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Per Layoffs.fyi, A layoff tracker, more than 16,000 tech workers who lost their jobs in May and June got off to a similarly devastating start. TechCrunch Senior Correspondent Amanda Silberling and I accidentally, and unfortunately, started working on a weekly column on tech layoffs; What first started as a nascent moment at Thrasio soon expanded to startups regardless of sector, financial stage, or whether they had obvious growth strains.
As the layoff process continues, it can look like the same backstory: the number of people affected, the roles or groups reduced, the details of the severance package, and a vague general statement from the CEO. Executives cited market turmoil as the main reason for the cuts. That’s not to say they’re any less newsworthy, but I’m always curious about the story’s next opportunities. So I asked all of you for some perspective, specifically what else to ask and include in these stories.
From Jennifer Neundorfer: I’d like to see a sequel with data on where those laid off will continue. Do specific companies/industries appeal to them? Several established companies? Something else entirely?
This question made my mind immediately jump to the talent opportunity that arose in early 2020 when unicorns laid off staff in preparation for the pandemic. Then I wrote a story about how startups hire laid-off employees, aka. acquisition strategy is not so new. At one point, much of the online mortgage lender Stavvy was rife with old bakeries impacted by the restaurant tech’s 50% cut of the workforce.
In addition to the increase in hiring, I think we will see some classic scholarships popping up to help recent layoffs get started. Neundorfer’s company, January Ventures, has started a program similar to Cleo Capital, provide capital to aspiring founders to launch them.
The key here is that layoffs make people more risk-averse, especially depending on their socioeconomic background. That combined with the fact that Big Tech is shutting down hiring, I don’t know what will happen when the wave of job losses is mixed. message recruitment market.
But, if anyone has the data to answer this question, please send it over!
From Anna Rasby-Safronova: Do those laid off see that coming, and how does the layoff affect the mental health, anxiety, and productivity of the rest of the team?
I’ve now spoken to dozens and dozens of former and current employees at struggling startups, and the response to layoffs has largely felt like a blow to those affected.
Reason? The difference between the 2022 and 2020 layoffs is that many of the companies laying off staff today are well-capitalized, being named unicorns just a year ago. In 2020, the cuts could easily be seen as an unprecedented pandemic whose growth plans are complicated; while in 2022, the cuts come shortly after leaders boasted of frenzied growth just a few months earlier. Add in the fact that people are still fired in questionable ways – from severance shows in payroll arrive lengthy memo — and I can’t imagine that these cuts don’t have such a dramatic impact on internal and external morale.
International workers face additional complications when laid off, as job loss can cause visa status to change. Even as companies put together spreadsheets or continue to support, increased volatility could mean talented workers are forced to leave the United States altogether to pursue a better life in another country. other places. These are stories we are trying to tell but are sensitive for obvious reasons.
By Luke Metro: What part of the company’s employees have been hired in the past 1-2 years? I wonder how many companies doing layoffs have rolled out large numbers of staff throughout 2021?
The reason this question is important is that it colors the way the layoff process is designed; and if it affects only the newest members, the newest products or everyone – from executives to entry-level employees. If it’s the latter, it could suggest that a startup facing deep-seated problems needs to reorganize its resources. If workforce cuts have largely affected those hired in the past year, it could mean the startup needs to shrink some of the more experimental work and hone back in place. products that are suitable for the market. Thanks for the tip, I’ll start asking about this!
In the rest of this newsletter, we’ll talk about multiplayer fintech 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 sign up my blog. As a program note, I’m going on vacation next week, so expect an abbreviated Startups Weekly column, still yours really, but with support from Henry PickavetRichard Dal Porto and the rest of the team.
Trading of the week
A startup based in Santa Monica, Ivella wants to build banking products for couples to eliminate money stress. CEO and co-founder Kahlil 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: The best solution, by far, for multiplayer fintech is joint accounts: that is, two people will set up an account where they – sing with me now – join their accounts and withdraw from the same a group. Instead, Lalji wanted to build a split account: Couples maintain individual accounts and balances but receive an Ivella debit card linked to both of those accounts.
With that shared card, couples can set a rate – which can be calculated as a percentage of each bill someone pays depending on their income – and Ivella will automatically split any any transactions made with an Ivella debit card. This in itself was the biggest technical challenge Ivella faced in its early days, Lalji description:
“The point where a lot of people fall short, like many fintechs fall short, is that they don’t break the mold of what the bank looks like,” Lalji said. “And because we’re specifically focused on couples, we wanted to build a product that’s not too sterile and doesn’t look like a bank.”
Delivery market is going down from pandemic high
Our own Kyle Wiggers wrote about how on-demand delivery market The period of rapid development of the pandemic is dwindling. As he notes, there are signs of a correction including falling valuations of Instacart, volatility in the share prices of DoorDash and Deliveroo and Gorillas, Getir, Zapp and Gopuff going through layoffs while others like Fridge No More and 1520 closed completely.
Here’s why it’s important: As I told Wiggers via Slack, the lack of profitability in the on-demand delivery market is often spoken of as, “it’s too obvious” and representative. This section went into the heart of why grocery delivery is so expensive and more specific difficulties that startups face in this market.
Here’s what Craft Ventures partner and co-founder, Jeff Fluhr, former CEO of StubHub, told TechCrunch; despite the fact that Craft has invested in several delivery companies:
“The fast delivery space is the epitome of 2021: Investors are pouring money into money-hungry companies with flimsy business models,” he told TechCrunch in an email interview. “Fast delivery companies are very capital intensive. They require local infrastructure, local people, and local operations that are expensive to build. As a result, all of these companies have burned through cash over the past 12 to 24 months as they expand into new geographic markets. Of course, consumers love instant gratification with an ice cream in 15 minutes, so sales grow rapidly thanks to a great consumer experience and word of mouth. Investors chase growth without paying attention to the potential for profit. But the notion that a startup could profitably deliver on that promise is a pipe dream. “
Seen on TechCrunch
Seen on TechCrunch +
Until next time,