The fall of crypto exchange FTX and potential resulting contagion could lead to an acceleration of crypto-company layoffs in the coming months, recruitment specialists warn.
A Nov. 14 report from crypto data aggregator platform CoinGecko found that as of Nov. 13, the crypto space has seen 4,695 employees let go in 2022 so far, presenting 4% of staff cuts across all “technology startups.”
However, the authors of the report warn that crypto layoffs could increase in the coming months when the “full impact” of FTX’s sudden collapse takes effect:
“With the collapse of FTX since November 2 and its full impact on the cryptocurrency space still unfolding, further cryptocurrency layoffs may occur in the months to follow.”
Speaking to Cointelegraph, CryptoRecruit founder Neil Dundon argues that while FTX’s events will cause some layoffs, it hasn’t changed the broader trend that crypto recruitment follows crypto prices.
“Layoffs have been consistently effectively following the same trend as crypto prices. FTX hasn’t changed that broader trend albeit a tragic event,” he said, adding:
“There will be layoffs because of it but that will present opportunities for good projects to scoop up good talent which we are collecting.”
Kevin Gibson, the founder of recruitment firm Proof of Search was less optimistic, sharing that he had one candidate that was due to start employment today but had his offer “pulled” during the first call with the company.
Gibson said it was hard to comment on how the FTX collapse will shake out as it’s “changing daily” but said his candidate’s experience “will not be an isolated incident.”
Companies across the crypto sector have already undergone a number of layoffs throughout the year as a result of the market downturn.
Among the most recent staff cuts in the industry include payment processor Stripe’s layoff of 1,000 employees, Flow blockchain developer Dapper Lab’s 22% cut, and venture capital firm Digital Currency Group’s 10% layoff. All layoffs took effect in early November.
Digital asset-focused investment firm Galaxy Digital was also reported to be eyeing a 20% cut on Nov. 1.
Coinbase is understood to have cut another 60 staff on Nov. 10, according to Yahoo Finance.
The latest CoinGecko report follows an earlier Nov. 4 report which looked into the cities most impacted by cryptocurrency layoffs.
At the top of the list was San Francisco — home to Silicon Valley, one of the world’s largest technology and innovation hubs — which was followed by Dubai, New York City, and Singapore.
For more than two decades, the U.S. tech industry has been a reliable source of booming stocks and cushy, high-paid jobs. In the span of weeks, the sheen has faded and the ax has fallen.
More than 24,000 tech workers across 72 companies have been laid off this month, adding to a total of 120,000 tech jobs lost this year, according to layoffs.fyi, which tracks job cuts in the tech industry. It's safe to say a reckoning is underway, even as each company is grappling with its own challenges. (See: Twitter.)
Many of the companies making public statements have cited at least one of two primary causes:
First, they hired a lot of employees during the pandemic, when people were extremely online. Now, the internet boom has faded, offline life has picked up, and those new employees seem too expensive.
Second, broader economic wobbles have made brands more reluctant to spend on digital ads–a source of revenue for many tech companies. High-interest rates have put an end to the cheap-money era of venture capital.
Here are some of the companies that have announced the biggest job cuts.
Amazon: a reported 10,000 jobs
The online retail and cloud computing behemoth plans to lay off some 10,000 employees in corporate and technology jobs, The New York Times was the first to report on Monday. Amazon did not reply to an NPR request for confirmation of the report.
As of this fall, Amazon employed more than 1.5 million full- and part-time workers around the world, many in warehouses. The 10,000 expected layoffs would comprise about 3% of Amazon's corporate employees, according to the Times, and a significantly smaller share of its overall workforce.
The cuts reportedly will focus on Amazon's devices division, including Alexa, the company's virtual assistant technology, as well as its retail and human resources divisions.
Earlier this month, the company announced a hiring freeze on corporate jobs. "We're facing an unusual macro-economic environment, and want to balance our hiring and investments with being thoughtful about this economy," wrote Beth Galetti, Amazon's senior vice president of people experience and technology.
Meta: 11,000 jobs
Facebook and Instagram's parent company, Meta, laid off 11,000 people last week – about 13% of its staff.
CEO Mark Zuckerberg attributed the cuts to overhiring during the pandemic. In a letter to staff posted to the corporate website, he cited a decline in e-commerce, the wider economic downturn, increased competition, and a decline in ad sales–the primary way the company makes money.
"I got this wrong, and I take responsibility for that," he wrote.
The layoffs come as the company has invested billions in the so-called metaverse, pitched as a virtual-reality future in which people will work, mingle, exercise, and go to concerts. But it's an unproven bet on the future, and not all everyone is convinced it should be the social media company's focus.
Zuckerberg said the workforce cuts would affect the whole organization, with recruiting staff disproportionately affected due to fewer hires anticipated in the coming year. A hiring freeze through the first quarter of 2023 will continue.
Twitter: about 3,700 jobs
Billionaire Tesla and SpaceX CEO Elon Musk bought the social media platform at the end of October and wasted no time slashing its workforce. He immediately ousted the company's leadership, including its CEO, CFO, and top lawyer. Mass layoffs were announced on November 4, with about 50% of the staff cut.
"Regarding Twitter's reduction in force, unfortunately, there is no choice when the company is losing over $4M/day," Musk tweeted.
Co-founder and former CEO Jack Dorsey tweeted that he accepted the blame for hiring too many workers in recent years.
"I own the responsibility for why everyone is in this situation: I grew the company size too quickly. I apologize for that," he wrote.
Musk's $44 billion purchase of Twitter – which he tried to get out of for several months – has saddled the company with $13 billion of new debt.
His short tenure at the top of Twitter has been marked by hasty changes that quickly halted, including his plan for a revamped Twitter Blue verification service, which charged $8 a month to get a blue checkmark on one's account. Accounts impersonating celebrities, major corporations, and Musk himself proliferated immediately, spurring Twitter to halt Twitter Blue signups twice within a week.
Key executives who were not fired, including Twitter's head of content moderation and safety on the platform, and the company's chief privacy officer and compliance officer, resigned last week.
Stripe: about 1,000 jobs
Payment processing platform Stripe announced on November 3 that it was cutting 14% of its workforce.
Stripe CEO Patrick Collison wrote in an email to employees that the pandemic pushed the world toward e-commerce, spurring the company's growth.
The CEO said he and his brother and co-founder John Collison had made "two very consequential mistakes": being too optimistic about the internet economy's near-term growth, and growing Stripe's operating costs too quickly.
"We are facing stubborn inflation, energy shocks, higher interest rates, reduced investment budgets, and sparser startup funding. ... [M]any parts of the developed world appear to be headed for recession. We think that 2022 represents the beginning of a different economic climate," Collison wrote.
Salesforce: hundreds of jobs
Salesforce, which makes cloud-based business software, laid off some of its employees last week, CNBC reported.
Salesforce said in a statement to NPR: "Our sales performance process drives accountability. Unfortunately, that can lead to some leaving the business, and we support them through their transition."
A source familiar with the cuts said they affected hundreds of employees in the sales organization.
Microsoft: fewer than 1,000 jobs
The software company made cuts across its divisions last month, Axios reported. Fewer than 1,000 jobs were cut, a source told Axios.
A request for confirmation of the layoffs was not immediately returned.
Zillow, Snap, and Robinhood
Zillow, the online real estate marketplace, laid off 300 of its employees late last month, TechCrunch reported. The company laid off 25% of its workforce a year ago as it shuttered its instant buying service.
Snap, the company behind Snapchat, said at the end of August that it was cutting its workforce by 20%. The layoffs affected some 1,200 employees, with the company's full-time workforce of about 6,400 as of June.
Robinhood, the brokerage app company, laid off 23% of its workforce in August. That amounted to 780 employees, according to Bloomberg. The company had already reduced its staff by 9% in April. "This did not go far enough," wrote Robinhood CEO Vlad Tenev.
Twitter’s new owner Elon Musk told employees Monday they can continue to receive stock and options as part of an “ongoing compensation plan” even though the company is now private, according to an internal memo viewed by CNBC.
Musk said the stock plan will resemble the one in place at SpaceX, where he is also CEO. SpaceX conducts secondary offerings regularly as a way for long-time stockholders to sell equity, given that the company remains private for more than 20 years since its founding.
SpaceX employees are granted their stock awards twice a year, on May 15 and Nov. 15.
Musk told Twitter employees that “exceptional amounts” of shares will be granted for “exceptional performance.”
The billionaire began a rocky takeover of the social media company after closing his $44 billion acquisition on Oct. 28. His leadership has been marked by massive layoffs, spending pauses from some advertisers, and confusion about the platform’s policy changes. When Musk first took over, some Twitter employees were concerned that he would hasten to fire them before a crucial vesting date. Many were paid, however, before Musk implemented a massive workforce reduction.
Read Musk’s message to employees:
Even though Twitter is now a private company we absolutely will continue to provide stock and options as part of our ongoing compensation plan.
The stock plan will be much like that of SpaceX, which has been very successful. As with SpaceX, exceptional amounts of stock will be awarded for exceptional performance.
Thanks,
Elon