AVOS Systems is laying off majority of its workforce, according to sources close to the startup. AVOS is the company established by YouTube founders Steve Chen and Chad Hurley, wrote VentureBeat.

AVOS mainly creates digital media services such as bookmarking site Delicious and video app MixBit. However, despite its founders' prowess in creating the most high-volume traffic websites in the world, the services of AVOS have failed to take off. In November, the company had closed down digital mag Zeen. In addition, the Delicious site failed to attract more users even after its relaunching, the report detailed.

The situation is now forcing the California-based startup to lay off almost 80% of its workforce and close its 18-person office in San Mateo, the source said. The fate of AVOS' offices in Beijing and New Zealand is still unknown, the report stated.

In a statement, Avos responded to reports about an impending MixBit shutdown: "MixBit is most definitely not shutting down, quite the opposite. We're really excited about MixBit and have been focusing our efforts around it.  You can expect many new features very soon. As for the San Mateo office, we're not shutting down, just moving into a new space."