Spike in tech firms cutting jobs as economic realities bite

Fintechs have been particularly impacted by economic downturn

Two weeks after announcing plans to slow hiring, crypto exchange Coinbase has now said it will extend this pause into the “foreseeable future”, and will also be rescinding some job offers.

This comes as the leading crypto exchange revealed a loss of 70% of its value so far this year, a loss brought on by both the downturn of the economy and of cryptocurrencies. Bitcoin is down by more than one-third this year and Ethereum by 50%.

In a blog post last week, Coinbase’s Chief People Officer L.J. Brock wrote that “after assessing our business priorities, current headcount, and open roles, we have decided to pause hiring for as long as this macro environment requires”.

It’s a similar story at other fintechs across the US and Europe, including Robinhood, Nuri, Klarna and Bolt.

Berlin-based digital bank Nuri announced it was letting go of 20% of its workforce, with CEO Kristina Walcker-Mayer explaining in a blog post that this was part of the startup’s strategic plans “towards earlier profitability” as it adapts to the new reality in the financial markets.

Swedish BNPL startup Klarna is laying off 10% of its staff, according to a video message sent to employees in which CEO Sebastian Siemiatkowski blamed market conditions.

And San Francisco-based check-out payments startup Bolt is shedding around a third (250) of its workforce, with Bolt chief executive Maju Kuruvilla also blaming market conditions and writing in a company blog that “in order to secure Bolt’s financial position, extend its runway, and reach profitability with the money it has in hand, the company has decided to reduce the size of its workforce.

The news of layoffs at Bolt comes just months after investors valued the payment startup at US$11bn.

Many of these fintechs have undergone rapid expansion over the last few years, on the back of investor support and high valuations, and have hired accordingly. Coinbase, for example, tripled the size of its staff last year to 3,730 employees, while online brokerage firm Robinhood saw a rapid headcount growth in 2021 in light of its IPO.

For Robinhood, like Coinbase, that now means having to cut its losses with a headcount crackdown. The Silicon Valley startup recently announced it is cutting around 9% of its full-time employees following a drop in monthly active users in the last quarter of 2021, which has in turn led to a total net revenue decrease of 43% in the first quarter of this year.

In a blog post, CEO Vlad Tenev said the cutting of jobs was being made to “improve efficiency” and also to “increase our velocity”. That said, the Stanford-educated co-founder of Robinhood still has the ‘I’m hiring’ tag on his LinkedIn profile.