This is not (just) another round of tech layoffs.

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A month later I saw nearly 16,000 technical workers lose their jobs, June will start just as stormy. Startups in every sector, from healthcare to enterprise SaaS to crypto, are laying off some staff and seem to be referring to the same notes: it’s a tough market, a time of uncertainty and a correction towards sustainability is needed.

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This week we continue our review of tech layoffs, but we don’t stop there; we’ve pulled out a few common themes from workforce cuts, especially focusing on nuances that may be missing from the headlines. For starters, here are the companies that are using layoffs this week:

  • Carbon Health laid off 8% of employees, or 250 people. According to our very own Christine Hall, “The startup’s most recent funding round was a $350 million Series D round in July 2021, led by the Blackstone Group, which reportedly valued the company at $3.3 billion. In November 2020, we reviewed his $100 million Series C round. In his letter to employees, Bali outlined two reasons for the decision to lay off staff, despite its constant and rapid growth over the years. The first was the winding down of some lines of business related to COVID. In 2020, Carbon Health has developed both pop-up clinics and home testing kits.”
  • Loom, the corporate video tool backed by Andreessen Horowitz, laid off 14% of its employees. In the latest round, the company was valued at $1.53 billion, making it a unicorn for the first time. Kleiner Perkins, Sequoia, Coatue and General Catalyst are also investors in the company. Like Hopin, Loom has benefited from more people working from home in response to the COVID-19 pandemic; The product was designed to help remote workers find the best ways to connect with colleagues in the virtual world, as well as help hybrid workers find an easy way to skip some meetings. Then, as with Hopin, the startup made layoffs to help it build what it describes as a more sustainable way to move forward.
  • Coinbase will extend the hiring moratorium and withdraw accepted offers from some candidates who have not yet assumed their roles (…and inform them of their status by email). The news comes after Coinbase’s brutal Q1 results, which reported a $430 million loss.
  • Crypto platform Gemini, led by co-founders and twin brothers Cameron and Tyler Winklevoss, has laid off 10% of its staff. due to “turbulent market conditions that are likely to persist for some time.” Despite reacting to market changes, the Gemini co-founders also noted the expected volatility in what they called the “crypto revolution.”
  • Social app IRL is laying off 25% of the team, saying it has enough money to last until 2024. The cut comes about a year after the startup raised $170 million in SoftBank-led Series C and achieved coveted unicorn status. Regarding the downsizing decision, CEO Avraham Shafi wrote in a staff memo that IRL “has more than enough money to last through 2024.” The startup has grown its headcount by 3.5 times over the past year, but Shafi noted that WhatsApp has been able to grow to 450 million users with a team of 55 people. correct team size after a period of over-hiring.
  • Insurtech Policygenius cuts 25% of staff less than 3 months after raising $125M. According to Mary Ann Azevedo, “Since its inception in 2014, Policygenius has raised more than $250 million from investors such as KKR, Norwest Venture Partners and Revolution Ventures, as well as from strategic backers such as Brighthouse Financial, Global Atlantic Financial Group , iA Financial Group, Lincoln. Financial and Pacific Life. While we cannot speak specifically to Policygenius, it has been widely reported how poorly insurtech companies have performed in the public markets over the past year, with Lemonade, Root and Hippo trading well below their opening prices.”
  • Amsterdam-based TomTom lays off 500 employees, or 10% of its workforce. TomTom was known for its in-car GPS navigation before we all had iPhones, but over the past few years the company has tried to move into self-driving car mapping. The affected jobs are in the maps department, where the company is aiming for more automation.
  • Softbank-backed digital mental health company Cerebral plans to implement layoffs in July. (Which should not cause concern to employees who are waiting to know their fate). The telemedicine company also recently changed its CEO amid a government investigation into potential violations of the Controlled Substances Act – Cerebral has come under fire for over-prescribing Drugs for ADHD.
  • Tesla CEO and guy who needs to stop tweeting, Elon Musk ordered a hiring freezee and job cuts, which will affect 10% of employees. Tesla currently employs nearly 100,000 people. Ironically, President Joe Biden weighed in, saying, “So, he got very lucky on his trip to the moon, I don’t know.”

Nuance notes

Nobody wants to be in the unicorn club

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While layoffs come at all stages, many of the recent layoffs have come from companies that achieved unicorn status just a year ago. The list includes Cameo, IRL and Loom and there are several reasons why this might be.

First, a year is a long time. And it seems even longer in a market that can’t make up its mind. However, startups that achieved growth last year may no longer be on the same trajectory, greatly increasing their current valuation. As a result, the one-year mark can be displayed as a reminder to think and, unfortunately for employees, downscale to a more realistic value.

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Secondly, being a unicorn is hard – even in a bull market. Some believe that high-value startups must eventually achieve expected value, and capital does not necessarily guarantee success. When you are a late-stage company, there are certain growth challenges associated with the name, such as integrating with acquisitions, working with a remote workforce, and learning to iterate when the business is no longer as flexible as it was when it was just two people in a dorm room. In the past, layoffs could be delayed by another funding round, but now that follow-up funding is not a given, layoffs are becoming more frequent.

Thirdly, many of Pandemic-born unicorns are really just piñatas filled with expired candy.. Hard stop.

Layoffs should be seen as a worst-case scenario, not a precaution

Companies like Coinbase, Tesla, and IRL have plenty of room to keep their employees busy during the turbulent economic times and the ongoing pandemic. But they still cut costs by laying off their employees.

“Courage is a decision and we will choose courage,” IRL CEO Abraham Shafi wrote in a company memo after laying off 25% of its staff. “Everything we face today cannot be worse than the uncertainty we faced at the start of the COVID-19 pandemic.”

Unfortunately, workers cannot control their firing when their employer has enough money to keep them. And for those of us who suffer from the endlessly frustrating American healthcare system, losing a job also means medical instability for both you and your family. Let’s stop pretending that COBRA isn’t prohibitively expensive.

Meanwhile, Coinbase canceled offers already accepted from a number of employees. According to a LinkedIn search, many of the laid-off employees were students who were soon to complete both doctoral and bachelor’s degrees. In these cases, the new employee may agree to work a few months before the start date, as they will need to complete a college degree before taking on the role.

Many future graduates who took jobs at Coinbase turned down several other job offers at a major crypto exchange, but now they are stuck looking for work. This situation is even more dire for international students who face deportation if they cannot find an employer that sponsors their visas.

Unfortunately, layoffs are an inevitable part of corporate life, especially in startups. But very often it seems that they are caused by poor management choices that make it increasingly difficult to pay employees. People make mistakes, but those mistakes can leave innocent workers in financial insecurity, possible deportation, and limited access to healthcare. So when layoffs are made as a precaution or as a correction to mitigate past mistakes and over-hiring, it’s a personal matter.

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