While earlier in the year much of the talk in the tech sector focused on lower valuations, lower stock prices and slower funding rounds, there has been a lot of talk over the past couple of months about something much closer to home for a lot of people.
Many tech companies are slowing down or freezing hiring altogether, while others are taking a step forward and laying off employees — and the pace seems to be accelerating.
Only since April have companies ranging from personal video platform Cameo to Facebook’s parent Meta have changed their hiring plans. Cameo is said to be laying off 80 employees — 25 percent of its workforce — per The Information, while Meta has frozen hiring through the end of the year, according to Business Insider.
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While it is difficult to determine the exact number of layoffs in the tech sector in recent months, Crunchbase data shows that more layoffs are being written this month than since the pandemic in 2020. In the week of May 2, Crunchbase recorded 43 layoffs signals — News Sources and articles mentioning layoffs – the highest number since September 2020.
However, that number is far from the highs seen in the first several months of the COVID-19 pandemic in fall and winter 2020, when businesses tried to keep cash and layoffs signals were essentially hovering in the 70 to 80 range per week, according to Crunchbase data. .
None of this means that the job market is collapsing. In fact, the latest numbers show it’s still going strong. Last week, the US Department of Labor reported that the economy added 428,000 new jobs, topping the Dow Jones’ estimate by nearly 400,000.
However, tech companies have faced severe market pressures in public markets — the Nasdaq Composite is down more than 25 percent this year — while startups have faced lower valuations and a slowdown in the influx of venture capital dollars.
A quick summary of some of the layoffs and hiring freezes in the past several weeks include:
- On April 18, mortgage tech company Blend Labs said it would lay off 10 percent of its workforce — or about 200 positions — in a filing with the Securities and Exchange Commission.
- Later in April, financial trading platform Robinhood – which went public last year – announced that it would cut about 9 percent of its staff.
- Also in late April, Netflix laid off dozens of employees from its editorial companion site Tudum — just months after they were hired to build the site. The announcement came after a quarterly call in which the streaming services said it had lost 200,000 subscribers and its stock plunged.
- Brian Olsavsky, Amazon’s chief financial officer, announced during the company’s earnings conference call on April 28 that the retail giant has too many workers after hiring more as it prepares for workers who are sick due to the emergence of the Omnicron COVID-19 variant.
- Earlier this month, several reports said Amazon aggregator Thrasio would have an unspecified number of layoffs and would replace its CEO. The $10 billion company announced in October the initial closing of its Series D.
- This was followed by the San Jose, California-based financial platform MainStreet — which was worth $500 million last year — cutting about 30 percent of its staff, according to tweet From CEO Doug Ludlow.
- On May 5, San Francisco-based On Deck, which helps founders navigate the startup world, said it was laying off 25 percent of its employees, or 72 employees.
- The next day, several workers at the San Francisco-based collaborative tools startup Moral were reported to have been laid off, according to their LinkedIn pages.
- Late last week, The Information reported that Miami-based Reef Technology, the operator of a network of ghost kitchens that has raised more than $1.5 billion in capital, laid off as many as 750 employees early this week.
- Earlier this week, Uber said it would put in place more selective hiring practices going forward and that the hiring slowdown is a response to a “seismic shift” in the market.
- This was followed by news on Tuesday that online car dealer Carvana had laid off 2,500 employees — many of them reportedly via Zoom.
- Finally, just on Wednesday, artificial intelligence startup DataRobot — whose investors include New Enterprise Associates and Tiger Global Management — announced that it would lay off 7 percent of its 1,000-strong workforce, according to a report in The Information.
The announcements come as 40-year high inflation, rising interest rates and geopolitical tensions are worrying investors.
Investors in both the public and private markets seem intent on changing some of the metrics they used to rate tech companies – such as high growth – and focus on strong cash flow and profitability.
To go along, it seems that both private and public companies in the sector are watching their cash burn to please investors as well as maintain liquidity in a tight market where capital becomes more expensive.
Unfortunately for employees, this comes after many tech companies massively pooled their workforce when the pandemic helped many experience unprecedented growth – especially in sectors like online retail and work-from-home technology.
However, not everything is gloomy in space. The long-term prospects for work in the technology sector remain bright, as it has never been more intertwined with personal and work life. The number of technical jobs — including web developers and software engineers — is expected to continue to grow in the next decade, according to the US Bureau of Labor Statistics.
However, the next few quarters – and possibly more – could be bumper-filled for those in the industry.
Illustration: Dom Guzman
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