Tech and crypto firms experienced massive layoffs in May. Here’s how bad it really is
Andrew Marquardt
Last month, Fortune reported that the tech industry’s 2021 hiring boom seemed to be slowing down. One month later, it’s clear that the boom is over.
Amid rising inflation rates and slowing demand, tech and crypto companies cut more jobs in the month of May than in the previous four months combined, according to outplacement firm Challenger, Gray & Christmas, as first reported by MarketWatch.
There were 4,044 job cuts in the tech industry in May, compared to around 500 through the first four months of the year and the most in one month since December 2020, according to the Challenger, Gray & Christmas figures. Crypto and other companies in the fintech industry cut 1,619 jobs in May, compared to 440 in January through April.
"Many technology startups that saw tremendous growth in 2020—particularly in the real estate, financial, and delivery sectors—are beginning to see a slowdown in users, and coupled with inflation and interest rate concerns, are restructuring their workforces to cut costs," Andrew Challenger, senior vice president of Challenger, Gray & Christmas, told Reuters.
Many of the world’s top tech and crypto companies announced plans to slow down hiring last month amid what Uber CEO Dara Khosrowshahi described as a reaction to a “seismic shift” in the markets.
Khosrowshahi told employees last month the company will begin to “treat hiring as a privilege” as a means for cutting costs. Facebook parent company Meta announced in early May it was slowing or pausing hiring mid- to senior-level positions for the same reason. A week later, Salesforce made a similar announcement.
Last week, Microsoft announced it was slowing hiring in its Windows, Office, and Teams chat and conferencing software groups, citing a need to realign staffing priorities. Shares of Snap Inc. dropped as much as 30% last week after CEO Evan Spiegel announced the company was slowing down hiring for the rest of the year and expected to miss its quarterly revenue and earnings targets.
On Friday, crypto exchange Coinbase announced it was pausing hiring “for the foreseeable future” as a result of market conditions, and even went as far as rescinding job offers to people who had recently accepted jobs there but had not yet started to work.
Other companies have taken it a step further and have started to lay off employees.
Tesla CEO Elon Musk announced on Friday that the company plans to cut 10% of jobs for salaried workers, according to Electrek. Musk said in an internal email that Tesla has “become overstaffed in many areas,” prompting the upcoming layoffs.
Insurtech platform Policytech laid off 25% of its staff in recent weeks, less than three months after it raised more than $125 million in investments, according to reporting from TechCrunch.
In April, digital brokerage app Robinhood said it would be cutting 9% of its workforce, after the company’s headcount grew from around 700 employees in 2019 to 3,800 at the end of 2021. Also in April, streaming giant Netflix laid off dozens of employees from its Tudum editorial companion site after losing 200,000 subscribers in the previous quarter.
Despite the recent slew of layoffs and hiring slow-downs among tech and crypto firms, the latest U.S. jobs report showed 390,000 job gains in May, outpacing expectations.
Job growth in May was led by steady hiring in leisure and hospitality, business services, and education and health care, Bloomberg reported.
Crypto: Coinbase and the Winklevoss Twins Confirm Tough Times Are Ahead
LUC OLINGA
15 HOURS AGO
The tough time that the crypto sphere is going through is not about to go away.
Judging by the recent decisions announced by the big names in the sector, it is even logical to say that what industry sources call "crypto winter" will continue for several more weeks, at least, even if volatility is the key word in the space.
The last episode of "crypto winter" lasted from 2018 to fall 2020 before prices rebounded and soared to record highs in 2021.
Coinbase (COIN) , the most popular of American digital currency trading platforms, has just announced new cost-saving measures. These include an indefinite suspension of hiring. Worse, the firm will rescind certain job offers made to candidates.
"In response to the current market conditions and ongoing business prioritization efforts, we will extend our hiring pause for both new and backfill roles for the foreseeable future and rescind a number of accepted offers," L.J Brock, chief people officer, said in a blog post on June 2.
"It’s become evident that we need to take more stringent measures to slow our headcount growth," Brock added. "Adapting quickly and acting now will help us to successfully navigate this macro environment and emerge even stronger, enabling further healthy growth and innovation."
The extended hiring pause does not include roles that are related to security and compliance, the company said.
As for the cancellation of accepted job offers, Coinbase said this will apply to "people who have not started yet."
'Coinbase Will Cone Out Stronger'
"We always knew crypto would be volatile, but that volatility alongside larger economic factors may test the company, and us personally, in new ways. If we’re flexible and resilient, and remain focused on the long term, Coinbase will come out stronger on the other side," Brock concluded.
The challenges of which the executive speaks are linked to fears of a recession in the economy. These fears have prompted many investors to liquidate risky assets, such as cryptocurrencies.
Recent scandals, such as the collapse of the UST and Luna coins, have also reminded investors that the industry is still young and therefore subject to many ups and downs.
The crypto market has lost over $1.7 trillion in value since November.
The price of Bitcoin is down 57% from its all-time high of $69,044.77 reached on Nov. 10. The king of cryptocurrencies is now trading around $29,846.33 at last check, according to data firm CoinGecko.
Ether, the second crypto in terms of market value, is worth 64% less than when it broke its record high of $4,878.26 on Nov. 10. It's currently trading around $1,780.06.
As for Coinbase, its market capitalization has shrunk by more than $48 billion since January, while the stock has lost about 74% of its value to $66.69 as of June 3.
'We Are Not Alone'
Gemini, another platform for buying and selling cryptocurrencies, is also reducing costs. And that means job cuts. The firm was founded in 2014 by twin brothers Cameron and Tyler Winklevoss, who came to prominence after they and a classmate claimed that Mark Zuckerberg stole their idea for Facebook.
"We have asked team leaders to ensure that they are focused only on products that are critical to our mission and assess whether their teams are right-sized for the current, turbulent market conditions that are likely to persist for some time," Cameron and Tyler wrote in a blog post. "After much thought and consideration, we have made the difficult but necessary decision to part ways with approximately 10% of our workforce."
The crypto revolution is well underway and its impact will continue to be profound. But its trajectory has been anything but gradual or predictable. Its path can best be described as punctuated equilibrium — periods of equilibrium or stasis that are punctuated by dramatic moments of hypergrowth, followed by sharp contractions that settle down to a new equilibrium that is higher than the one before."
"This is where we are now, in the contraction phase that is settling into a period of stasis — what our industry refers to as “crypto winter.” This has all been further compounded by the current macroeconomic and geopolitical turmoil. We are not alone."
This is the first time Gemini has cut jobs. The firm employs 1,033 people, according to PitchBook, and was valued at $7.1 billion in its last funding round. A 10% reduction would therefore amount to laying off a little more than 100 people.
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