Snap’s Layoffs Are Just The Latest In Big Tech’s Belt-tightening Trend

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This is not (just) another roundup of tech layoffs

Later on a month that saw nearly 16,000 tech workers lose their jobs, June is off to a similar tumultuous get-go. Startups across all sectors, from healthcare to enterprise SaaS to crypto, are laying off portions of staff and citing, seemingly, from the same notes: it’s a tough marketplace, a fourth dimension of uncertainty, and a correction toward sustainability is needed.

This week, we’ll continue our round-up of layoffs in tech, only we’re not stopping there; we extracted a few common themes from the workforce reductions, especially focusing on nuances that may be lost from headlines. To start, hither are the companies leveraging layoffs this week:

  • Carbon Health laid off 8% of staff,
    or 250 people. Per our own Christine Hall, “the startup’s virtually recent funding round was a $350 million Serial D round in July 2021, led by Blackstone Group, that reportedly put the company at a $3.3 billion valuation. We covered its $100 million Serial C round in November 2020. In his letter to employees, CEO Eren Bali outlined two reasons for the conclusion to let go of staff — despite its continued and fast growth over the years. The first was winding downward some of its business lines related to COVID. In 2020, Carbon Health developed both pop-up clinics and at-dwelling house test kits.”
  • Loom, an enterprise video tool backed by Andreessen Horowitz, laid off 14% of staff.
    The company’s most contempo round valued the company at $1.53 billion, making it hitting unicorn status for the showtime time. Kleiner Perkins, Sequoia, Coatue and Full general Goad are besides investors in the company. Similar to Hopin, Loom benefited from a surge of people working from home in response to the COVID-19 pandemic; the product was positioned to help remote workers find amend means to connect with colleagues in a virtual-starting time world, and aid hybrid workforces find a lightweight mode to skip some meetings. Then, again similar to Hopin, the startup conducted layoffs to help it build in what information technology describes as a more sustainable way moving forward.
  • Coinbase volition extend its hiring freeze and revoke accepted offers from some candidates
    who haven’t started their roles yet (…and inform them of their status via e-mail). This news comes after Coinbase’s brutal Q1 results, which reported a $430 million loss.
  • The crypto platform Gemini, led by co-founders and twin brothers Cameron and Tyler Winklevoss, laid off 10% of its staff
    due to “turbulent market place atmospheric condition that are probable to persist for some fourth dimension.” Despite reacting to the market changes, Gemini’s co-founders also addressed that there’s a somewhat expected volatility in what they called the “crypto revolution.”
  • Social app IRL lays off 25% of team, says it has plenty greenbacks to terminal well into 2024.
    The cut comes effectually a year later on the startup landed a $170 million SoftBank-led Serial C and striking coveted unicorn status. Regarding the decision to cut staff, CEO Abraham Shafi wrote in a memo to staff that IRL has “more than plenty cash to final well into 2024.” Over the last year, the startup increased its head count by 3.5 times, simply Shafi noted that WhatsApp was able to grow to 450 one thousand thousand users with a team of 55. This suggests that the workforce reduction was less almost trying to reduce runway and more than virtually right-sizing the team after a menses of overhiring.
  • Insurtech Policygenius cuts 25% of staff, less than three months after raising $125M.
    As Mary Ann Azevedo reports, “since its 2014 inception, Policygenius has raised over $250 million from investors such equally KKR, Norwest Venture Partners and Revolution Ventures also as strategic backers such as Brighthouse Financial, Global Atlantic Financial Group, iA Financial Grouping, Lincoln Financial and Pacific Life. While nosotros can’t speak specifically to Policygenius, information technology’s been widely reported how poorly insurtech companies have fared in the public markets over the by year with Lemonade, Root and Hippo all trading significantly lower than their opening prices.”
  • Amsterdam-based TomTom allow get of 500 employees
    , or 10% of its workforce. TomTom used to exist known for car GPS navigation before nosotros all had iPhones, but over the terminal few years, the company has attempted to pin to mapping for self-driving cars. The jobs affected are in the maps department, where the company is pursuing more automation.
  • A digital mental health visitor backed past Softbank, Cerebral plans to conduct layoffs in July

    (which shouldn’t exist anxiety-inducing at all for staff every bit they wait to acquire their fate). The telehealth visitor also recently replaced its founding CEO among a government investigation into its potential violations of the Controlled Substances Human activity — Cerebral has been critiqued for

    over-prescribing

    ADHD drugs.
  • Tesla CEO and guy-who-needs-to-stop-tweeting, Elon Musk ordered a hiring freeze and job cuts, which would affect x% of salaried employees. Currently, Tesla employs nigh 100,000 people. Strangely, President Joe Biden weighed in, saying, “Then, lots of luck on his trip to the moon, I don’t know.”

Nuance of note

No ane wants to be in the unicorn club

Despite cuts happening across all stages, many of the contempo layoffs take come from companies that, just ane year ago, striking unicorn condition. The list includes Cameo, IRL and Loom, and there are a couple of reasons as to why that may be.

First, one year is a long time. And it feels fifty-fifty longer in a market that can’t make up its mind. Nonetheless, Startups that were hit growth terminal yr may no longer be on the same trajectory, making growth into their current valuation a significant stretch. As a upshot, the one yr mark could exist showing up as a reminder to reflect, and unfortunately for employees, scale downwards to a more than realistic spot.

Second, being a unicorn is hard — even in a balderdash market. Richly valued startups do demand to eventually deliver on hopeful value, some would believe, and capital doesn’t necessarily ensure success. When you’re a late-stage company, in that location are specific growing pains that come with the title, such equally integration with acquisitions, handling a remote workforce and learning how to iterate when the business is no longer every bit nimble equally it was when it was just ii people in a dorm room. In the past, layoffs may accept been put off by some other round of funding, merely at present that follow-on funding isn’t a given, layoffs are becoming more mutual.

Tertiary, many of the pandemic-built-in unicorns are actually just piñatas filled with expired candy. Hard stop.

Layoffs should be treated as a worst case scenario, non a precaution

Companies similar Coinbase, Tesla and IRL have enough runway to keep their staff employed during a tumultuous economic time and ongoing pandemic. Only they cut costs anyway by letting go of their staff.

“Courage is a decision, and we will choose courage,” IRL CEO Abraham Shafi wrote in a visitor memo after laying off 25% of his staff. “Whatsoever we are facing today tin’t be any worse than the uncertainty we met at the beginning of the COVID 19 pandemic.”

Unfortunately, workers tin can’t control getting laid off when their employer has plenty coin to retain them. And for those of united states subject to the endlessly frustrating American healthcare organization, losing your task too means medical instability for both y’all and your family unit. Let’s stop pretending that COBRA isn’t exorbitantly expensive.

Meanwhile, Coinbase rescinded already accustomed offers from a number of employees. According to a LinkedIn search, many of the rescinded employees were students who were soon to graduate with PhDs and available’s degrees akin. In those cases, a new hire may take a job months before their start appointment, since they’ll need to graduate before filling the role.

Many soon-to-be graduates who accepted jobs at Coinbase turned down several other offers to work at the major crypto exchange, but now, they’re stuck scrambling to find employment. This situation is even more than dire for international students, who take chances deportation if they can’t find an employer to sponsor their visas.

Layoffs are sadly an inevitable part of corporate life, especially in startups. Simply and so oftentimes, it seems like they’re caused past bad management choices that make information technology more difficult to go on paying staff. People brand mistakes, but those mistakes can put innocent workers in situations of financial precarity, potential deportation and limited access to healthcare. Then when layoffs are made every bit a precaution, or a correction to mitigate past mistakes and over-hiring, it’s personal.

Source: https://techcrunch.com/2022/06/03/not-just-another-roundup-tech-layoffs/