Hey Siri, when does a “macroeconomic downturn” become a “recession”?
It’s another bleak week for startups weathering bleak technology 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 column about layoffs, because there’s been enough bad news again this week that it’s necessary to wrap everything up.
This week, crypto and real estate startups have performed particularly poorly – of course, as mortgage rates rise, fewer people want to buy homes. Meanwhile, Bitcoin is approaching dangerously close to $20,000, a serious plunge from the $60,000+ prices we saw just seven months ago (I’ve been told on Twitter that #ItsNotAllAboutPrices).
Unfortunately, this week’s layoffs extended beyond just those two areas, also impacting consumer technology, fintech and food delivery.
Let’s start with real estate
Our very own Mary Ann Azevedo has been monitoring the real estate technology industry, reporting Tuesday that listed real estate brokerage platforms redfin and Compass a total of 900 employees laid off.
“I said we wouldn’t fire people if we didn’t have to,” said Glenn Kelman, CEO of Redfin. “We have to.”
Redfin offered laid-off workers ten weeks of base pay, plus an additional week’s pay for each year of service, up to a maximum of 15 weeks. They are also reimbursed for the costs of three months of occupational health care, so that they can temporarily continue the cover.
In addition to cutting 450 jobs, or 10% of its workforce, Compass will halt recruitment and mergers and acquisitions for the remainder of the year.
Rental Platform in San Francisco Zumper according to The Real Deal, it also cut about 15% of its 300 employees, which mainly affected the arts, sales and customer service departments. Another Bay Area brokerage earlier this month Side also cut 10% of its staff.
Despite this industrial turmoil, some companies are still struggling. Proptech company HomeLight raised $60 million this week and acquired credit startup Accept.inc.
Pain on the blockchain
Coinbase suffers a slow, morally crushing descent. Following a hiring freeze and then the controversial withdrawal of accepted offers, the crypto exchange announced this week that it will cut its workforce by 18%.
Remember when we said that layoffs are a little more bearable if you’re not a jerk to your employees? I’m sorry to inform you that the higher folks at Coinbase probably don’t read my work.
In a letter to employees, CEO Brian Armstrong said fired employees would be notified of their status via their personal email — they would be immediately locked out of their company accounts to protect sensitive data.
It is true that irate former employees can retaliate by leaking such information. But do you know how to make them even more disadvantaged? Lock them out of their work account without warning and tell them they are out of a job.
Coinbase had 1,250 employees in early 2021, when the NFT craze ushered in a new wave of cryptocurrency participants. Since then, the team had more than quadrupled.
“There were new use cases made possible by crypto gaining traction practically every week,” Armstrong explained. “While we did our best to get this just right, it’s clear to me now that we hired too much.”
Armstrong also added that hiring new hires had made the team less productive in recent months.
Coinbase offers 14 weeks of severance pay to affected employees, plus 2 weeks for each year of employment for more than one year. The platform also provides 4 months of COBRA health insurance in the US and 4 months of mental health insurance for international workers.
The crypto layoffs don’t end there. Exchanges that rely on transaction costs are losing their revenue streams due to the recession. The $3 Billion Crypto Lending Platform BlockFi Cut 20% of its workforce of about 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 (in the meantime, Crypto.com has pledged $700 million over 20 years for the naming rights to the Staples Center…). Finally, Huobi Thailand will be shut down in July due to problems with government permits.
Consumer technology also takes a hit
While Spotify No layoffs yet, CEO Daniel Ek told employees the streaming giant will slow hiring by 25%, citing uncertainty in the market. So far this year, Spotify has shut down its live audio creator fund and scrapped its in-house podcast group, Studio 4, affecting about 15 jobs.
Is WordPress design tool Elementor consumer technology? It saved me several times, so let’s keep going. Last week, Elementor bought Strattic, which converts WordPress sites to Jamstack, a newer web development architecture. But citing “rising inflation and looming recession,” Elementor co-founder and CEO Yoni Luksenberg announced that the company would lay off 15% of its workforce, primarily in its marketing department.
That brings us to ByteDance – don’t worry, TikTok is fine. Three years ago, the China-based parent company of TikTok bought Mokun Technology, an online game developer. 101 Studio, which was part of that acquisition, was shut down this week, with about 150 employees being cut and the other 150 employees at the studio being given internal transfers. This marks a setback in ByteDance’s race against Tencent to dominate mobile gaming.
And yet, there is more
TechCrunch’s Mary Ann Azevedo reports:
Canadian fintech giant Wealth Easy, which was valued at $4 billion last year, is laying off 159 people — or about 13% of the workforce. The Toronto-based company has been a leader in democratizing consumer financial products, including stock trading, crypto asset sales and peer-to-peer money transfers. And now it appears that Wealthsimple is an example of another company that experienced a boom during the early days of the pandemic and is now seeing a slowdown in business.
Mary Ann also reported a 25% workforce reduction at 110 employees at: Notarize, a startup that offers online remote notarization. Of course, this startup thrived at the beginning of the pandemic, but now online notarization is not that much in demand.
Our very own Christine Hall shared the news of JOKRan on-demand food delivery company, leaving the US to focus on Latin American markets.
Food delivery companies are going through tough times as funding dries up and the rush to invest in this sector, partly as a result of the global pandemic, has left it quite inflated and in need of a course correction. This became clear when some of JOKR’s competitors announced layoffs. For example, in May, Gopuff, Gorillas and Getir announced staff reductions.
Earlier this month, TechCrunch took a closer look at what’s happening in the on-demand delivery space and what this means for the industry going forward.