We don’t have to tell you the layoffs that are dotting the tech landscape right now, especially at late-stage companies looking to raise expansion rounds and growing into existing valuations. What we think is important, however, is to focus on a depressing trend that is emerging in the midst of all these headlines: some companies have announced layoffs in quick succession, a double reduction that is surprising.
Longer term, I note that the startups that took a March 2020 layoff should moderate again in the 2022 wave. The first wave was in preparation and fear, this wave seems to be a rebound after the surgery. What baffles me now is seeing startups cut employees now, citing the obvious reason for the macroeconomic environment, and then do the same a few weeks later for the same reason.
Some minor
In most cases, follow-up layoffs appear to be larger than previous cuts, which tells us that the company didn’t go far enough in the original reorganization.
It’s worth nothing that net new resignation events are falling slightly. According to layoff tracker layoffs.fyi, there were 150 new layoff incidents in July, down 18 percent from the previous month.
According to Nolan Church, CEO and co-founder of fractional career platform Next, there are a few reasons why a founder might be fired in two rounds in quick succession: the business gets worse, a poor forecast, or both. He added that one of the reasons may be that “the management did not have the courage to think deeply” when it came to people and projects in the first round.
Continuum recently raised a $12 million Series A round to scale a suite of fractional work tools, including a service that helps startups make things more humane. From day-to-day support with breaking the news to high-level advice on layoffs, the company connects with customers who need support. He didn’t see double firings among customers, which he attributed to executives encouraging founders to “cut and dump once.”
“The reduction is inexcusable because of the two-week gap. Management, perhaps the CEO, made a serious miscalculation,” Church said. “A two-year gap doesn’t surprise me. Typically, CEOs of early-stage companies are afforded a two- to three-year runway. The first layoff was when they first changed direction. As part of that event, they likely changed course and made a new bet. The 2nd dismissal was due to unpaid bets.
With all of this in mind, here are some of the companies that have had at least two rounds of layoffs in months, and sometimes weeks, according to reports from layoffs.fyi and TechCrush Report:
On the ship
Deck, the tech company that connects founders, capital and mentoring, has made another round of layoffs three months after laying off a quarter of its workforce. According to sources, more than 100 people will be laid off due to workforce reductions, about half of the total workforce, and the company – which confirmed the layoffs to TechCrunch in an email – has laid off 73 full-time employees, sources said. No executives were affected.
The startup’s second strike comes with a different strategic plan for what’s next, with the first strike largely due to changes in capital and leveraged markets. This time, On Deck went deeper: She has sunk many communities and is swinging her career development arm to a different startup.
It could be due to the very urgent need to extend the runway. Sources speculated that the first round of layoffs occurred because On Deck Runway was only nine months away. Now, On Deck co-founders Eric Thorenberg and David Booth say the company has more than three years of runway.
Robin Hood
Earlier this week, Robinhood announced it was laying off 23% of employees across all functions. The workforce cuts come three months after Robinhood cut 9% of full-time employees, and CEO and founder Vlad Tenev said it was “the right decision to improve efficiency, increase our speed and ensure we are responsive to demand.” Changing needs of our customers”.
The second round of layoffs was officially confirmed and Tenev struck a different tone. In the year The founder took responsibility for Robinhood’s transparency in hiring in 2021. The company said it had staffed many of its operations last year with the expectation that “intense retail engagement” would continue into 2022.
“We are operating with more manpower than is appropriate in this new environment,” he wrote. “As CEO, I’ve approved and taken responsibility for the direction of a major human resource mobilization — that’s on me.” He said the first round of layoffs didn’t go far.
“Since then, we’ve seen further deterioration in the macro environment, with 40-year high inflation and a broader crypto market crash. This has further reduced customer trading activity and assets under custody,” Tenev said. Robinhood’s share price has also been volatile over the past year. At the time of publication, the company is trading at $8.90 after hours, an impressively low – 89% – from its 52-week high of $85. Down 3.6% after hours.
Gemini
Crypto platform Gemini has cut roughly 10% of its workforce and cut an additional 7% a few weeks later. Co-founders and twin brothers Cameron and Tyler Winklevoss spoke of some expected volatility in what they called the “crypto revolution.”
“The path can best be described as a punctuated equilibrium — punctuated by periods of equilibration or dramatic growth, followed by sharp contractions leading to a new equilibrium higher than before,” the co-founders wrote. In a blog post during the first downsizing. Crypto has subsequently entered a temporary downturn, otherwise known as a contraction phase, further “compounded by the current macroeconomic and geopolitical turmoil,” they say.
However, when Gemini reached the second time, he did not respond to the comment, he reported that he was fired. A source who spoke to TechCrunch on condition of anonymity said that the company is laying off employees due to “extreme cost-cutting.” According to an internal operating plan document, Gemini was looking at a plan that would take the company to about 800 employees, down 15% from 950 employees at the time, reports Jacqueline Melink.
I screamed.
Virtual events platform Hoppin, last valued at $7.75 billion, laid off 29% of its workforce, or 242 people, in July. The cuts come four months after Hoppin let go of 12 percent of its workforce, citing a goal of sustained growth in a volatile market at the time.
A Hoppin spokeswoman confirmed that in addition to cutting nearly a third of the company’s workforce, some contractors and third-party team members had been laid off, but did not provide an exact number. The difference between the first round and the second round, apart from the latter being more than double in size, is that Hoppin parted ways with several executives. TechCrunch has learned that the company’s COO, CFO and chief business officer have left the company, although it’s unclear whether the three left voluntarily or were fired.
In an emailed statement, a Hoppin spokeswoman confirmed the three men were “leaving the business,” adding, “After many discussions, we all agreed this was the best course of action for the business.”
Bolt
Proptech, which went public through a SPAC in June 2021, is a SaaS platform, and is the first business I’ve seen with two consecutive weeks of layoffs.
In May, the company cut 30 people, or 6% of its total workforce, according to an email obtained by TechCrunch. Then, as confirmed in a press release last Friday, Latch announced it was cutting a total of 130 people, or 28% of its full-time workforce.
Similar to Hoppin’, a series of resignations is accompanied by an executive outcry. Sources say the deals are for Chief Revenue Officer Chris Lee and Vice Chairman of Sales Adam Shields. In April, Latch left the company less than a year after assuming the CFO role and leading the company through a reverse merger. At the time, TechCrunch described the SPAC meltdown as widespread — and explained that Latch was not immune.
After the layoffs, Latch is expected to achieve approximately $40 million in annual operating cost savings in research and development, sales and marketing, and general and administrative expenses, according to a press release.
Clearco
Clearco, a Toronto-based provider of fintech capital to online companies, has laid off 125 people, or 25 percent of its total workforce, told TechCrunch. Those affected will receive severance pay, a two-year window of equity and job transfers from the management team, Clearco said. The company did not say which teams and roles were affected or if any C-suite members were let go.
Despite expanding into Germany in June, Clerco cut 10% of its staff in Ireland, breaking into the market three months later and announcing plans to hire more than 100 staff, according to Independent.ie. It’s not clear if there will be more geographically focused layoffs in the future, or what “strategic” options lie ahead – but we do know that Clearco has many international competitors. The startup previously made another layoff in March 2020, which affected 8 percent of its workforce, citing the “long-term economic impact of COVID-19.”
It’s been a year since Clerco announced funding from SoftBank, a $215 million venture that closed weeks after the company landed a $100 million round that raised its valuation to $2 billion.
The taken
With nearly four months to go to cover the relentless drumbeat of workers, it’s clear that the double cuts will deliver mixed messages in more ways than one. Perhaps a mix of factors played a role in the layoff, from miscalculations to failed extension rounds, until he realized just how bad it was getting. While workers must deal with the consequences of macroeconomic climate change, employers are giving us an example of how difficult it can be to figure out how to manage a workforce in times of crisis. Or at least manage to fire them.
