Stripe Cuts 14% of Its Workforce, CEO Says “They’ve Hired Too Much for the World We’re in” • TechCrunch
Stripe has announced that it is laying off 14 percent of its workforce, affecting about 1,120 of the fintech giant’s 8,000 employees.
The latest round of layoffs follows a series of cutbacks in the fintech sphere, with Brex last month reveals mowed down 11% of its workforce, while just yesterday Chime confirmed that 12% of its employees he would be fired.
U letter published on the InternetStripe CEO Patrick Collison relayed a familiar story in terms of the reasoning behind the latest cuts: a massive hiring frenzy fueled by a worldwide pandemic-induced surge in e-commerce, a significant period of growth, and then an economic downturn followed by inflation, higher interest rates and other macroeconomic challenges .
“We’ve over-committed to the world we’re in, and it hurts us not to be able to deliver the experience we hoped those affected would have at Stripe,” Collison wrote.
While there is never a perfect way to handle such a large round of layoffs, Collison’s announcement is significant in terms of the extent to which he accepts blame for the situation, pointing to two specific mistakes made by the company’s leadership. he wrote:
In making these changes, you might reasonably wonder if Stripe’s leadership made some errors in judgment. We would go further than that. In our opinion, we made two very consequential mistakes, and we want to highlight them here because they are important:
We were overly optimistic about near-term growth in the Internet economy in 2022 and 2023 and underestimated both the likelihood and impact of a broader slowdown.
We increased operating costs too quickly. Buoyed by the success we’re seeing in some of our new product areas, we’ve allowed coordination costs to rise and operational inefficiencies to creep in.
Today’s announcement may not come as much of a surprise. While Stripe’s long-awaited IPO remains in the balance, its own internal valuation it reportedly fell 28% from $95 billion last year to about $74 billion. And back in August, TechCrunch learned of a smaller round of layoffs at Stripe, affecting a reported 45-55 workers at TaxJara tax compliance startup he bought last year.
As for severance, Collison noted that all those affected will receive at least 14 weeks’ pay, depending on their time with the company. On top of that, he noted that Stripe will pay the full annual bonus for 2022, though it will be prorated if they only join this year. In addition, he said all unused paid time off (PTO) will be paid, and Stripe will provide health care for six months after each leave.
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