We don’t need to tell you about the layoffs that are currently defining the tech space, especially focused on late-stage companies that are struggling to raise deferred financing and grow to their current valuations. Still, we think it’s important to focus on the frustrating trend that’s emerging between all these headlines: some companies are announcing layoffs after layoffs in a row, with surprising doublings of layoffs.
For a long time, I noticed that the same startup that made layoffs in March 2020 had to downsize again in a wave of 2022. The first wave was in preparation and fear, and this wave felt like a pullback after a pump. What confuses me now is seeing startups laying off staff now, citing it vaguely due to the macroeconomic environment, and then doing the same thing a few weeks later for the same reason.
In most cases, subsequent layoffs appear to be larger than previous layoffs, telling us that the company didn’t do enough in the first restructuring.
It’s also worth noting that the pace of new layoffs is slowly decreasing. There were 150 new layoffs in July, down nearly 18% from the previous month, according to layoffs.fyi, a layoffs tracker.
According to Nolan Church, CEO and co-founder of part-job platform Continuum, there are several reasons why founders might have to go through two rounds of layoffs in quick succession: The business gets worse, the forecast is poor, or both Of. He also added that one factor could be that “leadership didn’t realize the guts to go deep” when it came to people and projects in the first round.
Continuum recently raised a $12 million Series A to expand a suite of part-work tools, including a service that helps startups become more human. The company connects clients who need support as they make layoffs with experienced executives for day-to-day support ranging from sharing news to high-level advice. He didn’t see any double rounds of layoffs among clients, which he attributed to the fact that his executives encouraged founders to “cut once and cut deep.”
“The layoffs two weeks apart are inexcusable. The leadership, probably the CEO, was grossly miscalculated,” Church said. “The layoffs two years apart doesn’t surprise me. Typically, CEOs of early-stage companies optimize for a runway of two to three years. The first layoff is when they initially change direction. As part of that event, they may Will change direction and make new bets. The second layoff is because that bet didn’t pay off.”
With all of this in mind, here are some companies that have gone through at least two rounds of layoffs in a few months, sometimes even a few weeks, based on data from layoffs.fyi and TechCrunch’s own report:
On Deck, a tech company that connects founders with one another, funding and advice, made another round of layoffs just three months after laying off a quarter of its workforce. The layoffs affected more than 100 people, or half of its workforce, sources said, while the company (which confirmed the layoffs to TechCrunch via email) said 73 full-time employees were made redundant. No executives were affected.
The startup’s second layoff lays out a more specific strategic plan for next steps, while its first layoff was largely attributable to changes in the capital and accelerator markets. This time, On Deck goes deeper: It has shuttered several communities and spun off its professional development division into a separate startup.
This may be due to the more urgent need to extend the runway. Sources estimate that the first round of layoffs happened because On Deck had only nine months of runway left. Now, On Deck co-founders Erik Torenberg and David Booth say the company has more than three years of runway.
Earlier this week, Robinhood announced layoffs of 23% of its workforce across all functions, with a particular focus on the company’s operations, marketing and project management functions. Robinhood is laying off 9% of its full-time workforce after just three months, which CEO and co-founder Vlad Tenev said was “to increase efficiency, increase speed and ensure we respond to changing customer needs.”
Tenev’s tone was different as the second round of layoffs was officially confirmed. The co-founder is responsible for Robinhood’s apparent overhiring in 2021’s hiring frenzy. The company staffed many of its operations last year, assuming the “high level of retail engagement” that is happening will continue in 2022, he said.
“We are overstaffed in this new environment,” he wrote. “As CEO, I approve and take responsibility for our ambitious staffing trajectory — it’s up to me.” He also said , the first round of layoffs “doesn’t go far enough”.
“Since then, we have seen a further deterioration in the macro environment, with inflation reaching a 40-year high, along with a broad crypto market crash. This has further reduced client trading activity and custody assets,” Tenev said. Shares of Robinhood have also been volatile over the past year. At press time, the company was trading at $8.90 after hours, 89% below its 52-week high of $85. It was also down 3.6% a few hours later.
Crypto platform Gemini laid off about 10% of its workforce, followed by about 7% a few weeks later. Co-founders and twin brothers Cameron and Tyler Winklevoss spoke about the expected volatility of what they call the “crypto revolution.”
The co-founders wrote: “Its path can best be described as punctuated equilibrium – periods of equilibrium or stagnation interrupted by dramatic moments of excessive growth, followed by sharp contractions, stabilizing to a new higher than before,” the co-founders wrote. Balance.” in a blog post during the first layoff. They went on to say that the cryptocurrency has entered a temporary downturn, a so-called contraction phase, further “affected by the current macroeconomic and geopolitical turmoil.”
However, Gemini did not respond to comment when it came to the second layoff. An unnamed source told TechCrunch that the company is laying off workers because of what it called “extreme cost-cutting.” According to Jacquelyn Melinek, an internal operating plan document shows that Gemini is considering a plan that would bring the company to about 800 employees, a reduction of about 15 percent from the 950 at the time.
Virtual event platform Hopin, last valued at Valuation at $7.75 billion, laid off 29% of the workforce in July, or 242 people. The layoffs come just four months after Hopin fired 12% of its workforce, citing its goal of sustainable growth in a changing market.
In addition to laying off nearly a third of the workforce, a Hopin spokesman confirmed that some contractors and members of third-party teams were fired, but did not provide exact numbers. The difference between the first and second rounds, aside from the fact that the latter has more than doubled in size, is that Heping has parted ways with several executives. TechCrunch has learned that the chief operating officer, chief financial officer and chief commercial officer have left the company, but it is unclear whether the three left voluntarily or were fired.
A Hopin spokesperson confirmed via email that the three are “leaving the company,” adding that “after much discussion, we all agree that this is the best way forward for the company.”
Latch, a proptech combined with a SaaS platform, went public via a SPAC in June 2021, and was the first business I saw to lay off staff for two weeks in a row.
The company laid off 30 jobs in May, or 6% of its workforce, according to an email obtained by TechCrunch.Then, if confirmed Via a press release late FridayLatch announced a total of 130 layoffs, or 28% of its full-time workforce.
Similar to Hopin, successive layoffs have been accompanied by executive attrition. The layoffs affected chief revenue officer Chris Lee and vice president of sales Adam Sold, the sources said. In April, Latch’s CFO left the company less than a year after taking the job and after taking the company public through a reverse merger. At the time, TechCrunch outlined the broader SPAC debacle — and explained that Latch wasn’t immune either.
Latch expects to save approximately $40 million annually in R&D, sales and marketing, and general and administrative expenses following the layoffs, The press release said.
ClearcoThe Toronto-based provider of online corporate fintech capital, told TechCrunch it has cut 125 jobs, or 25% of its workforce. According to Clearco, those affected will receive severance packages, a two-year window to exercise equity and transition support for the leadership team’s work. The company did not say which teams and roles were affected, or if any C-suite members were fired.
Clearco reportedly expanded to Germany in June, but also cut 10% of its Irish workforce just three months after entering the market and announcing plans to hire more than 100 employees independent. It’s unclear if there will be more geographic-focused layoffs, or what “strategic” options are available – but we do know that Clearco does have plenty of international competitors. The startup had previously made another round of layoffs in March 2020 that affected 8% of its workforce, which it then extrapolated to “long-term economic impact of COVID-19.”
It’s been about a year since Clearco announced funding from SoftBank, closing a $215 million funding round just weeks after the company closed a $100 million round that valued it five times at $2 billion.
Nearly four months after reporting on the ongoing wave of layoffs, it’s clear that double layoffs provide different messages in a number of ways. It’s likely that a variety of factors played a role in the layoffs, from bad forecasts to declining renewal rounds to the realization that things really were that bad. While workers ultimately have to deal with the effects of the changing macroeconomic environment, employers are giving us one example after another of how difficult it can be to manage workers during a downturn. Or at least management fire them.