Coinbase layoffs show an increasingly insensitive side of the cryptocurrency’s slump

Let’s start with the premise that there’s never a perfect way to tell people they’re being “downsized,” a ridiculous euphemism for the dreaded corporate layoff.

But there are better ways than what happened at Coinbase last week. Yes, you can deliver the bad news and make people feel like they are more than just numbers on a shrinking balance sheet.

Coinbase is a cryptocurrency exchange – the largest in the country. Its IPO last year brought significant wealth to its members like CEO Brian Armstrong.

At just 39 years old, Armstrong is one of those crypto billionaires (aka “Bros”). He is fickle, sure of his business and not afraid to flaunt his wealth. It made big headlines just a few months ago, snapping up ostentatious excavations in Bel Air for $133 million.

That was when Coinbase was hot, which it is now decidedly not. It is losing money, lots of it, like other companies being crushed in the cryptocurrency crash – an epic failure that took over 70% of a market that was valued at an irrational $3 trillion last year.

Yes, Coinbase and Armstrong are right in the midst of the meltdown and exuberance that led to it. The company had about 2,500 employees last fall just after its IPO, which funded a platform that lets you trade digital currencies like Dogecoin (which started out as a joke) and other strange high-flying tulips.

Coinbase
Coinbase laid off 18% of its workforce in a way that was highly criticized.
SOPA/LightRocket images via Gett

As the cryptocurrency bubble grew, its equally irrational management led by Armstrong went through a wave of massive hiring, adding another 2,500 people with plans to grow to 10,000.

Coinbase was profitable through the craze until reality hit. As the crypto bubble began to lose steam, it announced a loss of more than $400 million in the first quarter, with declines in key metrics such as active users. Coinbase shares are down about 85% since closing the first day after last year’s IPO. Losses are likely to continue, analysts say.

Layoffs were quick

With everything going on, the company obviously needed to cut costs, and fast. The goal of 10,000 hires is gone; came a hiring freeze, though Armstrong & Co. wasn’t willing to completely give up on her high expectations. They said they would honor offers for new hires – people who left previous jobs but didn’t start working at Coinbase.

This was before the cryptocurrency correction turned into full-blown panic in recent weeks. Coinbase did what all companies do when they are fighting for survival: it laid off people, cutting 18% of its workforce, or 1,100 employees. That “commitment” with workers who received offers but did not start also disappeared.

The problem is not that Coinbase had to reduce headcount; is that he did it in an even crueler way than when Better.com CEO Vishal Garg laid off 900 workers via a Zoom call last year.

Armstrong didn’t give the canning workers any decent warnings, at least according to some of the now-former employees.

People who received the ax on Tuesday found out via an oddly terse text message around 8 a.m. alerting them to an “important update from Coinbase: check your personal email for more details.” That’s right: no phone calls from management giving a warning, no town hall meetings telling people to brace themselves for pain. Not even a Zoom call.

As employees accessed their work laptops, they read an email informing them that layoffs were coming. The people who were part of the 18% only knew because, within minutes, they were suddenly locked into the company’s computer system.

A little later that morning, this time in their personal email, they received the official news of the bad news.

Coinbase
Fired Coinbase employees found out why they were locked out of their company laptops.
dpa/picture alliance via Getty I

insensitive to the extreme

I asked Coinbase PR people to provide an explanation for their apparent extreme insensitivity. Here’s what they told me: The whole thing couldn’t have been avoided. Due to the potential for trade secret theft, they needed to immediately block those on the layoffs list.

Armstrong apologized for the way he was treated. There were conversations with employees and team leaders later to explain post-employment options.

Again, there is no perfect way to give someone the axe. Layoffs, unfortunately, are among the few ways companies can stay out of bankruptcy until they regain health.

But I’ve seen the layoff drama play out on the streets of Wall Street over the years in much better ways, where people actually get a call instead of an SMS.

Also, it doesn’t take a crypto guy to figure out that the layoffs in this business are only going to continue – much like the internet crash of the early 2000s. Dogecoin trade.

So a piece of advice for niggas — and I know this is going to date me a little — but when the layoffs come, turn off Zoom calls, text messages, and emails and try breaking the news the old-fashioned way: with a phone call. or, better yet, face to face.

Yes Brian, you can do better.

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