It’s another bleak week for startups weathering dismal tech stocks and even worse cryptocurrency prices. This week, startups in crypto and real estate fared particularly badly; naturally, as mortgage interest rates rise, fewer people want to buy homes. Meanwhile, Bitcoin is nearing dangerously close to the $20,000 mark, a serious plunge from the $60,000+ prices we saw just seven months ago. Unfortunately, this week’s layoffs spanned beyond just those two fields, with consumer tech, fintech, and food delivery impacted as well.
High-tech companies are laying off employees
Kirsty O'Connor/ PA Images/ Getty Images | The slump is affecting a wide range of companies
It was clear to everyone that this moment would come, yet 2022 caught the high-tech industry by surprise. After several prosperous years of spending money without limits on recruiting employees, obtaining real estate in dreamy locations, improving conditions, and lavish parties, technology companies were forced to slam on the brakes and quickly recalculate their route.
The first pressure came from the "people with the money," some of whom are veterans with lots of experience with crises, such as the giant American fund Sequoia, which demanded that companies start making immediate cuts and adjust to the crisis that was occurring. High-tech companies in the United States were quick to respond and fired about 20,000 workers in a very short time. Giant companies such as Robinhood and Coinbase, which are on the seam between high-tech and the capital market, fired thousands in one day. Giant companies such as Meta and Intel, whose stability is not feared, have also announced a freeze on recruitment.
Andriy Onufriyenko/ Getty Images | There were 4,044 job cuts in the tech industry in May
It’s not just early-stage startups that are feeling the burn. Big tech companies including Meta, Salesforce, and Netflix have also recently announced hiring freezes or layoffs amid cost-cutting pressure, rising inflation, a looming bear market, and rising interest rates.
Layoffs are on the rise
After initially planning to hire up to 2,000 more employees this year, citing "enormous product opportunities ahead," Coinbase has abruptly shifted course. Recently, the cryptocurrency exchange, which was once valued at nearly $100 billion, has rescinded offers, implemented a hiring freeze, and laid off 18% of its workforce.
Anikei/ Getty Images | Amid rising inflation rates and slowing demand, tech and crypto companies cut more jobs
Crypto.com CEO Kris Marszalek announced that the Singapore-based exchange would be laying off almost 260 workers, or 5% of its workforce. Another large exchange platform, Gemini Exchange, announced last week that it would be laying off 10% of staffers. And Crypto lending platform BlockFi said it is cutting around 20% of its workforce.
With the value of bitcoin, Ethereum, and other popular currencies dropping sharply, startups in the risky cryptocurrency space are at the forefront of layoffs. But the tech downturn is broad; the Nasdaq composite index has lost 30% of its value since January, the biggest drop in the tech-heavy stock index since 2007, when it fell 48%. That's affecting even established tech industry stalwarts. Meta and Twitter have slowed or paused hiring plans, while Netflix, Peloton, and Robinhood are laying off workers.
