August 16, 2022


We don’t need to tell you about the layoffs that are defining the tech landscape right now, which are particularly concentrated in lagging companies struggling to ramp up rounds of extension and growth to current valuations. What we think is important, though, is to focus on a depressing trend that emerges among all of these headlines: Some companies have announced post layoffs in quick succession, a seemingly surprising double cut.

For a long time, I have observed that the same startups that conducted layoffs in March 2020 had to fall back in the 2022 wave. The first wave was in the making and fearful, this wave looks like a dip after a rally. What puzzles me now is seeing startups cut staff now, vaguely citing them due to the macroeconomic environment, and then doing the same a few weeks later with the same reasoning.

Some nuances

In most cases, the additional layoffs seemed larger than previous cuts, which tells us the company didn’t go far enough on its first reorganization.

Nor is it worth anything that the tempo of net new demobilization events drops so slightly. According to the layoffs tracker.

According to Nolan Church, CEO and co-founder of part-time work platform Continuum, there are a few reasons a founder might have to go through two rounds of layoffs in quick succession: the business is getting worse, the forecast is poor, or both. He also added that one factor could be that “the leadership didn’t have the conscious courage to go deep” when it came to people and projects in the first round.

Continuum recently raised $12 million from its first Series A round to expand a suite of part-business tools, including a service that helps startups transact more humanely. The company connects a client who needs support when conducting a layoff with an experienced CEO for anything from support day sharing news to top-notch advice. He hasn’t seen any double rounds of layoffs among clients, which he attributes to the fact that his executives are encouraging founders to “one-time cuts and deep cuts.”

“A two-week layoff is unforgivable. The leadership, most likely the CEO, greatly miscalculated,” Church said. “Layoffs after two years do not surprise me. Typically, CEOs of early stage companies are improved for two to three years off the runway. The first demobilization was when they initially changed direction. As part of this event, they may have changed course and made a new bet. The reason for the second layoff is that this bet did not pay off.”

All this in mind, according to data from the layoffs. fyi In addition to TechCrunch’s own reports, here are some companies that have had at least two rounds of layoffs within months, sometimes weeks of each other:

on deck

On Deck, a tech company that connects founders, capital and advice, conducted another round of layoffs just three months after laying off a quarter of its employees. Sources say more than 100 people have been affected by the workforce cutback, accounting for half of all employees, while the company — which confirmed the layoffs to TechCrunch via email — said 73 full-time employees have been laid off. None of the executives were affected.

The startup’s second layoff comes with a more specific strategic plan for what’s to come, while the first is largely attributed to changes in capital markets and accelerators. This time around, On Deck has delved deeper: It has ignited several communities and is turning its career advancement arm into a separate startup.

This may be due to the urgent need to extend the runway. Sources have estimated that the first round of layoffs occurred because On Deck only had nine months left of the runway. Now, On Deck founders Erik Torenberg and David Booth say the company has more than three years of exposure.

Robinhood

Earlier this week, Robinhood announced that it was laying off 23% of its employees in all functions, especially company operations, marketing and program management functions. The workforce cut comes just three months after Robinhood cut 9% of full-time employees, which CEO and co-founder Vlad Tenev said was “the right decision to improve efficiency, increase our speed and ensure we are responsive to the changing needs of our customers.”

With the second round of layoffs officially confirmed, Tenev took a different tone. The co-founder apparently took over Robinhood for hiring in the 2021 craze. He said the company last year hired several of its operations jobs assuming that “increased retail engagement” was occurring in 2022.

“In this new environment, we are working with more than appropriate employees,” he wrote. “As CEO, I have agreed and taken responsibility for our ambitious hiring path – that’s on me.” He also said the first round of layoffs “wasn’t enough”.

Since that time, we have seen a further deterioration in the macro environment, with inflation rising to its highest levels in 40 years accompanied by a broad crash in the cryptocurrency market. This further reduced client trading activity and assets held, Tenev said. Robinhood’s stock price has been volatile over the past year as well. At press time, the company was trading at $8.90 in after-hours, down significantly – 89% – from a 52-week high of $85. It was also down 3.6% after hours.

Twins

Gemini Crypto cut nearly 10% of its workforce, then cut about 7% more staff a few weeks later. Co-founders and twin brothers Cameron and Tyler Winklevoss have talked about the somewhat predictable vicissitudes of what they call the “crypto revolution.”

Its course can best be described as intermittent equilibrium—periods of equilibrium or stagnation punctuated by dramatic moments of overgrowth, followed by severe contractions that settle into a new, higher equilibrium than the previous one,” the founders wrote. In a blog post during his first workforce cuts. They add that the cryptocurrency has entered a temporary deflation phase, known as a deflation phase, which is “exacerbated by the current macroeconomic and geopolitical turmoil.”

However, Gemini did not respond to comment when it comes to their second reported layoff. A source, who spoke to TechCrunch on condition of anonymity, said the company is laying off employees because of what it called “significant cost cuts.” An internal operating plan document showed Gemini was looking at a plan that would take the company to about 800 employees, which is about 15% less than the 950 employees at the time, Jacqueline Mylink reports.

jump in

Virtual events platform Hopin, recently rated a 7.75 billion dollars valuation, laid off 29% of employees, or 242 people, in July. The cut came just four months after Houben let 12% of its workforce go, pointing at the time to a goal of sustainable growth amid a changing market.

In addition to cutting nearly a third of the company, a Hoppen spokeswoman confirmed that some contractors and third-party team members have been laid off, but did not provide exact numbers. The difference between Round One and Round Two, other than the latter being more than twice the size, is that Hoppen has parted ways with a number of executives. TechCrunch has learned that the COO, CFO and chief business officer have left the company, although it is unclear whether the trio left voluntarily or were laid off.

A spokesperson for Hoppen confirmed via email that the trio is “quitting work,” adding that “after many discussions, we all agreed that this was the best way forward for the business.”

latch

Latch, a proptech company meeting with the SaaS platform that went public via SPAC in June 2021, was the first business I’ve seen being laid off for two weeks in a row.

In May, the company cut 30 people, or 6% of its total staff, according to an email obtained by TechCrunch. Then, as is assured Through a press release issued late on FridayLatch announced that it has laid off 130 people, or 28% of its full-time employee base.

Similar to Hoppen, successive layoffs are accompanied by an aspect of executive momentum. Sources say the cuts affected chief revenue officer Chris Lee and vice president of sales Adam Sold. In April, Latch CFO left the company less than a year after taking office and after going public with the company through a reverse merger. At the time, TechCrunch identified the broader breakdown of SPAC—and made it clear that Latch was not immune.

Latch expects annual operating rate cost savings of approximately $40 million across research and development, sales and marketing, and post-layout general and administrative expenses. Press release says.

clerk

clerk, a Toronto-based provider of financial technology capital to online businesses, told TechCrunch that it has laid off 125 people, or 25% of its entire staff. Those affected will receive severance pay, a two-year window to exercise equality and support a career transition from the leadership team, according to Clearco. The company did not say which teams and roles were affected, or whether any C Suite members were abandoned.

Clearco expanded into Germany in June but meanwhile laid off 10% of its staff in Ireland, just three months after breaking into the market and announcing plans to hire more than 100 employees, according to reports. independent. It’s not clear if there will be more layoffs focused on geography, or what exactly are “strategic” options – but we do know that Clearco has plenty of international competitors. The startup earlier conducted another round of layoffs in March 2020, a cut that affected 8% of employees and then attributed this to the “long-term economic impact of COVID-19”.

It’s been nearly a year since Clearco announced it had secured funding from SoftBank, closing a $215 million tranche just weeks after the company reached a $100 million round that had more than tripled in value to $2 billion.

Takeaway

After nearly four months of covering the steady pace of layoffs, it’s clear that the double cuts are delivering mixed messages in more ways than one. It’s possible that there was a combination of factors that played a role in the layoffs, from misleading expectations to poor extension rounds to the realization that that’s just how bad it really was. While employees eventually have to deal with the ramifications of a changing macroeconomic climate, employers are giving us example after example of how difficult it is to know how to manage employees during an economic downturn. Or at least manage their layoffs.



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