SAN FRANCISCO, Calif. (KRON) — It’s been a rough year for San Francisco and Silicon Valley tech companies with layoffs and hiring freezes. High-profile tech CEOs said they are slashing numbers in their workforces because they see a recession looming on the horizon.
Telsa CEO Elon Musk hit the pause button on hiring because he has a “super bad feeling” about what will happen next. Coinbase CEO Brian Armstrong said he is planning for the worst because if a recession sets in, a “crypto winter” is coming.
Tech Layoffs
Telsa – factory operates in Fremont: The electric car manufacturing company reportedly laid off 10 percent of its staff this June. Tesla CEO Elon Musk said he will also pause hiring because he has a “super bad feeling” about the economy, Reuters reported.
According to a May filing with the Securities and Exchange Commission, Tesla said it had more than 100,00 employees worldwide.
Netflix – headquartered in Los Gatos: The movie and TV streaming service has laid off 450 employees within the past two months. Netflix laid off 150 workers in its first round of layoffs in May, followed up by 300 more layoffs in June. The company is cutting costs amid a downtown in revenue growth and a steep decline in subscribers.
Coinbase – headquartered in San Francisco:
The cryptocurrency exchange platform announced layoffs for 18 percent of its employees.
Coinbase CEO and cofounder Brian Armstrong wrote in a message dated June 14, “I am making the difficult decision to reduce the size of our team by about 18%, to ensure we stay healthy during this economic downturn.”
Armstrong listed reasons why the layoff was necessary. “Economic conditions are changing rapidly. We appear to be entering a recession after a 10+ year economic boom. A recession could lead to another crypto winter, and could last for an extended period. In past crypto winters, trading revenue (our largest revenue source) has declined significantly. While it’s hard to predict the economy or the markets, we always plan for the worst. We want to ensure we can successfully navigate a prolonged downturn,” he wrote.
Armstrong also admitted that his company “grew too quickly.” “At the beginning of 2021, we had 1,250 employees. At the time, we were in the early innings of the bull run and adoption of crypto products was exploding. It’s challenging to grow at just the right pace given the scale of our growth (~200% y/y since the beginning of 2021). While we tried our best to get this just right, in this case it is now clear to me that we over-hired,” he wrote.
Stitch Fix – headquartered in San Francisco:
The online personal shopping and styling company announced on June 9 that it was slashing its workforce by 15% — around 330 employees.
Stich Fix CEO Elizabeth Spaulding wrote in a memo to employees, “I’m writing to share the difficult news that we are reducing our workforce by approximately 15% of salaried positions. Most of the reductions are in our non-technology corporate roles and styling leadership roles. In light of our recent business momentum and an uncertain macroeconomic environment, we’ve taken a renewed look at our business and what is required to build our future.”
Sonder – headquartered in San Francisco: The short term rental company pitches itself as a more-upscale version of Airbnb and was once valued at nearly $2 billion.
Sonder Holdings Inc. announced on June 9 that it was “restructuring” its operations, including cutting 21% of the company’s corporate roles and a 7% of frontline roles, according to Market Watch.
Tech Hiring Freezes
Meta – Facebook and Instagram’s parent company based in Menlo Park:
Even this social media tech giant is enacting a hiring freeze for certain roles. Product groups experiencing a freeze are the dating app, gaming app and a messenger app designed for kids. One reason for the freeze is because of Apple iOS’ privacy change requiring apps ask for permission before tracking the user’s activity. Meta said Apple’s App Tracking Transparency feature will decrease the company’s 2022 sales by an estimated $10 billion.
Twitter – headquartered in San Francisco:
Twitter froze the majority of its hiring in May, according to Business Insider.
“Effective this week, we are pausing most hiring and backfills, except for business-critical roles,” the company’s spokesperson told Insider. Twitter CEO Parag Agrawal told his employees that the company was struggling and failing to meet goals for audience building and revenue, Bloomberg reported.
Twitter is facing a possible takeover by Musk, who offered to buy the social media company for $44 billion.
Musk, the world’s richest man, met virtually with Twitter employees earlier this month. Musk reportedly addressed possible layoffs at the company and said, currently, “costs exceed revenue. That’s not a great situation.” He also touched on growth, saying he’d like to see Twitter reach a billion users — roughly four times its current user base.
Intel – based in Santa Clara
Intel also ordered a hiring freeze this June for its computing group that creates PC chips for desktop and laptop computers, according to Fortune magazine.
“Increased focus and prioritization in our spending will help us weather macroeconomic uncertainty, execute on our strategy, and meet our commitments to customers, shareholders, and employees,” Intel told Fortune.
