As startup layoffs continue, some prospects

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According to Layoffs.fyi, tracking layoffs, more than 16,000 tech workers lost their jobs in May, and June is off to a similarly brutal start. Senior Correspondent at TechCrunch Amanda Silberling and I accidentally and unfortunately started working on a weekly column on tech layoffs; what first began as a tipping point at Thrasio soon spread to startups regardless of sector, stage of funding, or whether they had obvious growth problems or not.

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As the layoffs continue, it may seem like it’s the same formulaic story: the number of people affected, the roles or teams that have been cut, the details of the severance pay, and a vague general statement from the CEO that cites market turbulence as a key reason for the cuts. . That’s not to say they’re equally newsworthy, but I’m always curious about the possibilities for follow-up stories. So, I asked all of you to give some point of view, namely what else to ask and include in these stories.

From Jennifer Neundorfer: I’d like to see a follow-up with data on where the fired go. Are specific companies/industries picking them up? Some companies create? Something completely different?

This question led me to jump right into the talent scouting opportunity that came up in early 2020 when the unicorns laid off some of the staff in preparation for the pandemic. Then I wrote a story about how startups hired groups of employees who were laid off. not-so-new acquisition strategy. At one point, most of the online mortgage company Stavvy was filled with former toasters affected by a 50 percent reduction in restaurant staff.

I think that in addition to an increase in hiring of new employees, we will see the emergence of some of the classic scholarships that will help recently laid-off people to take up entrepreneurship. Neundorfer’s firm, January Ventures, launched a program similar to the one cleo Capital, which gives capital to aspiring founders to give them a boost.

The key point here is that layoffs make people less likely to take risks, especially depending on their socioeconomic status. This combined with the fact that Big Tech is freezing hiring, I don’t know what happens when a wave of people lose their jobs in a mixed hiring message market.

But, if someone has data to answer this question, send it!

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From Anna Rasbi-Safronova: Have those who got laid off seen this happen, and how do layoffs affect the mental health, anxiety, and productivity of the rest of the team?

I’ve spoken to dozens and dozens of former and current employees of struggling startups, and the reaction to layoffs is pretty much felt like a whiplash for those affected.

Cause? The difference between layoffs in 2022 and 2020 is that many of the companies laying people off today are well capitalized and were called unicorns a year ago. In 2020, cuts could easily be attributed to an unprecedented pandemic that complicated growth plans; while in 2022, the cuts came just after leaders boasted of insane growth just a few months before. Add to that the fact that people are still getting fired in dubious ways – from severance pay appears on payroll to wordy notes — and I can’t imagine these cuts not having an aggressive effect on morale inside and out.

International workers face additional hardships when they leave because the loss of a job can change visa status. Even as companies roll out spreadsheets or resume support, additional volatility could mean talented workers are forced to leave the United States altogether to seek a better life elsewhere. These are the stories we’re working on, but they’re delicate for obvious reasons.

From metro Luke: What proportion of the company’s employees were hired in the last 1-2 years? I wonder how many layoff companies were hiring in bulk in the height of 2021?

The reason this question is important is because it defines how the termination was organized; and if it only affects the newest members, the most emerging products, or everyone across the board from executives to entry-level employees. If it’s the latter, it may indicate that the startup has deep internal problems that require a massive reorganization of its resources. If the workforce cuts affect those who were hired last year to a large extent, it could mean that the startup needs to cut back on some of its more experimental work and get back to being already in tune with the market. Thanks for the tip, I’ll start asking about it!

In the rest of this newsletter, we’ll talk about multiplayer financial technology and the world of grocery delivery. As always, you can support me by forwarding this newsletter to a friend or follow me on twitter or subscribe to My blog. As a programming note: I’m going on vacation next week, so expect an abbreviated Startups Weekly column, still from yours truly but with support Henry PickavetRichard Dal Porto and the rest of the team.

Deal of the Week

Startup from Santa Monica, Ivella wants to create banking products for couples to take the stress out of money. CEO and co-founder Kalil Lalji is launching a split account product that just raised $3.5 million in funding from Anthemis, Financial Venture Studio and Soma Capital. Other investors include Y Combinator, DoNotPay CEO Joshua Browder and Gumroad CEO Sahil Lavingia.

Here’s why it’s important: So far, the best solution for multi-user fintech has been shared accounts: this means that two people create an account in which they – sing with me now – join their accounts and receive from the same pool. Instead, Lalji wants to create a split account: couples have individual accounts and balances, but receive an Ivella debit card that is linked to both of those accounts.

With this shared card, couples can set ratios—perhaps prorate a percentage of each bill someone pays based on their income—and Ivella will automatically split any transactions made using an Ivella debit card. This in itself was the biggest technical challenge that Yvella faced in its early days. describes Lalji:

“The place where a lot of people fail, like a lot of fintech, is that it doesn’t break the mold of what banking looks and feels like,” Lalji said. “And because we’re focused specifically on couples, we want to create a product that’s not as barren and not like in a can.”

The delivery market is coming off the peak of the pandemic

Our very own Kyle Wiggers wrote about how on-demand delivery market The pandemic period of rapid growth is coming to an end. There are signs of a correction, he notes, including a decline in Instacart’s valuation, swings in DoorDash and Deliveroo stock prices, and layoffs from Gorillas, Getir, Zapp and Gopuff, while others like Fridge No More and 1520 have shut down completely.

Here’s why it’s important: As I told Wiggers on Slack, the unprofitability of the on-demand delivery market is often said “it’s so obvious” and broad. This article was the key to why grocery delivery is so expensive. and more specific challenges faced by startups in this market.

Here’s what Craft Ventures partner and co-founder Jeff Flur, former CEO of StubHub, has to say. told TechCrunch; despite the fact that Craft has invested in a number of delivery companies:

“The fast delivery space is the epitome of 2021 abundance: investors poured money into cash-guzzling companies with unsustainable business models,” he told TechCrunch in an email interview. “Fast delivery companies require large capital investments. They need local infrastructure, local people and local operations, which are expensive to set up. As a result, over the past 12 to 24 months, these companies have all been burning tons of cash as they expand into new geographic markets. Of course, consumers love the instant gratification of a 15-minute pint of ice cream, so revenues have grown rapidly thanks to great consumer experiences and word of mouth virality. Investors followed the growth, not paying attention to the yield potential. But the idea that a startup can deliver on that promise profitably is a pipe dream.”

In a week

Seen on TechCrunch

Seen on TechCrunch+

See you later,

H




Credit: techcrunch.com /

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