Are Tech Layoffs Accelerating?

Startups are being asked to trim staff to save on costs.

Hey Guys,

Just a quick note.

It's no secret, the U.S. startup tech layoffs have begun. (Source: Crunchbase)

In May, 2022 - 15k tech layoffs occurred. (Source: Yahoo News).

It’s fairly interesting to watch if you work in Tech or want to work in software engineering as the intended audience of this Newsletter.

The number of people let go are high:

• Klarna: ~700 (~10%)

• Bolt: ~200 (around 30% of employees)

• Netflix ~150 (around 2%)

• Laceworks: ~300 (around 20%)

• Getir: more than 4,000 (~14%, this includes delivery people)

• Gorillas: more than 300

• Vroom ~ 270 (around 14%)

• Skillz: ~70 (~10%)
  

See the full list here for U.S. based startups and companies.

• Most of these companies are laying off tech people, including software engineers.

Compared to April, 2022, thinks have been accelerating a lot in May with the layoff trend.

Some sectors of startups have been particularly hit bad like:

• Delivery startups e.g. (Getir, Zapp Join Delivery Startups Cutting Staff).

15,000 Let Go in May, 2022

TechCrunch rounded up week after week of layoffs, and according to aggregator layoffs.fyi, more than 15,000 tech workers have lost their jobs this month, May, 2022.

Multiple companies relating to startups have been making warnings and best practice procedures including Y Combinator and others. Hacker News is now full of people being let go and advice on how startups should “fire quickly but take responsibility”.

The Pragmatic Engineer of Substack has been covering this as well, see his LinkedIn post here.

Different day of the week, different startup being impacted.

Venture Funds are Drying up

With venture funds drying up, layoffs looming and stock prices plummeting, could the tech boom experienced during the pandemic now be headed towards a historic down-cycle? It certainly looks that way.

Even established BigTech are slowing down hiring considerably in the Spring of 2022. Though the job market remains tight, several large tech companies, including Salesforce, Twitter and Meta, have slowed the hiring of new staff amid rising inflation and market uncertainty; other companies have decided to cut jobs entirely.

This might impact Europe even worse in the Tech Sector. The tech company layoffs have hit Europe. Several of Europe’s best-known startups have made drastic cuts to their teams in order to cut costs and preserve their cash runway as the global economy takes a downturn.

A number of tech companies that enjoyed pandemic-related surges are facing a correction, due to a number of factors, from rising inflation, economic distress, war and shifting consumer behaviors. All to say, confidence is plummeting in terms of startups making arrangements for tougher conditions.

Let’s face it the job market may not have stayed red hot in 2022. Several tech companies have recently announced hiring freezes and layoffs. Startups who were pumped liquidity during the QE years 2020-2021, might have to face reality in the coming months and it won’t be pretty.

Back two weeks ago, Economists didn’t yet think that the tech slowdown necessarily means a broader hiring slowdown is on the way. But how quickly things change, startup layoffs certainly seem to be accelerating.

What do you think?

Thanks for reading guys!