While earlier in the year, much of the talk in the tech sector focused on falling valuations, dropping stock prices and slower funding rounds, a lot of chatter the past two months has been around something that hits much closer to home for many people.
Many tech companies are slowing or outright freezing hiring, while others are going a step further and laying employees off—and the pace seems to be accelerating.
Just since April, companies ranging from personalized video platform Cameo to Facebook parent Meta are altering their employment plans. Cameo is reportedly cutting 80 employees—25 percent of its workforce–per The Information, while Meta is freezing hiring through the end of the year, according to Business Insider.
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While the exact number of layoffs in the tech sector in recent months is hard to quantify, Crunchbase data shows more is being written about layoffs this month than since the pandemic in 2020. In the week of May 2, Crunchbase recorded 43 layoff signals—news sources and articles that mentioned layoffs—the highest figure since September 2020.
However, that number is well off the highs seen in the first several months of the COVID-19 pandemic in the fall and winter of 2020, when companies tried to conserve cash and layoff signals hovered mainly in the 70 to 80 range weekly, according to Crunchbase data.
The job market
None of this is to say the job market is collapsing. In fact, recent numbers illustrate it is still strong. Last week, the U.S. Department of Labor reported the economy added 428,000 new jobs, beating the Dow Jones estimate of around 400,000.
Tech companies, however, have faced severe market pressures in the public markets—with the Nasdaq Composite down more than 25 percent this year—while startups have faced declining valuations and the slowing flow of venture capital dollars.
A quick recap of some of the notable layoffs and hiring freezes in the last 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 it would cut around 9 percent of its staff.
- Also in late April, Netflix laid off dozens of employees from its editorial companion site Tudum—just months after hiring to build the site. The announcement came after a quarterly earnings call in which the streaming services said it lost 200,000 subscribers and its stock plummeted.
- Amazon Chief Financial Officer Brian Olsavsky announced during the company’s earnings conference call on April 28 that the retail giant has too many workers after hiring more as it braced for workers being 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 replace its CEO. The company, valued at $10 billion, announced in October the initial closing of a $1 billion Series D.
- That was followed by San Jose, California-based financial platform MainStreet—valued at $500 million last year—cutting about 30 percent of its staff, according to a tweet from CEO Doug Ludlow.
- On May 5, San Francisco-based On Deck, which helps founders navigate the world of startups, said it is laying off 25 percent of its staff, or 72 employees.
- The following day, it was reported several workers at San Francisco-based collaborative tool startup Mural had been laid off, according to their LinkedIn pages.
- Late last week, The Information reported Miami-based Reef Technology, an operator of a network of ghost kitchens that has raised more than $1.5 billion in capital, was laying off as many as 750 employees as early as this week.
- Earlier this week, Uber said it will institute more selective hiring practices moving forward and the hiring slowdown is a response to a “seismic shift” in the market.
- That was followed by news on Tuesday that online car dealer Carvana had laid off 2,500 employees—reportedly many of them over Zoom.
- Finally just on Wednesday, AI startup DataRobot— whose investors include New Enterprise Associates and Tiger Global Management—announced it was laying off 7 percent of its 1,000-person workforce, according to a report in The Information.
The announcements come as 40-year-high inflation, rising interest rates and geopolitical tensions unnerve investors.
Investors in both the public and private market seem intent on changing some of the metrics they have used to value tech companies—such as high growth—and focus on strong cash flow and profitability.
To fall in line, both private and public companies in the sector seem to be watching their cash burn to appease investors as well as conserving cash in a tightening market where capital is becoming more expensive.
Unfortunately for employees, this comes after many tech companies significantly bulked up on their workforce when the pandemic helped many experience unprecedented growth—especially in sectors like online retail and work-from-home tech.
Not all is doom and gloom in the space, however. Job prospects in the tech sector are still bright in the long term, as it has never been more entangled with both personal and work life. The number of tech jobs—including web developers and software engineers—is expected to continue growing in the next decade, according to the U.S. Bureau of Labor Statistics.
However, the next few quarters—maybe more—could be bumpy for those in the industry.
Illustration: Dom Guzman
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