Major Silicon Valley payments company Stripe has revealed 14 percent of its workforce has been laid off.
Cofounder and CEO Patrick Collison explained the necessity for cost reduction at Stripe in an email to staff members citing issues with the global economy, such as inflation, increasing interest rates, and “sparse startup funding.”
Collison admitted Stripe management had made mistakes during the previous two and half years.
He said that the business “overhired” during the pandemic and was “too optimistic” about the rapid expansion of e-commerce in the foreseeable future.
The workforce base at Stripe has more than doubled during the last two years, according to LinkedIn data.
It had more than 8,000 employees as of last month, and the fresh layoffs will reduce that number to a little less than 7,000, which would be the same as it was in February 2022.
Collison also said Stripe “grew operating costs too quickly” and “allowed operational inefficiencies to seep in.”
A former employee told Forbes: “They didn’t really explain what was happening and why they were trying to sugarcoat it by calling it ‘performance management,’”.
A Stripe spokesperson said: “One of Stripe’s operating principles is to obsess over talent. Good times and abundant hiring can make performance management less conspicuous, but we’ve worked hard on this front in the past in order to sustain the talent bar that we benefit from today—and we will continue to do so.
Now that layoffs have been announced, one former employee says, “I think they had the layoff planned since the beginning and tried to just fire low performers initially.
“But given that the economic climate continued to worsen, they had to pull the lever even more.”
A representative for Stripe declined to comment.
However, a layoff round that isn’t only determined by seniority would often additionally consider employee performance, job function, and a company’s necessity.
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Stripe reduced its internal valuation, which is used to set employee equity-based pay packages, by 28 percent to $74 billion in July.
The layoffs at Stripe occur as the year comes to a conclusion and it looks like most fintech companies are making personnel reductions.
Small and major businesses, such as Robinhood, Klarna, and the online bank Chime, have declared layoffs in 2022.