Cyworld, which once made huge profits from its "mini-hompy" service, is facing another crisis as expectations for its revival are dimmed.
According to a media report on June 30, Cyworld, many of its current 30 employees have expressed their intention to resign to its CEO Jeon Je-wan. It is known that the employees are in a situation where they can carry out collective resignation if no special measures are made by the end of this month.
The reason for leaving the company is that the issue of unpaid wages for those who are in office and those who leave the company is not resolved, and the company's operating funds are not enough. It is analyzed that the employees issued an ultimatum to the CEO as they could not be sure about the future of the company, with pressure from creditors increasing day by day.
This is the result of some media companies filing lawsuits after the news curation service "QUE," which was introduced last year, failed to get much response and failed to pay for content usage. Because of this, social networking services are no longer being developed due to financial problems.
Cyworld even started a cryptocurrency business called "Cling" in its new news service, seeking to take a leap back, but it was not enough to save the company in crisis.
As the company decided to receive a total of 5 billion won in investment from Samsung in 2017, many in the industry expected Cyworld to regain its previous reputation. But with Samsung's investment already exhausted, new businesses have been drifting as they failed to seek additional funds to invest.
"We have not secured additional funds for the last development since early 2019, and as a result, we have been sued by the Labor Ministry by the prosecution for five months in arrears and unpaid bills," CEO Jeon Jae-wan said. However, Jeon is confident that he can get out of the current financial difficulties and encourage employees by receiving investments from abroad.
He said he is preparing to list "Aire", the parent company of Cyworld, on the Swiss stock market, and that he is also working on issuing cryptocurrency via Aire.
Jeon assured that the company's situation will be much better after September, when it will be submitted documents and an inflow of funds. He also denied reports that employees had issued an ultimatum, saying it was not true. It is true that the number of people leaving the company continues to rise, but there has been no talk of employees resigning as a group.
Cyworld grew rapidly in 1999 as its online community service Minihompy gained huge popularity among young people. However, the company has yet to find a next-generation revenue source as it has not been able to adapt to the mobile era.