This is not (just) another roundup of tech layoffs

Amanda Silberling, Natasha Mascarenhas / 4:45 PM EDT•June 3, 2022

Nearly 16,000 tech workers lost their jobs in a single month, and June is off to a rocky start. It's a tough market, a time of uncertainty, and a correction towardsustainability is needed, and that's why startups across all sectors are laying off parts of their staff.

We are going to continue our round-up of layoffs in tech this week, but we are also going to take a closer look at some of the themes from the reductions. Here are the companies that are using layoffs.

• Carbon Health laid off 8% of staff, or 250 people. Per our own Christine Hall, “the startup’s most recent funding round was a $350 million Series D round in July 2021, led by Blackstone Group, that reportedly put the company at a $3.3 billion valuation. We covered its $100 million Series C round in November 2020. In his letter to employees, Bali outlined two reasons for the decision to let go of staff — despite its continued and fast growth over the years. The first was winding down some of its business lines related to COVID. In 2020, Carbon Health developed both pop-up clinics and at-home test kits.”
• Loom, an enterprise video tool backed by Andreessen Horowitz, laid off 14% of staff. The company’s most recent round valued the company at $1.53 billion, making it hit unicorn status for the first time. Kleiner Perkins, Sequoia, Coatue and General Catalyst are also investors in the company. Similar to Hopin, Loom benefited from a surge of people working from home in response to the COVID-19 pandemic; the product was positioned to help remote workers find better ways to connect with colleagues in a virtual-first world, and help hybrid workforces find a lightweight way to skip some meetings. Then, again similar to Hopin, the startup conducted layoffs to help it build in what it describes as a more sustainable way moving forward.
• Coinbase will extend its hiring freeze and revoke accepted offers from some candidates who haven’t started their roles yet (…and inform them of their status via email). This news comes after Coinbase’s brutal Q1 results, which reported a $430 million loss.
• The crypto platform Gemini, led by co-founders and twin brothers Cameron and Tyler Winklevoss, laid off 10% of its staff due to “turbulent market conditions that are likely to persist for some time.” Despite reacting to the market changes, Gemini’s co-founders also addressed that there’s a somewhat expected volatility in what they called the “crypto revolution.”
• Social app IRL lays off 25% of team, says it has enough cash to last well into 2024. The cut comes around a year after the startup landed a $170 million SoftBank-led Series C and hit coveted unicorn status. Regarding the decision to cut staff, CEO Abraham Shafi wrote in a memo to staff that IRL has “more than enough cash to last well into 2024.” Over the last year, the startup increased its head count by 3.5 times, but Shafi noted that WhatsApp was able to grow to 450 million users with a team of 55. This suggests that the workforce reduction was less about trying to reduce runway and more about right-sizing the team after a period of overhiring.
• Insurtech Policygenius cuts 25% of staff, less than 3 months after raising $125M. As Mary Ann Azevedo reports, “since its 2014 inception, Policygenius has raised over $250 million from investors such as KKR, Norwest Venture Partners and Revolution Ventures as well as strategic backers such as Brighthouse Financial, Global Atlantic Financial Group, iA Financial Group, Lincoln Financial and Pacific Life. While we can’t speak specifically to Policygenius, it’s been widely reported how poorly insurtech companies have fared in the public markets over the past year with Lemonade, Root and Hippo all trading significantly lower than their opening prices.”
• Amsterdam-based TomTom let go of 500 employees, or 10% of its workforce. TomTom used to be known for car GPS navigation before we all had iPhones, but over the last few years, the company has attempted to pivot to mapping for self-driving cars. The jobs affected are in the maps department, where the company is pursuing more automation.
• A digital mental health company backed by Softbank, Cerebral plans to conduct layoffs in July (which shouldn’t be anxiety-inducing at all for staff as they wait to learn their fate). The telehealth company also recently replaced its founding CEO amid a government investigation into its potential violations of the Controlled Substances Act – Cerebral has been critiqued for over-prescribing ADHD drugs.
• Tesla CEO and guy-who-needs-to-stop-tweeting, Elon Musk ordered a hiring freeze and job cuts, which would affect 10% of salaried employees. Currently, Tesla employs almost 100,000 people. Strangely, President Joe Biden weighed in, saying, “So, lots of luck on his trip to the moon, I don’t know.”

Nuance of note

No one wants to be in the unicorn club

Many of the recent layoffs have come from companies that have been around for a long time. There are a couple reasons as to why that is.

One year is long. In a market that can't decide, it feels even longer. Growth into their current valuation may be a significant stretch since they may no longer be on the same path. The one year mark is a reminder to reflect and unfortunately for employees, scale down to a more realistic spot.

Being a unicorns in a bull market is difficult. Richly-valued startups need to eventually deliver on hope, but capital doesn't guarantee success. There are certain growing pains that come with being a late-stage company, such as integration with acquisitions, handling a remote workforce, and learning how to iterate when the business is no longer as quick as it was. In the past, layoffs may have been put off by another round of funding, but now that follow on funding isn't a given, layoffs are becoming more common

Many of the unicorns are just piatas filled with old candy. Stop hard.

Tech layoffs don’t happen to companies, they happen to people

Layoffs should be treated as a worst case scenario, not a precaution

There is enough runway for companies to keep their staff employed during the current economic downturn. They let go of their staff to save money.

The CEO of the company wrote a memo after laying off 25% of his staff. The uncertainty we met at the beginning of the COVID 19 Pandemic can't be any worse.

Workers can't control getting laid off when their employer has enough money to keep them. Losing your job means medical instability for both you and your family. It is time to stop pretending that the cost of COBRA is not high.

We think founders need a quick Heart to Heart about the market

There were already accepted offers from a number of employees that were withdrawn. Many of the employees who were rehired were students who were graduating with PhDs and bachelor's degrees. It is possible for a new hire to accept a job months before their start date because they will need to graduate.

Many soon-to-be graduates who accepted jobs at Coinbase turned down other offers to work there, now they are stuck scrambling to find a job. International students who can't find an employer to sponsor their visas could be deported.

Layoffs are a part of startup life. It seems like they are caused by bad management choices that make it harder to pay staff. Mistakes can put innocent workers in situations of financial precarity, potential deportation and limited access to healthcare, if they are made. It is personal when layoffs are made as a precautionary measure.

Tech layoffs top 15K in a brutal May

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