl? Surely your licenses will remain and you won’t desperately need new features for your show?