Since our last column, another smattering of tech startups has laid off employees. We get it. Layoffs happen. But as we conduct yet another week of analysis into a depressing time in tech, we’re thinking about how these difficult conversations could be a bit less awful if we learned to prioritize care for workers over increasing profit margins.
We know that the startup ecosystem is volatile, but severance pay and extended healthcare benefits give employees much more peace of mind as they search for their next opportunity. “Where do you expect us to find this money?” you might ask. That’s a good point, but if your startup has ever thrown a swanky party with expensive alcohol that you didn’t really need, maybe start there. Also, rescinding offers is bad, conducting layoffs via email is like sending a breakup text, and lest we forget the time when Buzzfeed acquired HuffPost, then immediately laid off 47 writers by inviting them to a Zoom meeting with the password “spr!ngisH3r3.”
Some companies like Coinbase and Vtex have offered employees who were laid off (or rescinded) the option to list themselves in a public talent hub to help them get more job opportunities. This is a nice gesture, but only time will tell how effective these tactics are — is anyone really scrolling through a list of 326 rescinded Coinbase candidates? For their sake, hopefully, yes.
Otherwise, we’re still observing the same trends we’ve noted over the last few weeks — edtech companies like Eruditis that thrived during lockdown are becoming less active as remote learning eases, leading to job cuts. ID.me, the identity verification service, overhired to meet pandemic demand, then hit a wall. Clubhouse, once the buzziest new social app, is also fading out from relevance, in part perhaps due to the return of in-person events, but also, established social networks like Twitter have ripped off the live audio concept and deployed it more effectively.
One new trend, if we can call it that, is that some of the workforce reductions also come with a chunk of staff leaving voluntarily as companies pivot strategy and change their mind.
Without further ado, here are the startups leveraging layoffs this week:
Superhuman, a buzzy e-mail startup that has received over $100 million in venture funding, laid off 22% of staff last Friday, CEO and co-founder Rahul Vohra wrote on Twitter. “As we head into a downturn that could last years, we made this difficult choice so that we can deliver on our vision sustainably,” he wrote. The workforce reduction impacted 23 people, who Vohra says will be provided with severance, mental health support, health insurance throughout the year and job search help. TechCrunch reached out to Vohra for comment on how the support will look and what roles were impacted and has yet to hear back.
Clubhouse laid off a portion of staff as part of a restructuring and “rethinking of the audio app’s strategy,” reports Bloomberg. The company told the publication that some roles were eliminated, and some people left to pursue new opportunities. One person who fits the latter bill is Aarthi Ramamurthy, who led international product efforts for Clubhouse for over a year before leaving last week. TechCrunch reached out to Clubhouse for comment on how many people were impacted and what roles will be focused on going forward. Clubhouse responded with the following statement: “A few individuals have decided to pursue new opportunities and a handful of roles were eliminated as part of streamlining our team. We are continuing to recruit for roles in engineering, product and design.” When asked for further details, a spokesperson said that the statement is all the company has to share at this time.
Eruditis, an edtech unicorn, has laid off 40 people and had 40 people resign voluntarily, reports Inc42. The publication says that people on the talent acquisition, or hiring, team were impacted as Eruditis scales back its hiring plans, from bringing on 1,300 people over the past 12 months to only wanting 150 more people, at most, this year. Like many other startups conducting layoffs, Eruditis significantly increased its hiring pace over the last two years, when online learning became more of a priority in the pandemic. Now, a representative from the company tells TechCrunch:
Given the recent economic and geopolitical uncertainty, we are realigning our operating model as part of our commitment to growing the organization sustainably and responsibly, and making decisions that focus firmly on profitability. We have restructured, including combining consumer and enterprise marketing functions under global leadership and right-sized in select areas.
A bike- and scooter-sharing startup, Bird plans to lay off 23%, our own Rebecca Bellan reports. With about 600 employees, that means around 138 people will lose their jobs across organizations and regions. This move was unfortunately expected. In May, the company announced financials from Q1 2022, which showed a continued decrease in revenue every quarter since going public via SPAC in Q3 2021 — though the company started trading at about $10 a share, shares are now worth just 57 cents today. At the start of the pandemic, Bird laid off 30% of its workforce, or about 406 out of 1,387 employees. Now, the company’s total workforce will be just a third of the size it was in the beginning of 2020.
The personalized, direct-to-consumer clothing retailer Stitch Fix cut 15%, or 330, of its salaried workers. After going public in 2017, the styling service experienced a sharp decline in a pre-pandemic 2020, which has only gotten worse. Shares of the company traded at about $68 a year ago, but now, they fall below $8. The company tried cutting costs in summer 2020 by laying off 18% of its stylists, then brought in a new CEO Elizabeth Spaulding, whose inflexible policies around work schedules led another third of stylists to depart the company.
The identity verification service ID.me laid off some corporate employees after too-fast growth since the pandemic. Insider reported this week that after hiring 1,500 new workers to meet the demands of its high-profile clients like the IRS, the company suffered lapses in security, sometimes allegedly sharing sensitive information like social security numbers via Slack.
Hospitality unicorn Sonder laid off about 250 employees: Twenty-one percent of its corporate employees and 7% of front-line staff. A competitor to Airbnb (which is doing relatively well), Sonder rents out serviced apartments that are like boutique hotels. The company says its layoffs are part of a general restructuring and that management remains optimistic about the future of the travel industry. Yet according to an SEC filing from this week, the company aims to cut costs by $85 million annually to become cash-flow positive by 2023.
Yet another multibillion unicorn conducting layoffs, security startup OneTrust is reducing its headcount by 25%, affecting 950 employees. “I know this news is surprising, especially as you heard last month that the business is on track with record quarters and increasing customer demand,” CEO Kabir Barday wrote in a note to employees, published on the company blog. “However, capital markets sentiment shifted to a more balanced approach between growth and profitability, and at this time, we have decided the best course of action is to reorganize.” OneTrust is providing severance packages, extension of medical coverage, equity and an opt-in talent network.
Convoy will lay off 7% of its 1,300-person staff, GeekWire reports. Less than two months ago, the Seattle-based trucking marketplace raised a $260 million Series E round, bringing its valuation to $3.8 billion. But now, a company spokesperson says, Convoy is making this decision to best position itself to wade through a market downturn.
Softbank-backed creator economy startup Jellysmack laid off 8% of employees this week, shutting down commercial operations in Italy, Germany and the Netherlands. In light of the challenging market, the company plans to focus on projects that bring the most immediate value to creator partners. Like its competitors, Jellysmack buys limited-time licensing to creators’ back catalogs, giving them upfront cash in exchange for their slower (yet potentially larger) income stream.
Let’s hope for a shorter list next week.
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