You thought the market was bad for venture capitalists, but what about the actual workers behind the tech companies they’ve backed?
Reluctantly, we’re writing a tech layoffs roundup for the third week in a row, because once again, there have been reductions across stages and sectors. Over the past month, public and private tech companies have been announcing mass layoffs across sectors. Employees from Section4, Carvana, DataRobot, Mural, Robinhood, On Deck, Thrasio, MainStreet and Netflix have been impacted by the workforce reductions. Some bigger companies are instituting hiring freezes, such as Twitter and Meta, or announcing a shift in strategy, such as Uber.
As has been our mantra while reporting on the layoffs sweeping the tech industry: layoffs don’t happen to companies, they happen to people. Especially for the U.S.-based tech employees, layoffs don’t just mean a loss of income — they mean a medically dangerous loss of healthcare.
Let’s take a look at which companies announced reductions this week.
A Netflix representative wrote in an emailed statement, “As we explained on earnings, our slowing revenue growth means we are also having to slow our cost growth as a company.” Netflix reported revenue of $7.87 billion for the first quarter of 2022 and a significant loss of 200,000 subscribers.
Contractors were also impacted by these layoffs, but the number of affected workers in that designation is unclear. Website Maker News asked Netflix about reports that staff running diverse social channels like Strong Black Lead, Golden, Most and Con Todo were laid off, but Netflix said that the company decided not to renew contracts with certain agencies it used to recruit contractors. Still, it doesn’t feel great to see queer people and people of color losing their jobs, which helped Netflix cater to these audiences.
Less than a year ago, Picsart raised $130 million from SoftBank, putting the visual creator tools startup into unicorn territory with a valuation exceeding $1 billion. A leaner, hipper version of Adobe, things seem to have taken a downturn for Picsart, which laid off 8% of its staff this week, affecting 90 people. Other SoftBank-backed companies like Cameo, which also became a unicorn last year, just conducted layoffs. When Alex Wilhelm last covered Picsart, he noted that the company was expected to go public — that still hasn’t happened, which may be a clue into what’s going on at the company to precipitate such cuts.
Cars24, a marketplace for used cars last valued at $3.3 billion by its venture capital investors, cut 600 jobs — or 6% of its entire workforce — this week. The Series G startup had just raised a $400 million round, making the reduction more about runway extension than lack of ability to pay the bills.
As our own Manish Singh reports, Cars24 is one of many Indian startups that fired people in the last few weeks. Employees from Vedantu, Unacademy, Meesho, OkCredit, Trell, Furlenco and Lido have also cut several roles, he says.
Marketplace startups, such as Cars24, feel especially vulnerable during a downturn. Consumer spending habits can get extremely fickle, which means that demand may decline while supply stays consistent or even grows. Balancing the two sides is the biggest art for any marketplace startup, but it becomes especially difficult to predict stability in revenue when everyone else has hit pause.
Esports company Skillz laid off 70 employees, around 10% of the team, earlier this week, the company confirmed to Website Maker News. No executives were impacted by the cuts.
“We decided to reorganize our resources and investments to increase our profitable growth and further deliver against our vision of building the competition layer of the internet,” the company said in an emailed statement. “This realignment resulted in changing some of our programs and consequently people on our team as we prioritize our resourcing levels to continue to offer a great player experience and enable more game developers to bring their creations to life.”
The company’s statement is ironic; to better support its external community, it is cutting its internal community. The company says it plans to continue hiring in some areas of the business but did not mention which ones.