Last week, Hipstamatic laid off three developers, one designer and a writer in a bid to reset and rebuild its team "to ship more products and updates in the next few months," says Lucas Allen Buick, the company's CEO.

"Letting people go is never an easy decision," he explains. "[This] reduction in staff was the result of endless discussion and debate about what we want our company to look like in the future. It was in no way a reflection of the work ethic or talent of those no longer with us. Over the last year we simply lost our focus. Art and creativity were no longer the center of what we did. Hipstamatic was founded as a lifestyle and culture brand that happened to make software. We aren't a typical software company, and our inability to scale and ship became clear."

However, BJP understands that Hipstamatic is facing financial hardship, as the app has disappeared from the top charts on Apple's App Store especially since Instagram's rise in popularity. Hipstamatic is said to have four million users, when Instagram has reached 80 million users in less than two years. Recently, Facebook acquired Instagram for close to $1bn.

Hipstamatic's recent staff changes are casting doubts on the company's plans for a Foundation for Photojournalism. As revealed by BJP last month, the foundation would support "the next generation of photographic storytellers using smartphones with Hipstamatic to tell and broadcast their tales." BJP understands that Hipstamatic's recently-released Snap magazine on the iPad would form an important part of the foundation's goal.

The foundation would be financed with the proceeds of a Photojournalism Pak of virtual lenses and films produced in association with photographer Ben Lowy, as well as Michael Christopher Brown, who was only involved in the early stages of the project. BJP has been told that the Pak was finalised in early July, after undergoing months of tests.

However, BJP also understands that Hipstamatic has yet to discuss its plans for the foundation with industry experts – such as agency directors and prominent photographers – who would form part of the organisation's board of directors, almost a year after it first reached out to them.

Speaking to BJP in early July, a spokeswoman for Hipstamatic said that the Foundation would not be launched before October. It remains unclear whether these plans are still in place following last week's staff reshuffle. In a blog post, Buick writes: "Moving forward, Hipstamatic will also continue to make awesome photo apps for mobile devices. We have high expectations for the type of company we want to build. Today we will be back to work making products that inspire people to take their creativity to the next level."

He adds: "Productivity will not be stopping anytime soon around here. We are all excited to focus on what we are passionate about and what made us successful in the first place."

For more about Hipstamatic's Foundation for Photojournalism, read BJP's previous reports Hipstamatic plans launch of Foundation for Photojournalism and What will the Hipstamatic Foundation for Photojournalism do for the industry?