Patrick Collison (right)/Stripe.
Tech layoffs spill over to Stripe despite resilience
Stripe's potential IPO continues to hang in the balance.
Tech employees are the latest victim of the economic slowdown. While Twitter, Robinhood, and Meta are behind the most high-profile job cuts, privately held payments behemoth Stripe was not left unscathed.
According to Stripe CEO Patrick Collison's email to employees earlier this month, the fintech is slashing 14 per cent of its workforce amid soaring costs. Most of the layoffs, which seemingly amount to about 1,000 individuals, hit the company’s recruiting unit as Stripe braces for a slowdown in hiring next year. Stripe fell into the trap of hiring too aggressively and is now forced to tighten its belt.
"We are facing stubborn inflation, energy shocks, higher interest rates, reduced investment budgets, and sparser startup funding," said Collison in the email. He added that Stripe "is fundamentally well-positioned to weather harsh circumstances."
Stripe, whose valuation hovered at $95bn as of its latest funding round in March, is trimming costs ahead of a potential IPO in the future. The laid-off staff will miss out on Stripe's listing should it decide to go public in 2023.
All told, the tech industry has seen more than 120,000 layoffs during the market downturn,
Tim Herbert, chief research officer at The Computing Technology Industry Association (CompTIA), told AltFi that while the Fed seems intent on slowing the economy, labour market hiring “continues to defy expectations.” He explained:
“Specifically in the tech space, our November jobs report shows an increase of 20,700 net new jobs in the tech sector, extending the streak to 23 consecutive months of gains. Year-to-date employment is tracking 28 per cent ahead of the same period last year. Tech unemployment was essentially unchanged at 2.2 per cent, which continues to signal a tight labour market with few tech workers sitting on the sidelines.”
So what gives? Herbert points to an expansive tech industry with “pockets of companies struggling while others are holding up or even performing well.” He explained that the most resilient tech plays are those operating in the enterprise technology market as well as companies with stable cash flow.
If you look back over the past two decades or so, tech and its workforce have “outperformed the macro economy,” Herbert noted. He pointed to previous recessions, saying that while tech suffered some dips, it was much less severe vs. other sectors or labour force categories. In addition, tech’s recovery was much swifter during the height of the pandemic, when hiring rebounded following a brief dip in employment.
“Weakness in one area tends to be offset by other sectors or companies increasing their hiring, which has the net effect of stable and sustainable growth over the long term,” said Herbert.
Meanwhile, Stripe's Collison hopes that his former employees will land safely. He
“If you’d like to hire any of the wonderful former Stripe employees who are leaving, email firstname.lastname@example.org. We’ll let you know as soon as the directory is ready.”
Meanwhile, employees are not wasting any time, with one former Stripe worker showcasing his portfolio of animations on Twitter. The ex-Striper, Zach Saucier, had nothing but good things to say about his former employer, and based on the response from prospective employers, he could be back to work sooner than later.
I was a part of theStripe (videos in thread): pic.twitter.com/ankCaE2E1p
— Zach Saucier (@ZachSaucier)
In addition, laid-off tech employees could be rescued by a program called “Funded Not Fired,” launched by VC firm Day One Ventures. The initiative targets laid-off workers from the likes of Twitter, Stripe, and Affirm and, with a tagline ‘Funded, Not Fired,’ seeks to invest $100,000 into startup ideas.