The latest in crypto news is the rising number of big tech layoffs. Multiple tech companies are slashing their employee counts, and crypto companies only account for 4% of the tech layoffs. Elon Musk’s massive layoff of Twitter employees continues to create a buzz in the tech landscape as he says goodbye to more than half of the company’s former team. Amazon and Meta have also announced major layoffs for their teams. The question remains, why are tech layoffs happening, and what does this mean for the future of their respective technologies?
The sweeping staff layoffs took off soon after the collapse of the cryptocurrency exchange platform FTX. Co-founded by Sam Bankman-Fried and Gary Wang, FTX was the second-largest exchange platform, just after its rival, Binance. According to Coindesk’s report on November 11th, more than 24,224 crypto jobs have been cut so far in 2022. What do these layoffs mean for the future of these companies? Will they stop developing their platforms? In the following sections, we’ll answer these burning questions in detail and take a look at other tech companies cutting ties with employees.
Meta Layoffs – Is Meta Stopping Their Development of the Metaverse?
Any business that wants to stand the test of time must be willing and able to adapt to the changes around it. Meta is doing just that. Zuckerberg is developing Meta to ensure that his company won’t be adversely impacted by the changes in the industry. But why is he reducing a significant number of employees in the company? Meta reportedly said goodbye to 11,000 of its employees, that’s 13% of its total staff. Zuckerberg acknowledges that he made hiring mistakes during the pandemic. He over-hired, and now, employees are facing the consequences.
In his letter to staff, Zuckerberg cited a decline in the primary way the company makes money: Ads. Apple’s 2021 iOS privacy update made it harder for Meta to target ads to its users. In his meta layoff letter, he also cited a decline in e-commerce since the hiring, increased competition, and the overall global economic downturn. Zuckerberg also states in the meta layoff letter other cost-saving efforts the company will make, such as “desk-sharing” for employees who usually work outside of the office. According to the meta layoff letter, the company will continue its hiring freeze well into 2023.
Overall, Zuckerberg states that Meta is making all of these changes because its revenue outlook is much lower than expected at the beginning of 2022. He also says the Family of Apps and Reality Labs subsidiaries, which are responsible for developing virtual reality and related technology, will all be functioning more efficiently in the months to come.
What Do the Meta Layoffs Mean in Terms of Meta Development?
While Zuckerberg is deeply saddened by the number of layoffs the company had to take, he says the goals for the future are still the same. Meta aims to lead the social virtual experience of the future. Zuckerberg stated:
“I believe we are deeply underestimated as a company today. Billions of people use our services to connect, and our communities keep growing. Our core business is among the most profitable ever built with huge potential ahead. And we’re leading in developing the technology to define the future of social connection and the next computing platform. We do historically important work. I’m confident that if we work efficiently, we’ll come out of this downturn stronger and more resilient than ever.”
While Meta doesn’t seem to be stopping development any time soon, it does look like development teams will be working in a more cost-effective environment. Infrastructure will be reduced, and hiring will be halted until the downturn is over.
Zuckerberg believes that investments in the Metaverse will provide great returns over the long term. Some investors aren’t so convinced. Meta shares plummeted over 24% the day after the company reported a weak fourth quarter, below analysts’ estimates. Zuckerberg states that beyond 2023, the investments in Reality Labs will reach goals to grow the company and operating income overall.
Twitter Layoffs, Amazon Layoffs, Google Layoffs, and More
Traditionally known as a bullish month, November, also known as “Moonvember” in the crypto space, kicked off with a sweeping number of layoffs. But, big layoffs only account for 4% of the layoffs in 2022. Big players in the tech space like Google, Coinbase, Amazon, and Twitter are also taking part in a massive number of tech layoffs this year. In the following sections, let’s take a look at some of the big names in tech and why they’re slashing their headcount.
Google Layoffs
In September, Google told about 50% of its 100 startup accelerator employees to look for other opportunities. Google CEO, Sundar Pichai, called on employees to be “more entrepreneurial” and 20% more productive in these challenging economic times.
One of the most significant shareholders of Google’s parent company, Alphabet, TCI wants Google to “aggressively” reduce operation costs. The managing director of London-based TCI, Christopher Hohn, wrote to the CEO of Alphabet, Sundar Pichai, urging him to emulate the cost-cutting measures of his Silicon Valley rivals. In Christopher Hohn’s letter, dated November 15th, 2022, he writes that Alphabet has too many employees and the cost per employee is too high. He continues to add that in Q3 2022, expenses grew 18% year over year while revenue only grew by 6%. Hohn illustrates how Alphabet is overpaying its employees compared to other tech companies with the chart below.
TCI holds a $6 billion stake in Alphabet, reflecting its strong conviction in Alphabet’s future. Hohn states that he agrees with Google’s public statement in September that it needs to operate 20% more efficiently. While Google is approaching the layoffs a bit slower than its rivals, the pressure is on to take more aggressive action.
Amazon Layoffs
Tech and e-commerce behemoth, Amazon, has also announced plans to cut headcount. With consumers returning to physical stores and also feeling the sting of inflation, demand for Amazon is less than projected. The company is reviewing its most unprofitable units and branches with slow growth. For the first time in its history, Amazon’s Alexa has reported revenue losses this year, coming in at a loss of $5 billion so far.
Amazon layoffs are estimated to be a reduction of about 10,000 employees, but the exact number is yet to be determined. Reductions will be made individually by teams instead of by top company executives. Amazon layoffs will mainly focus on Amazon’s devices division, including Alexa, Echo, Fire TV, etc. One employee who wishes to remain anonymous told reporters that just a few weeks ago, she was in talks of a full-time role then was abruptly canceled due to “ongoing restructuring.”
The ongoing layoffs at Amazon come as a surprising reversal, as the company was having a hard time finding enough workers when demand was high in peak pandemic times.
So, what is the Amazon employee count? Amazon doubled its employee count from 798,000 to 1.6 million between 2019 and 2021. For the holiday season, Amazon will temporarily hire 150,000 workers just as it had in previous years. Now, Amazon is slowing its hiring process and planning to cut a record number of its workforce for the first time in its nearly three decades of existence.
Twitter Layoffs
So, how many people did Twitter layoff? Perhaps the hottest news in tech and crypto layoffs comes after Elon Musk purchases Twitter. Musk wasted no time in slashing the employee count at Twitter by 50%, or 3,700 jobs. The new CEO tweeted that the abrupt firings were mandatory with the company losing about $4 million a day. He also claims that everyone who was fired was offered three months of severance pay which is 50% more than legally required.
Among those who were not fired from the company were key executives who recently resigned. The company’s former CEO, Jack Dorsey, tweeted that he made the mistake of over-hiring 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 in his tweet.
Many working for the company claim that they didn’t even receive notice of the layoff. They are abruptly being removed from Twitter’s internal systems, emails, and Slack. Managers are realizing that their team members are disappearing from the system without any notification from their leaders.
Stripe Layoffs
Like most other tech companies, Stripe had a hiring surge during the peak of the pandemic. Now, with many consumers returning to shopping in physical stores, demand for e-commerce returned to its previous rates. Consumers and institutions alike are also affected by higher interest rates and other macroeconomic challenges. Stripe recently announced that it would cut off 14% of jobs, equating to 1,100 employees.
The company offers “dedicated support” to its employees after letting them go. Stripe will give its laid-off employees six months of healthcare and at least three months of severance pay.
Salesforce Layoffs
Salesforce recently announced that it would cut 950 members of its global staff of more than 73,000 employees. Even though Salesforce had a relatively successful year in 2022, it has been feeling pressure from activist hedge fund Starboard Value. Immediately after taking a stake in the company, Starboard Value called for Salesforce to increase its margins. The news of the 950 layoffs comes shortly after Salesforce had already laid off 90 other employees.
Coinbase Layoffs
Coinbase CEO and co-founder, Brian Armstrong publicly shared a message that he sent to his employees. In his message dated June 2022, he announced the job cuts that would take place. He stated that an 18% cut in staff would be necessary to “stay healthy during this economic downturn.”
In his Coinbase layoffs letter, Armstrong explains that several realities have become clear after a conversation with the Exec team and the Board. He states these realizations as three issues: economic conditions are changing rapidly, managing costs is critical in down markets, and just as other tech firms have said, “we grew too quickly.”. Armstrong continued to explain in his Coinbase crypto layoffs letter that in order to solve some of the aforementioned issues, the company would need to manage its expenses and increase efficiency.
Coinbase told its employees that it would provide support after the crypto layoffs. A minimum of 14 weeks of severance pay, plus an additional two weeks for every year beyond the first year of employment, four months of global health insurance, and access to Talent Hub were among the list of unemployment support benefits.
Redfin Layoffs
Real estate giant, Redfin, announces a whopping 13% cut in its workforce. In addition to letting go of 862 employees, Redfin layoffs will also eliminate 218 employee roles but offer them a new role in the company. While many real estate companies couldn’t keep up with the demand of buyers in the era of low mortgage rates and rising housing prices during the pandemic, many are now shedding roles as the economic forecast grows more uncertain.
What Does This Mean for the Future of Tech?
Tech layoffs are hitting the industry hard after years of unbridled growth. And while there has been a lot of buzz surrounding the tech layoffs during this bear market, they represent only a small portion of the overall tech layoffs. So far in 2022, tech companies have said goodbye to over 100,000 employees and counting.
Major layoffs come with consequences, not just for those that are left jobless, but also for those that keep their jobs. Massive tech layoffs and tech layoffs can have a ripple effect on the entire industry. Those who are fortunate enough to keep their jobs may be faced with more workloads and pressure to perform. This kind of pressure can be unhealthy and lead to job dissatisfaction. Those who do lose their jobs can find that it’s harder to get back in with increased competition in their fields. As a result, layoffs can cause financial instability and uncertainty for those who are laid off and even for those who get to stay.
So, what do all of these tech layoffs mean for the future of their respective technologies? Any business that wants to stand the test of time must adapt and make changes that are relevant to current trends. To do that, companies must provide services that are in demand by consumers. They must also cultivate a company environment that promotes growth, healthy competition, and job security for valuable candidates. While nobody can say for sure what the future holds for the tech industry, time will tell how this phase of uncertainty unfolds.
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Summary
As the bear market sweeps the crypto landscape, crypto and tech companies are slashing their headcount by the hundreds, even thousands. In this article, we’ve named a few big names in tech, like Google, Amazon, Twitter, and Salesforce, but the list is much, much longer. Hundreds of crypto and tech companies around the world are forced to reassess their operations and costs to ensure efficiency and productivity. Luckily, many of the company leaders are taking the initiative to provide unemployment support like increased severance pay, continued healthcare access, and help to find new opportunities.
The bottom line is that the tech and crypto industries have had a tough few months, years even. While many are reducing their number of employees, development in their respective technologies continues. Just as many of the CEOs stated in their layoff letters to their staff, efficiency and a reassessment of expense management will lead to changes in their companies, but operations will not be interrupted.
Major lessons can be learned in these times of economic downturn. Leaders in these industries must take proactive steps to adapt to the ever-changing economic landscape. They will need to manage expenses more conservatively and increase efficiency to avoid mistakes of the past. Needless to say, the tech and crypto industries should recover in time. Time will tell how these tech companies handle the recent changes and overall global economic turbulence.
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