Layoffs

VCs decipher the recent fintech layoffs — and why they’re happening now • ZebethMedia

By zebethcontrolPosted on November 4, 2022Posted in Chime, EC Fintech, EC venture capital, Fintech, Layoffs, startup valuations, Startups, stripe, tech layoffsNo Comments

Many big companies in the fintech world cut jobs in the past month. And yet Stripe’s announcement it would lay off 14% of its workforce still made a splash, proving that unicorns and decacorns are not immune to the challenging economic and fundraising conditions. The Stripe news closely follows Chime confirming this week that 12% of its employees would be laid off and Brex revealing last month that it was cutting 11% of its workforce. So what the heck is going on here? Well, according to Spiros Margaris, a fintech venture capitalist and founder of Margaris Ventures, the current layoffs by some of these larger fintech companies were “caused by the challenging geopolitical market environment and inflationary pressures. It affects the whole fintech startup industry — and globally all industries — since the prominent players have a strategic ripple effect on the smaller players.” “Laying off good employees endangers their strategy to succeed in the grand vision they initially sold to the VC.” Spiros Margaris, founder of Margaris Ventures Cameron Peake, a partner at Restive Ventures who recently invested in AiPrise, concurred, noting via email that much of what we are seeing today “were the dynamics we saw play out last year,” including all of the “large funding rounds, sunny market projections and a belief that companies needed more people to fuel their growth.” What resulted was “a lack of discipline around company fundamentals,” she added. While the frenzy was dissipating, it was then that companies “realized they were not only ahead of their skis but that they needed to cut back in order to focus more on profitability,” she said.

Most of the unicorns aren’t • ZebethMedia

By zebethcontrolPosted on November 4, 2022Posted in Brex, Equity podcast, Layoffs, Onward, Startups, stripe, VentureNo Comments

Hello and welcome back to Equity, a podcast about the business of startups, where we unpack the numbers and nuance behind the headlines. Oh what a week. What a week. Things are busier than ever at ZebethMedia, where we’re coming out of our post-conference stupor and charing straight back into a packed news cycle. Sure, Musk is still making waves, but there are startup rounds to cover, layoffs to chew on, earnings coverage, unicorn reports, new data, and more. After cutting back sharply on material and still going long, here’s what Mary Ann, Natasha, and Alex got into this week: Rewind wants to help people with their memory. We talk about how the startup, which launched this week, uses recording technology to help you get what you see, hear and say at your finger tips. We talked about Onward, a startup that wants to help divorced or separated parents fight less about money and how it just raised nearly $10 million despite being pre-revenue. The somewhat odd, possible Byju’s IPO-spinoff of Aakash, a tutoring company that it bought the other year. Our views can be summarized in meme format: An edtech IPO? In this economy? Unicorns face an incredibly uphill journey to get public, which may explain in part why Byju’s is not itself going public (recall that it had had plans, but like with so many other companies those are on hold). And then there was Brex, which announced a new partnership with Techstars despite a big push into the enterprise space. Stripe revealed that it has cut 14% of its staff, or over 1,100 people, and its CEO and co-founder Patrick Collison admitting that the payments giant had “overhired for the world we’re in.” And finally, there’s a new VC ratings company in the neighborhood. How do we feel? Better than some VCs, at least. Got all that? Good. More Monday morning. Equity drops at 7 a.m. PT every Monday and Wednesday, and at 6 a.m. PT on Fridays, so subscribe to us on Apple Podcasts, Overcast, Spotify and all the casts. ZebethMedia also has a great show on crypto, a show that interviews founders, one that details how our stories come together, and more!

Twitter faces a class action lawsuit over mass employee layoffs with proper legal notice • ZebethMedia

By zebethcontrolPosted on November 4, 2022Posted in Apps, elon buys twitter, Elon Musk, Government & Policy, Layoffs, Social, TwitterNo Comments

Twitter is being sued for not giving employees advanced written notice of a mass layoff, in violation of worker protection laws including the federal Worker Adjustment and Retraining Notification Act as well as the California WARN Act, both of which require 60 days of advance notice. Following Elon Musk’s takeover of Twitter, the company began mass layoffs early on Friday in an effort to reduce costs by eliminating 3,700 jobs, or 50% of its total workforce. Bloomberg first reported the news of the lawsuit, filed on November 3, 2022 in the U.S. District Court in the Northern District of California. The complaint notes that Twitter began its layoffs on November 1, when it terminated the plaintiff in the lawsuit, Emmanuel Cornet, without providing the proper written notice in violation of U.S. and California law. Additional plaintiffs, Justine De Caires, Jessica Pan, and Grae Kindel said they were terminated on November 3 by being locked out of their accounts. Twitter is also enacting widespread layoffs across its workforce today, on Nov. 4, 2022, it stated, adding that California’s Employment Development Department had not received a notice related to the event. The suit reminds the court that Musk had previously laid off employees without notice at another company he owns, Tesla. A federal judge later ruled that Tesla must inform workers of the proposed class action lawsuit, as the termination agreements they had signed may have been misleading and caused them to waive their rights under federal law, Reuters reported at the time. Musk had dismissed that lawsuit as “trivial,” when commenting on the lawsuit at the Qatar Economic Forum organized by Bloomberg. In the new complaint against Twitter, the plaintiffs are asking the court to declare that Twitter has violated the federal and California WARN Acts and certify the case as a class action suit. It’s also asking the court to stop Twitter from having the laid-off employees sign documents that would release their claims without informing them of this lawsuit. And it’s seeking a range of relief, including compensatory damages (including wages owed), as well as declaratory relief, pre- and post-judgment interest, plus other attorneys’ fees and costs. Under Twitter’s takeover deal terms, Musk had agreed to keep employee compensation and benefits the same. That means the laid-off employees should receive 60 days of salary and the cash value of the stock they were to receive within three months of their last date at the company, per law. “Elon Musk, the richest man in the world, has made clear that he believes complying with federal labor laws is ‘trivial’ We have filed this federal complaint to ensure that Twitter should be held accountable to our laws and to prevent Twitter employees from unknowingly signing away their rights.” Shannon Liss-Riordan, one of the attorneys who filed the lawsuit told CNN in a statement. Twitter hasn’t responded to requests for comment — but that could also be because its comms staff has been included in the layoffs. The company has gone about its mass layoffs in a chaotic and fairly cold fashion. Instead of being informed personally, Twitter employees were to receive an email with an update about their employment status by Friday 9 AM PT. If they still had a job, the email would come to their work inbox. If not, they’d receive a personal email as access to internal systems was cut off. A number of Twitter employees around the world have already posted tweets indicating that they have been laid off and are sharing sympathies with their fellow “tweeps.” Twitter also closed its offices temporarily as the layoffs were underway by disabling badge access. The transition has been one of confusion for Twitter staff. It’s been reported that Twitter’s new owner hadn’t officially communicated with employees following the deal’s closure on Oct. 27, leading staff to learn of events by following Musk’s tweets, through private chats, on workplace gossip site Blind, and by reading news media reports. Immediately after the takeover, Musk fired CEO Parag Agrawal, CFO Ned Segal, General Counsel Sean Edgett and Head of Legal Policy, Trust and Safety Vijaya Gadde. Other top executives like Chief Consumer Officer Sarah Personette and Chief of People and Diversity Dalana Brand handed in their resignations the following day. General manager for core technologies Nick Caldwell, Chief marketing officer Leslie Berland, Twitter’s head of product Jay Sullivan, and its vice president of global sales, Jean-Philippe Maheu, have also left. The company canceled its upcoming developer conference Chirp and it appears that Twitter’s head of its developer platform, Amir Shevat, is also out, as he tweeted he’s “better out than in” and thanked the developer community for the amazing journey they had. In addition to reducing the number of employees, Musk has also been overhauling Twitter’s product at a rapid pace. Earlier this week, he announced his intention to enact a new version of the Twitter Blue paid subscription, which will cost $8 per month and offer users the verification check mark, fewer ads, and the ability to post longer videos. According to a report by The Platformer, Twitter is also planning to shut down its long-form writing product Notes and newsletter product Revue, which was acquired in 2021. Tweets indicate that staff that worked on Twitter Communities were also laid off, suggesting that product may also be shut down. The new legal complaint is embedded below. Twitter class action lawsuit over mass layoffs by ZebethMedia on Scribd

Spend management startup Pleo lays off 15% of its workforce • ZebethMedia

By zebethcontrolPosted on November 4, 2022Posted in corporate spend, Fintech, Layoffs, pleo, StartupsNo Comments

Danish startup Pleo has announced that it plans to lay off around 15% of the company’s workforce. As the company currently has nearly 1,000 employees, it could affect up to 150 people. Pleo develops expense management tools for SMBs around Europe. “I’ll be honest. Pleo today, at the point of almost 1,000 employees and with our focus across 16 different countries, feels so different than just 12 months ago,“ co-founder and CEO Jeppe Rindom wrote in a blog post. “Yet the world has changed and our next chapter will look different. We’re no longer operating under a ‘growth first’ mandate but rather a reality of ‘growth through focus and efficiency’. Focus on the many markets we now serve and focus on driving efficiency in everything we do. And what got us here, is not what will get us there,” he added later. As a reminder, Pleo raised $150 million in July 2021 — and then another $200 million in December 2021. Following this Series C round, the company reached a $4.7 billion valuation. It became one of Europe’s most valued fintech company. “We’ve made our priorities and set our strategy for the coming year. And sadly this is impacting 15% of our roles, up to 150 of our colleagues may have to leave. Each and every one has played an instrumental role in making Pleo what we are today. And I’d like to believe that Pleo is more than just any place of work. Pleo is about people. […] And that makes this decision extra hard and emotional. It’s difficult. Yet needed,” Rindom wrote. Pleo grew at a rapid pace. Last year, the company had 20,000 customers across six countries — Denmark, Sweden, Germany, Spain, Ireland and the U.K. The company now operates in 16 different countries. Pleo competes with Spendesk and Payhawk. The startup issues company cards with individual and team spending limits. When an employee buys something, they can attach the receipt of the expense in Pleo directly. The platform also supports out-of-pocket expenses in case you have to pay in cash and get reimbursed later. Finally, Pleo syncs expenses with accounting tools, such as Sage, Xero and Quickbooks. The company also offers an invoice management product to replace your existing accounts payable solution. The idea is that Pleo can help you automate many of the processes that come with spending your company’s money. And yet, Pleo may have grown too quickly. It is going to be difficult to raise more money at the same valuation. Pleo now has a longer runway, but some employees will have to leave the company, unfortunately.

Twitter’s mass layoffs are set to begin tomorrow morning • ZebethMedia

By zebethcontrolPosted on November 4, 2022Posted in Elon Musk, Layoffs, Social, TwitterNo Comments

According to an internal memo sent to Twitter employees, the new management under Elon Musk will begin conducting layoffs Friday morning. These layoffs have been rumored since before Musk’s takeover, with the most recent report estimating that half of the 7,500 employees will lose their jobs. On Thursday evening, all employees received an email stating that they will be informed of their employment status at 9 A.M. PT on Friday. Each email will be sent with the subject line “Your Role at Twitter.” If an employee is keeping their job, they’ll be notified via their work email — if they’re let go, they’ll be notified on a personal address. “To help ensure the safety of each employee as well as Twitter systems and customer data, our offices will be temporarily closed and all badge access will be suspended,” the email reads. “If you are in an office or on your way to an office, please return home.” The email was impersonally signed “Twitter.” According to a post from a Twitter employee, staff members have been flooding an internal Slack channel with blue heart emojis as they wait to learn their fate tomorrow. Musk’s team has already tried to evaluate the productivity of Twitter employees by asking engineers to print out the code that they have written in the last 30 to 60 days. Musk also brought in Tesla engineers to look over Twitter code. Still, it’s not clear what divisions of the company will be impacted. At Tesla, Musk axed the entire PR team a few years ago — by that notion, it’s likely that he will get rid of Twitter’s PR team. When Musk first took over last week, he immediately fired four key executives: CEO Parag Agrawal, CFO Ned Segal, General Counsel Sean Edgett and Head of Legal Policy, Trust and Safety Vijaya Gadde. Twitter’s Chief Consumer Officer Sarah Personette and Chief of People and Diversity Dalana Brand resigned the following day. This story is developing…

Iron Ox lays off 50; amounting to nearly half its staff • ZebethMedia

By zebethcontrolPosted on November 3, 2022Posted in Iron Ox, Layoffs, Robotics & AINo Comments

There are no sure bets in this — or any — business. Automation, agriculture and a climate-bent are green flags, but no category is immune from mounting economic headwinds on top of the already difficult task of launching a successful startup. While robotics has thus far seen a limited slowdown in investing relative to many other sectors, there’s no such thing as a recession-proof business in startup land. Bay Area-based Iron Ox has certainly had no shortage of supporters. The agtech firm has raised north of $100 million, culminating with a $53 million Series C announced in September of last year. But earlier this week, the robotic agtech startup instituted widespread layoffs. All told, 50 jobs were cut this week, a figure that amounts to nearly half of the company’s staff of “just over 100 people.” Chief Legal Officer, Myra Pasek, tells ZebethMedia that the decision was made in order to “extend [its] cash runway.” Pasek adds, We’ve decided to hyperfocus on our core competence of engineering and technology; as a result, we eliminated many roles that are not core to our renewed focus. However, the layoff was comprehensive and included positions throughout the organization — i.e., not limited to only certain departments. Reducing the Iron Ox team was a painful decision — one we did not take lightly. We are working with our board members and leaning into our extensive ecosystem throughout Silicon Valley to help employees find meaningful new work at mission-aligned companies. Iron Ox has always hired world-class talent, and I’m confident that the individuals we unfortunately had to cut this week will have many options open to them. As a matter of policy, we are not going to provide additional details or comment on specific personnel, and we ask that you respect their privacy at this sensitive time. It’s a massive blow for a well-funded firm at the cross section of several growth areas. Iron Ox’s play has focused on fully automated greenhouses, courtesy of robotic arms, Kiva-like plant moving carts and other technologies. Utilizing indoor growing techniques and a trove of data, the pitch promised broader growing seasons in more diverse climates and the utilization of less resources than standard farming, all while still harnessing the sun in a way that is often altogether removed from vertical farming. Precisely what shape the new focus will take remains to be seen, though the company’s site reflects a broad range of different satellite categories, including plant and data science and robotics. Speaking with ZebethMedia, Iron Ox explained that it had no intention of winding down operations, though the firm is seemingly open to both seeking additional funding and, perhaps, even a sale. “[A]t Iron Ox, our attitude is that we are always willing and eager to meet with mission-aligned investors who want to decarbonize the agriculture sector,” Pasek says. “Like other competitive startups, we never stop fundraising. We are not talking about winding down operations — we are more focused than ever on our core competencies in engineering and technology.”

Tiger Global-backed SaaS startup Chargebee cuts 10% jobs • ZebethMedia

By zebethcontrolPosted on November 3, 2022Posted in ChargeBee, Enterprise, Layoffs, StartupsNo Comments

Chargebee, backed by marquee investors including Tiger Global and Sequoia Capital India, has laid off about 10% of its staff in a “reorganization” effort due to ongoing global macroeconomic challenges and growing operational debt. The Chennai and San Francisco-headquartered startup, which offers billing, subscription, revenue and compliance management solutions, confirmed to ZebethMedia that the update impacted 142 employees. “This decision was a difficult one, and we want to first acknowledge and thank the team members who helped us get where we are today. Chargebee has grown exponentially over the last few years, and amid changing market conditions, we have decided to proactively refocus resources to set a strong foundation on which to continue our growth,” said Penny Desatnik, director of corporate communications at Chargebee, in a statement emailed to ZebethMedia. “We will continue to build and strengthen key relationships, and by focusing on efficient growth, we expect to sharpen our go-to-market strategy and operations to meet the rising market demand for subscription services across B2C and B2B businesses. We wish success to our former colleagues and remain committed to the success of our customers and partners around the globe,” Desatnik added. On Wednesday, Chargebee co-founder and CEO Krish Subramanian wrote on a LinkedIn post that the startup had changed its hiring plan to align with priorities owing to the macroeconomic factors and started reducing its expenses across various areas including tools, consulting and contractors due to a growing gap between revenue and spending. “While the scaling decisions were under our control and responsibility, the economic situation and lack of visibility into the future has made it harder for everyone,” the note said. The affected employees will receive three months of pay and extended medical benefits while they look for new opportunities, he added. The startup will also offer outplacement career services and an extension of time to exercise stock options granted under its stock incentive plan. Chargebee raised $250 million in a Series H round in February — over nine months after earning unicorn status following the $125 million Series G funding in April last year. The startup counts Insight Venture Partners, Sapphire Ventures, Steadview Capital, Tiger Global and Sequoia Capital India among its key backers. Unfavorable economic conditions have impacted several startups and tech companies around the world. In the last few months, Indian startups including Unacademy, Byju’s and Ola have cut their workforces amid a significant dip in the funding. U.S. companies including digital bank Chime, online real estate marketplace Opendoor and lending giant Upstart also recently made similar decisions.

Digital bank Chime is cutting costs across the board

By zebethcontrolPosted on November 2, 2022Posted in Chime, Fintech, Layoffs, StartupsNo Comments

Digital bank Chime confirmed today that it is laying off 12% of its workforce, or about 160 people. The Information first reported the news. According to an internal memo obtained by ZebethMedia, Chime co-founder Chris Britt described that the move was one of many that would help the company thrive “regardless of market conditions.” In the memo, Britt said that he and co-founder Ryan King are re-calibrating marketing spend, decreasing the number of contractors, adjusting workspace needs and renegotiating vendor contractors. “The changes will help, but we also need to adjust the size of our organization as we increase our focus and forge our path to profitability,” Britt wrote in the memo. Chime was notoriously one of the first neobanks to hit EBITDA profitability, a milestone it shared when it hit $14.5 billion two years ago. Its latest public valuation was $25 billion. Since its 2012 inception, Chime has raised a total of $2.3 billion in funding, according to Crunchbase. Sure enough, the co-founder added that the startup is “well-capitalized” but the financial market uncertainty was a factor in these changes. A spokesperson for Chime reiterated this perspective, adding over email that “as we look at current market dynamics, we are adjusting our organization to be fully aligned with our company priorities. As a result, we are eliminating some positions, while still hiring to select others.” The spokesperson did not immediately respond to other questions regarding severance details, the impact on C-level executives and salaries, as well as the profitability of the company. The company’s memo, along with the fact that Chime has paused its public debut plans, suggests that growth trends may have changed – a fate other fintechs have been similarly dealing with. Most recently, corporate spending startup Brex cut 11% of staff after being valued at $12.3 billion earlier this year, also citing the challenging macroeconomic environment. Still, broadly speaking, the tide is somewhat shifting on the cadence of tech layoffs. According to layoffs.fyi, nearly 70% of people who have been laid off this year lost their jobs during May, June, July and August. Since the summertime of sadness, staff cuts have decreased. September had half the number of layoff events than August, and in October, new layoff events slowed while people impacted slightly inched upward from August. While November is off to a not-so-great start, considering Chime’s cuts and Opendoor’s 18% reduction that happened just hours ago, the data brings some hope.

Opendoor lays off about 550 employees, or 18% of its workforce • ZebethMedia

By zebethcontrolPosted on November 2, 2022Posted in Eric Wu, Fintech, Layoffs, OpenDoor, proptech, real estate techNo Comments

Opendoor is letting go of about 550 people, or 18% of the company, across all functions, its co-founder and CEO Eric Wu announced in a blog post today. The real estate technology company is one of many real estate tech companies that have had to lay off workers in 2022. Online mortgage lender Better.com has had multiple rounds of layoffs and in June, Redfin and Compass shed a combined 900+ workers. Skyrocketing mortgage interest rates and inflation are largely to blame for the decreased demand that has led to slowdowns in business at such companies. For his part, Opendoor’s Wu said his company was navigating “one of the most challenging real estate markets in 40 years.” In his blog post, the executive said that his company over the past two quarters had worked to reduce its operating expenses. He wrote: “Prior to today, we scaled back our capacity by over 830 positions – primarily by reducing third party resourcing – and we eliminated millions of fixed expenses. We did not make the decision to downsize the team today lightly but did so to ensure we can accomplish our mission for years to come.” Impacted employees will receive ten weeks of severance pay, with an additional two weeks of pay for every full year beyond two years of tenure. All current healthcare benefits will remain active for the rest of the month, then Opendoor will pay for three months of health insurance. The company also plans to offer “job transition support” and launch an opt-in talent directory to help laid off team members “connect with new opportunities.” Opendoor went public in late December 2020 after completing its planned merger with the SPAC Social Capital Hedosophia Holdings II, headed by investor Chamath Palihapitiya. The eight-year-old company first offered its stock to the public at $31.47 per share. At the time of writing today, shares were trading at $2.48, only slightly higher than the company’s 52-week low of $2.26. This means that the company is valued at just $1.56 billion, down from a valuation of $8 billion in 2021. When it comes to venture capital, Opendoor last raised $300 million at a $3.5 billion pre-money valuation in March of 2019. Over time, it has raised about $1.3 billion in equity funding and nearly $3 billion in debt financing to finance its home purchases. Investors in the company include General Atlantic, the SoftBank Vision Fund, NEA, Norwest Venture Partners, GV, GGV Capital, Access Technology Ventures, SV Angel and Fifth Wall Ventures, along with others. Founders include Eric Wu and Founders Fund general partner Keith Rabois.

Upstart lays off 7% staff amid weakening demand for loans • ZebethMedia

By zebethcontrolPosted on November 1, 2022Posted in Fintech, Layoffs, UpstartNo Comments

Lending giant Upstart has laid off about 140 employees — or 7% of its total workforce — who help process loan applications, sources told ZebethMedia. The cloud-based AI lending platform notified its affected employees about the layoff on Tuesday. Upstart had about 2,000 employees, according to the company, which confirmed the layoffs. “Given the challenging economy, we are making this difficult decision for the long-term health of the company. We do not expect any further layoffs, and continue to hire for roles that are strategic to our business,” Upstart spokesperson Mike Nelson said in a statement. Upstart said in its latest 8-K filing with the U.S. Securities and Exchange Commission that the decision was due to ongoing economic challenges and the “reduction in the volume of loans” on its platform. However, the company would not confirm the exact drop in its loan volumes. In its last quarterly results in August, the California-based company reported a 72% annual increase in loan volumes on its platform from 456,610 in the first half of 2021 to a total of 786,675 in the same period a year later. The earnings for the third quarter are due on November 8. Upstart is facing difficulties owing to weakening demand for loans in the U.S. due to significant hikes in interest rates by the U.S. Federal Reserve to cope with the global rise in inflation. The company’s share price dropped by 84% this year. Upstart was trading at $22.88 in afternoon trading on Tuesday. The market cap of Upstart rose to nearly $32 billion at one point after its public debut in November 2020. Since, the company’s total stock value dipped to less than $2 billion earlier on Tuesday. Unfavorable economic conditions have not only impacted the lending industry but also many technology companies around the globe. Telehealth unicorn Cerebral, online real estate marketplace Zillow, and SurveyMonkey parent Momentive Global have all laid off employees in recent weeks. Companies including Netflix, Spotify and Tencent also made similar decisions. Indian startups such as Byju’s and Ola have also sacked their employees amid the dip in funding and investments.