With Twitter set to Thanos half its employees tomorrow, the axe is now swinging hard across Silicon Valley, where moments ago Bloomberg reported that one of the world’s most valuable startups, Stripe, will cut 14% of its entire workforce, some 1000 jobs returning headcount to the almost 7,000 total from February, as the company seeks to slash costs during the coming recession. The news was shared with the rest of the company in an email from co-founders Patrick and John Collison who vowed to trim expenses more broadly as they prepare for “leaner times.”
“We were much too optimistic about the internet economy’s near-term growth in 2022 and 2023 and underestimated both the likelihood and impact of a broader slowdown,” the Collison brothers said in the email. “We grew operating costs too quickly. Buoyed by the success we’re seeing in some of our new product areas, we allowed coordination costs to grow and operational inefficiencies to seep in.”
The Collisons said the headcount changes wouldn’t evenly impact the business, noting that the recruiting business would be disproportionately impacted since the company plans to hire fewer people next year. Departing employees will receive at least 14 weeks of severance, and the brothers vowed to pay annual bonuses and unused paid time off for all workers affected by the cuts.
Stripe and its money-losing publicly traded peers have seen their valuations crater as the growth in online spending slowed in the aftermath of the pandemic, just as supply-chain disruptions and once-in-a-generation inflation also hurt activity. According to Bloomberg, the company in July told staffers that an internal valuation for the company dropped to about $74 billion, compared to the $95 billion it received in its most recent fundraising.
“Stripe is not a discretionary service that customers turn off if budget is squeezed,” the Collisons said. “However, we do need to match the pace of our investments with the realities around us. Doing right by our users and our shareholders (including you) means embracing reality as it is.”
Translation: here’s a pink slip, consider it for the “greater good”. As for the November and December payrolls report, it will take some seriously seasonal adjustment magic to avoid a -200K (or worse) print.