{"id":5608,"date":"2022-07-15T17:52:38","date_gmt":"2022-07-15T07:52:38","guid":{"rendered":"https:\/\/knowhow.skalata.co\/?p=5608"},"modified":"2022-08-15T17:29:23","modified_gmt":"2022-08-15T07:29:23","slug":"when-unicorns-become-war-horses-a-layoff-bloodbath-is-looming","status":"publish","type":"post","link":"https:\/\/knowhow.skalata.co\/big-picture\/when-unicorns-become-war-horses-a-layoff-bloodbath-is-looming\/","title":{"rendered":"When unicorns become war horses: The layoff bloodbath"},"content":{"rendered":"\n

The latest trend to hit Silicon Valley isn\u2019t sliders, spirituality, or soy beer. It\u2019s unemployment. As of August, nearly 70,000 workers have been given their marching orders. There’s even a handy site<\/a> keeping track of the carnage.<\/p>\n\n\n\n

There are a few nuances to this trend. Firstly, the percentages are common – Tesla is also cutting 10%<\/a>, as is Winklevoss-owned crypto platform Gemini. Secondly, many firms involved are recent unicorns, having enjoyed explosive growth in the pandemic years or just before. <\/p>\n\n\n\n

But if you really want to nail the trend, you have to do things in the most impersonal way possible. <\/p>\n\n\n\n

Klarna CEO Seb Siemiatowski<\/a> and P&O\u2019s Peter Hebblethwaite<\/a> opted for prerecorded video messages. Cameo CEO Steven Galanis<\/a> and Better.com CEO Vishal Garg<\/a> at least did it live via Zoom. It seems ironically like the video software Loom<\/a> was the only one to put it in writing.<\/p>\n\n\n\n

It\u2019s not just tech. P&O Ferries sacked 800 UK staff members (again over Zoom), with no notice, and without consulting trade unions (illegal in the UK). <\/p>\n\n\n\n

Staff protested by refusing to leave the ships and some were physically hauled off by security staff. The public was furious, the tabloids were scathing. The move is being criminally investigated and was described in a recent hearing as a \u201cfire and rehire on steroids<\/a>\u201d. <\/p>\n\n\n\n

As CEOs love to remind us, corporations aren\u2019t charities. Redundancies are inevitable. They keep companies afloat and remaining staff employed. But the way business leaders are going about the cuts is – if not illegal – downright brutal. Surely there are ways we as founders can navigate things better? <\/p>\n\n\n\n

Why is this happening?<\/h2>\n\n\n\n

Vultures are circling the tech firms that spun gold out of global lockdowns. Ecommerce giants like Amazon and Spotify, SaaS like Zoom and Docusign, and entertainment platforms like Cameo, Netflix, and Tencent all multiplied market share and workforces during the remote revolution. <\/p>\n\n\n\n

Netflix was a particular pandemic darling, with locked-down streamers stapled to sofas. Having culled 150 staff members in May and a further 300 in June, It\u2019s perhaps one of the most high profile layoff instigators, having lost subscribers for the first time in a decade. <\/p>\n\n\n\n

Now, not only are we relying less on digital connection, but global pressures like the Ukraine war, rising inflation, rising-bubble housing markets, cost of living crises, and the incomplete COVID recovery are all pointing to an economic downturn. <\/p>\n\n\n\n

VC firms worldwide have issued black swan memos<\/a>, urging founders to extend runways where possible, slash expenses, and plan for an arid fundraising environment for the next 12-24 months. <\/p>\n\n\n\n

Those who aren\u2019t firing are freezing. Uber, Meta, Twitter, and Salesforce have all ceased hiring activity. <\/p>\n\n\n\n

In recession events, companies switch from growth to survival mode. Investors deploy capital with extreme caution. The talent wars of the past few years and the abundant capital in tech sent compensation packages spiralling upwards. Now, expensive and expendable staff are the first outgoing to go. <\/p>\n\n\n\n

Envato<\/h2>\n\n\n\n

Layoff season has officially reached Australian shores, and no industry is safe. Employees of Healthcare tech firm Eucalyptus, BNPL provider Brighte, grocery delivery startup VOLY, crypto exchange BANXA and ‘link in bio’ platform Linktree are among the casualties.<\/p>\n\n\n\n

Envato has shed 100 of its 600-strong team. It\u2019s not a move based on past performance – Envato posted a 14% rise in FY21 revenue<\/a>, and a 76% rise in operating profit. <\/strong>It\u2019s a direct response to CEO Hichame Assi\u2019s predictions of a \u201cmore challenged\u201d macroenvironment in the coming months. <\/p>\n\n\n\n

In his words: \u201cWe believe a renewed and sharpened business focus will ensure we continue on our long-term growth trajectory.\u201d<\/p>\n\n\n\n

Having been in the role for just 20 months, it\u2019s telling to see a young CEO shift gears from growth at all costs to that good old long-term planning.<\/p>\n\n\n\n

Loom<\/h2>\n\n\n\n

CEO Joe Thomas made the 14% reduction in Loom\u2019s staff numbers<\/a> to: \u201censure we\u2019re able to move forward sustainably, especially in light of increased economic uncertainty, and continue to deliver on our vision for years to come\u201d. <\/p>\n\n\n\n

There\u2019s more of that long-term talk.<\/p>\n\n\n\n

Loom was a pandemic-made unicorn, built on the ever-increasing complexity of our digital communication needs. While Zoom was the great divider, Loom\u2019s prerecording software saved video callers from the stress of scheduled meetings and the tyranny of going live. <\/p>\n\n\n\n

Loom\u2019s ambitions remain big. Just this year it\u2019s been busy personalising (a new home screen, video recommendations) and socialising (you can now follow and collaborate with colleagues).  <\/p>\n\n\n\n

Like Envato, they\u2019re not in <\/em>trouble – they\u2019re preparing for it.<\/p>\n\n\n\n

Cameo<\/h2>\n\n\n\n

Cameo has been one of the highest profile culling cases, despite the 87 staff member headcount being somewhat dwarfed by, say, Better.com\u2019s 900.<\/p>\n\n\n\n

During 2020, Cameo\u2019s gross revenue 4.5x\u2019d<\/a>. After receiving backing from Google Ventures, SoftBank, Lightspeed and others, it achieved unicorn status. <\/p>\n\n\n\n

CEO Steve Galanis has made no bones about this.<\/p>\n\n\n\n

To support both fan and talent demand during the pandemic lockdowns, Cameo\u2019s headcount exploded from just over 100 to nearly 400\u2026. Market conditions have rapidly changed since then. Accordingly, we have right-sized the business to best reflect the new realities.<\/p><\/blockquote>\n\n\n\n

Better.com<\/h2>\n\n\n\n

Vishal Garg has really not covered himself in glory recently. Forbes published an all-caps internal email<\/a> from Garg to staff last Christmas telling them to \u201cwake up\u201d and that they were \u201ctoo damn slow\u201d and a \u201cbunch of dumb dolphins\u201d who were \u201cembarrassing\u201d him. <\/p>\n\n\n\n

Then he laid off 900 employees shortly after a $750 million investment contributing to a valuation of $7 billion. The reason? 250 of them were apparently committing time theft by working for just 2 hours a day. Reasons were unclear for the rest.<\/p>\n\n\n\n

In March, Garg axed another 3100 employees. This time he did it simply by sending out severance <\/a>cheques<\/a>. Another undisclosed number of employees were let go two weeks later, to the rumoured tune of 1000 to 1500<\/a>. <\/p>\n\n\n\n

He\u2019s also just been accused<\/a> of misleading investors.\u00a0<\/p>\n\n\n\n

The moral of this section: don\u2019t be this guy.<\/p>\n\n\n\n

The moral of the broader scenario? Don\u2019t base future projections on revenue during freak events. Better.com 10x\u2019d their revenue in 2020. Last year, it lost $300 million<\/a>.\u00a0<\/p>\n\n\n\n

HyperSocial<\/h2>\n\n\n\n

CEO Braden Wallake’s guilt-ridden post<\/a> about laying off employees is now ‘LinkedIn famous’. But it wasn’t his tone-deaf, weirdly self-aggrandizing musings that went viral. He probably would’ve got away with it if not for his very<\/em> ill-informed crying selfie.<\/p>\n\n\n\n

“My intent was not to make it about me or victimize myself,” he wrote on LinkedIn. “I am sorry it came across that way.”<\/p>\n\n\n\n

It sure did, Braden. It sure did.<\/p>\n\n\n\n

<\/p>\n\n\n\n

\n

Linkedin is unintentionally the funniest social media platform.

CEO posts picture of himself crying because of layoffs.

Goes viral.

Gets clowned for adopting a sea lion during a recession lmao pic.twitter.com\/HcnS0o1iJk<\/a><\/p>— Jack Raines (@Jack_Raines) August 10, 2022<\/a><\/blockquote>