As startup layoffs continue, some perspective – TechCrunch

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As startup layoffs continue, some perspective – TechCrunch


Welcome to Startups Weekly, a fresh look at this week’s startup news and trends. To get this in your inbox, subscribe here.

According to, a layoff tracker, more than 16,000 tech workers lost their jobs in May, and June is off to a similarly brutal start. Senior reporter at TechCrunch Amanda Silberling and I accidentally and unfortunately started working on a weekly column about tech layoffs; what initially started as a transitional moment at Thrasio soon expanded to start-ups regardless of sector, funding stage or whether or not they had an obvious growth strain.

As layoffs continue, it can seem like the same boilerplate story: numbers affected, roles or teams that have been cut, details of the severance package, and a vaguely general statement from the CEO citing market turmoil as a key reason for the reduction. That doesn’t mean they’re any less newsworthy, but I’m always curious about the possibilities for follow-up stories. So, I asked you all for some perspective on what else to ask and include in these stories.

By Jennifer Neudorfer: I would like to see a follow-up piece with data on where people who are laid off go. Are specific companies/industries scooping them up? Do some start companies? Something else entirely?

That question made my mind immediately jump to the talent opportunity that arose in early 2020 when the Unicorns cut parts of the staff in preparation for the pandemic. Then I wrote a story about how startups hire employees who have been laid off, otherwise known as a not-so-new acquisition strategy. At one point, most of the online mortgage company Stavvy was filled with former toasters affected by the restaurant technologist’s 50% workforce reduction.

Beyond the rise of benefits hiring, I think we’ll see some classic scholarships emerge that help recently laid off people break into entrepreneurship. Neundorfer’s firm, January Ventures, launched a program similar to Cleo Capital’s that gives capital to aspiring founders to get them off the ground.

The key here is that layoffs make people more risk-averse, especially depending on their socioeconomic background. That, mixed with the fact that Big Tech is freezing hiring, I don’t know what happens when a wave of people lose their jobs in a mixed messaging hiring market.

But if anyone has data to answer this question, please send it!

By Anna Rasby-Safronova: Did those who were made redundant see it coming and how did the layoffs affect the mental health, anxiety and productivity of the rest of the team?

I’ve now spoken to dozens and dozens of former and current employees at struggling startups, and the reaction to the layoffs largely feels like whiplash for those affected.

The reason? The difference between layoffs in 2022 and 2020 is that many of the companies laying off people today were well-capitalized, so-called unicorns just a year ago. In 2020, layoffs can easily be attributed to an unprecedented pandemic that has complicated growth plans; while in 2022 the cuts come immediately after leaders had boasted of insane growth just months before. Add in the fact that people are still being fired in questionable ways—from severance that shows up on payroll to long notices—and I can’t imagine that these layoffs aren’t aggressively affecting morale internally and externally.

International workers face additional complications when they are laid off, as losing a job can change visa status. Even as companies pick up spreadsheets or resume maintenance, the added volatility could mean talented workers are forced to leave the United States to seek a better life elsewhere. These are stories we’re working to tell, but they’re sensitive for obvious reasons.

By Luke Metro: What proportion of the company’s employees have been hired in the last 1-2 years? I wonder how many downsizing companies made massive hires in the frothy year of 2021?

The reason this question is important is that it colors how the dismissal is designed; and if it only affects the newest members, the most nascent products, or everyone everywhere from executives to entry-level employees. If it’s the latter, it could mean that a startup has deep problems that require a massive reorganization of its resources. If downsizing has had a big impact on hires in the past year, it could mean the startup needs to cut back on some of its more experimental work and return to where it already fits the product market. Thanks for the tip, I’ll start asking about that!

In the rest of this newsletter, we’ll talk about multiplayer fintech and the world of grocery delivery. As always, you can support me by forwarding this newsletter to a friend or follow me on twitter or subscribe to my blog. On a programming note, I’m on vacation next week, so expect a shortened Startups Weekly column, still by yours truly, but with support from Henry PickavettRichard Dal Porto and the rest of the team.

Deal of the week

Santa Monica-based startup Ivella wants to build banking products for couples to take the stress out of money. CEO and co-founder Kahlil Lalji launched a split account product that just raised $3.5 million in funding from Anthemis, Financial Venture Studio and Soma Capital. Other investors include Y Combinator, DoNotPay CEO Joshua Browder and Gumroad CEO Sahil Lavingia.

Here’s why it’s important: So far, the best fintech solution for multiplayer is joint accounts: meaning two people will create an account where they — sing it with me now — join their accounts and withdraw from the same pool. Instead, Lalji wants to build a split account: Couples maintain individual accounts and balances, but get an Ivella debit card that’s linked to both accounts.

With this shared card, couples can set ratios — perhaps proportional to what percentage of each bill someone pays based on their income — and Ivella will automatically split any transactions made using the Ivella debit card. This in itself was the biggest technical challenge Ivella faced in its early days, Lalji describes:

“Where a lot of people fail, just like a lot of fintechs fail, is that they don’t disrupt the shape of what banking looks and feels like,” Laji said. “And because we’re focused specifically on couples, we want to create a product that doesn’t feel so sterile and not just like a bank.”

The supply market is coming off its pandemic highs

Our own Kyle Wiggers wrote about how the pandemic period of rapid growth in the on-demand delivery market is winding down. As he notes, there are signs of a correction, including Instacart’s reduced valuation, swings in DoorDash and Deliveroo’s stock prices, and layoffs at Gorillas, Getir, Zapp, and Gopuff, while others like Fridge No More and 1520 are closing entirely.

Here’s why it’s important: As I told Wiggers over Slack, the lack of profitability in the on-demand delivery market is often talked about in an “it’s so obvious” and sweeping manner. This piece went into the heart of why grocery delivery is so expensive and the more specific difficulties startups in this market face.

Here’s what Craft Ventures partner and co-founder Jeff Flour, former CEO of StubHub, told TechCrunch; despite the fact that Craft has invested in a number of delivery companies:

“The fast-delivery space epitomized the exuberance of 2021: Investors were pouring money into cash-sucking companies with fragile business models,” he told TechCrunch in an email interview. “Expedited delivery companies are capital intensive. They require local infrastructure, local people and local operations, which are expensive to build. As a result, all of these companies have burned through piles of cash over the past 12 to 24 months as they expanded into new geographic markets. Of course, consumers like the instant gratification of a pint of ice cream in 15 minutes, so revenue grew rapidly, driven by a great user experience and word of mouth. Investors followed the growth without paying attention to the yield potential. But the idea that a startup can deliver on that promise profitably is a pipe dream.”

During the week

Seen on TechCrunch

Seen on TechCrunch+

Until next time,



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