Hey Siri, when does a “macroeconomic downturn” become a “recession”?
It’s another bleak week for startups weathering shady tech stocks and even worse cryptocurrency prices. But let’s start with good news: your children can get vaccinated against COVID-19!
Back to the bad news: we’re writing another weekly layoffs column, because once again, there’s already been so much bad news this week that it’s necessary to round things up.
This week, cryptocurrency and real estate startups fared particularly poorly – naturally, as mortgage interest rates rise, fewer people want to buy homes. Meanwhile, Bitcoin is dangerously approaching 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).
Sadly, this week’s layoffs went beyond those two camps, with consumer tech, fintech and food delivery also impacted.
Let’s start with real estate
Our own Mary Ann Azevedo has been following the real estate tech industry, reporting on Tuesday that publicly traded real estate brokerage platforms redfin and Compass laid off a total of 900 employees.
“I said we wouldn’t fire people unless we had to,” said Redfin CEO Glenn Kelman. “We have to.”
Redfin offered laid-off employees 10 weeks of base pay, plus an additional week of pay for each year of service, limited to 15 weeks. They will also receive the cost of three months of medical care from the company so they can temporarily continue coverage.
In addition to cutting 450 jobs, or 10% of employees, Compass will take a break from hiring and mergers and acquisitions for the rest of the year.
San Francisco-based rental platform buzz 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 broker, Side, cut 10% off your team as well.
Despite this industry-wide shake-up, some companies are still forging ahead. proptech company HomeLight raised $60 million and acquired loan startup Accept.inc this week.
Coinbase is suffering a slow and crushing descent in morale. Following a hiring freeze and the controversial termination of accepted offers, the cryptocurrency exchange announced this week that it will reduce its workforce by 18%.
Remember when we said that layoffs are a little more bearable when you’re not a jerk to your employees? I’m sorry to report that Coinbase’s superiors probably don’t read my work.
In a letter to employees, CEO Brian Armstrong said employees who were laid off would be notified of their status via their personal emails – they would be cut from their corporate accounts immediately to protect sensitive data.
It is true that angry ex-employees may retaliate by leaking this information. But do you know how to make them even more hurt? Cut them out of their work bills without warning and tell them they no longer have a job.
Coinbase had 1,250 employees at the start of 2021, when the NFT craze ushered in a new wave of participants in the cryptocurrency. Since then, the team has more than quadrupled.
“There have been new cryptocurrency-enabled use cases gaining traction pretty much every week,” Armstrong explained. “While we tried our best to get it right, in this case it is now clear to me that we over-hired.”
Armstrong also added that onboarding new employees has made the team less productive in recent months.
Coinbase is providing 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 US and four months of mental health support for international employees.
Cryptocurrency layoffs don’t stop there. Exchanges that rely on transaction fees are losing their revenue streams because of the downturn. The $3 billion cryptocurrency lending platform BlockFi cut 20% of its staff from around 850 – 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 has committed $700 million over 20 years for the Staples Center naming rights…). Finally, Huobi Thailand is closing in July due to government licensing issues.
Consumer technology is also affected
While Spotify isn’t laying off layoffs yet, CEO Daniel Ek told employees that the streaming giant will cut 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 about 15 jobs.
It’s the WordPress design tool Elementor consumer technology? Saved my ass several times, so let’s go for it. Last week, Elementor acquired Strattic, which converts WordPress sites to Jamstack, a newer web development architecture. But, citing “rising inflation and pending recession,” Elementor co-founder and CEO Yoni Luksenberg announced that the company would lay off 15% of its workforce, mostly in the marketing department.
This leads us to ByteDance – don’t worry, TikTok is fine. Three years ago, the China-based parent company of TikTok purchased Mokun Technology, an online game developer. 101 Studio, which was part of that acquisition, closed this week, cutting about 150 employees, offering the studio’s other 150 employees internal transfers. This marks a setback in ByteDance’s race against Tencent to dominate mobile gaming.
And there’s still more
Mary Ann Azevedo of TechCrunch reports:
Canadian fintech giant simple wealth, 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 the field of democratizing consumer financial products, including stock trading, crypto sales and peer-to-peer money transfers. And now it looks like Wealthsimple is an example of another company that experienced a boom during the early days of the pandemic and is now seeing a downturn in business.
Mary Ann also reported a 25% workforce reduction affecting 110 employees in notarize, a startup offering remote online notarization. Of course, this startup grew at the beginning of the pandemic, but now, online notarization is not in high demand.
Our own Christine Hall shared news from JOKRan on-demand food delivery company, leaving the US to focus on Latin American markets.
Food delivery companies are facing difficult times as funding has dried up and the rush to invest in this sector, in part as a result of the global pandemic, has caused it to become quite inflated and due on a correct course. This was evident when some of JOKR’s competitors began announcing layoffs. For example, in May, Gopuff, Gorillas and Getir announced staff reductions.
TechCrunch took a deeper look at what was happening in the on-demand delivery space earlier this month and what it means for the industry going forward.