Hey Siri, when does a “macroeconomic slowdown” become a “recession”?
It’s another dark week for startups weathering dismal tech stocks and even worse cryptocurrency prices. But let’s start with some good news: your children can get vaccinated against COVID-19!
Back on the bad news: We write another weekly column on the layoffs, because again, there’s been enough bad news this week to round it all off.
This week, crypto and real estate startups have done particularly poorly — naturally, as mortgage interest rates rise, fewer people want to buy homes. Meanwhile, Bitcoin is getting dangerously close to the $20,000 mark, a serious drop from the $60,000+ prices we saw just seven months ago (I was told on Twitter that # ItsNotAllAboutPrices).
Unfortunately, this week’s layoffs extended beyond those two areas, with consumer tech, fintech and food delivery also affected.
Let’s start with real estate
Our own Mary Ann Azevedo has been tracking the real estate tech sector, reporting on Tuesday that publicly traded real estate brokerage platforms red fin and Compass laid off a total of 900 employees.
“I said we wouldn’t lay off unless we had to,” Redfin CEO Glenn Kelman said. “We must.”
Redfin offered laid-off employees 10 weeks of base pay, plus an additional week of pay for each year of service, capped at 15 weeks. They will also be paid the cost of three months of company healthcare so they can temporarily continue to be covered.
In addition to cutting 450 jobs, or 10% of employees, Compass will suspend hiring and mergers and acquisitions for the rest of the year.
Rental platform based in San Francisco Zumper also cut about 15% of its 300 employees, which primarily affected its art, sales and customer service departments, according to The Real Deal. Earlier this month, another Bay Area brokerage, Side, also reduced its workforce by 10%.
Despite this industry-wide shakeup, some companies are still making progress. Proptech company HomeLight raised $60 million and acquired lending startup Accept.inc this week.
Pain on the blockchain
Coinbase suffers a slow and crushing descent for morale. After a hiring freeze and then the controversial cancellation of accepted offers, the crypto exchange announced this week that it would cut its workforce by 18%.
Remember when we said layoffs are a little more bearable when you’re not a jerk to your employees? I regret to inform you that the superiors of Coinbase probably do not read my work.
In a letter to employees, CEO Brian Armstrong said terminated employees would be notified of their status via their personal emails – they would be immediately cut off from their company accounts to protect sensitive data.
It is true that angry former employees might retaliate by disclosing such information. But you know how to make them even more wronged? Cut them off from their business accounts without warning and tell them they’re out of work.
Coinbase had 1,250 employees at the start of 2021, when the NFT craze ushered in a new wave of crypto participants. Since then, the team has more than quadrupled.
“There were new use cases made possible by crypto that were getting traction practically every week,” Armstrong explained. “Although we did our best to make it perfect, in this case it is now clear to me that we have over-hired.”
Armstrong also added that onboarding new employees has made the team less productive in recent months.
Coinbase is offering 14 weeks of severance pay to affected employees, plus two weeks for each year of employment beyond one year. The platform will also offer four months of COBRA health insurance in the United States and four months of mental health support for international employees.
The crypto layoffs don’t stop there. Exchanges that rely on transaction fees are losing their revenue streams due to the recession. The $3 Billion Crypto Lending Platform BlockFi cut its staff of around 850 people by 20% – less than two years ago, the blockchain startup had just 150 employees. Crypto.com also laid off 5% of its workforce, or 260 employees (meanwhile, Crypto.com committed $700 million over 20 years for Staples Center naming rights…). To finish, Huobi Thailand closes in July due to government licensing issues.
Consumer technology is also taking a hit
Whereas Spotify isn’t making any layoffs yet, CEO Daniel Ek told employees the streaming giant would slow hiring by 25%, citing market uncertainty. So far this year, Spotify has closed its Live Audio Creation Fund and cut its in-house podcast group, Studio 4, affecting around 15 jobs.
Is the WordPress design tool Elementary consumer technology? It saved my life several times, so let’s go. Last week, Elementor acquired Strattic, which converts WordPress sites to Jamstack, a new web development architecture. But, citing “rising inflation and a looming recession,” Elementor co-founder and CEO Yoni Luksenberg said the company would lay off 15% of its workforce, mostly in the marketing department.
This brings us to ByteDance — don’t worry, TikTok is fine. Three years ago, TikTok’s China-based parent company bought Mokun Technology, an online game developer. 101 Studio, which was part of this acquisition, was closed this week, cutting around 150 employees, offering the studio’s remaining 150 employees internal transfers. This marks a setback in ByteDance’s race against Tencent to dominate mobile gaming.
And yet there is more
Mary Ann Azevedo of TechCrunch reports:
Canadian fintech giant Wealthsimple, which was valued at $4 billion last year, is laying off 159 people, or about 13% of its staff. The Toronto-based company has been a leader in democratizing financial products for consumers, including stock trading, selling crypto assets, and peer-to-peer money transfers. And now, it looks like Wealthsimple is an example of another company that boomed at the start of the pandemic and is now experiencing a downturn in business.
Mary Ann also reported a 25% workforce reduction affecting 110 employees at Authenticate, a startup that offers remote online notarization. Sure, this startup boomed at the start of the pandemic, but now online notarization isn’t as in demand.
Our very own Christine Hall shared news from JOKRan on-demand food delivery company, leaving the United States to focus on Latin American markets.
Food delivery businesses are facing tough times as funding has dried up and the rush to invest in this sector, partly due to the global pandemic, has caused it to become quite bloated and need to run a proper course . This became apparent when some of JOKR’s competitors started announcing layoffs. For example, in May Gopuff, Gorillas and Getir announced staff cuts.
TechCrunch took a closer look at what was happening in the on-demand delivery space earlier this month and what it means for the industry going forward.