What's with all the layoffs?

May 16, 2022

The Daily Stack is a daily private market insights newsletter by PrivCo, a private company intelligence platform. Read our previous insights.
Have an interesting topic you want us to include, let us know!

I’ve always appreciated the British term for getting laid off: being made redundant. It strikes me as a somewhat harsh but still accurate depiction of what employers are saying when they let go of large swaths of the company. Amidst a huge tech sell-off in the public markets and a renegotiation of valuations as well as budget cuts in the private sector, companies are dropping employees like they’re yesterday's news.

The Great Resignation + Layoffs = Chaos?
The pandemic-induced movement of people quitting their jobs looking for better opportunities, pay, or purpose has yet to slow down. Forty-seven million people left their jobs in 2021, and the record for resignations hit a new high in March of this year, reaching 11.5 million.

Meanwhile, hourly wages grew 6% in March, reflecting the employee’s market we’ve been experiencing. However, layoffs from big-name companies like Peloton and Robinhood signal a potential end to the party. Robinhood grew its workforce from 700 to 3,800 during the pandemic but is now course-correcting by laying off 9% of employees. It remains to be seen how these layoffs will affect the job market for job seekers.

Changing Tune
Many of the layoffs and hiring freezes we’re seeing from companies like Cameo, Netflix, Facebook, and Google are just recalibrations after an exceptionally booming market since the pandemic struck in 2020. According to Marc Andreessen of a16z, “The good big companies are overstaffed by 2x. The bad big companies are overstaffed by 4x or more.”

The good news is that smart people losing cushy jobs can be a recipe for innovation. We might start to see these former Google and Netflix employees starting their own companies.

Budget Slashing
Residential real estate machine learning startup Doma announced a 15% layoff of employees after a 12% decrease in revenues. Higher interest rates are finally cooling the superhot mortgage market. The company went public in a SPAC merger in March of 2021.

Latch, an operating system for buildings, is telling 6% of its workforce to see themselves out, as per an email obtained by TechCrunch.

For more companies reducing their payrolls, use our advanced search filter. Under the employee's tab, set a max of 0% for the employee growth rate to see a list of companies cutting staff.