The latest round of layoffs follows a string of cutbacks in the fintech sphere, with Brex last month revealing it was scything 11% of its workforce, while just yesterday Chime confirmed that 12% of its employees would be laid off. In a memo published online, Stripe CEO Patrick Collison conveyed a familiar narrative in terms of the reasons behind the latest cutbacks: a major hiring spree spurred by the world’s pandemic-driven surge toward ecommerce, a significant growth period, and then an economic downturn ridden with inflation, higher interest rates, and other macroeconomic challenges . “We overhired for the world we’re in, and it pains us to be unable to deliver the experience that we hoped that those impacted would have at Stripe,” Collison wrote. While there is never a perfect way to handle such a large-scale round of layoffs, Collison’s announcement is notable in terms of the degree to which he accepts blame for the situation, pointing to two specific mistakes the company’s leadership made. He wrote:
In making these changes, you might reasonably wonder whether Stripe’s leadership made some errors of judgment. We’d go further than that. In our view, we made two very consequential mistakes, and we want to highlight them here since they’re important:
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.
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.
Today’s announcement perhaps doesn’t come as a huge surprise. While Stripe’s long-anticipated IPO remains in the balance, its own internal valuation reportedly dropped 28% from $95 billion last year to around $74 billion. And back in August, TechCrunch learned of a smaller round of layoffs at Stripe, impacting a reported 45-55 workers at TaxJar, a tax compliance startup it acquired last year. In terms of severance, Collison noted that all those impacted would receive at 14 weeks worth of pay, depending on time served at the company. On to top of that, he noted said that Stripe will pay the full 2022 annual bonus irrespective of when each employee leaves, though it will be pro-rated if they only joined this year. Additionally, he said that all unused paid time off (PTO) will be paid, and Stripe will provide healthcare coverage for six months following each departure. Stripe cuts 14% of its workforce, CEO says they ‘overhired for the world we’re in’ by Paul Sawers originally published on TechCrunch