Digital payments platform Stripe is set to lay off 14% of its workforce, some 1,000 people, as tech firms continue to come to terms with the difficult economic conditions in markets around the world.
Stripe, which was valued at $95bn during its last funding round, informed employees yesterday that their posts could be under threat. Founded in 2009, it provides APIs that developers can use to add payment processing into websites and mobile apps, as well as physical payment infrastructure for businesses.
It is jointly headquartered in San Francisco and Dublin, with teams around the world, and investors in the company include Elon Musk, Peter Thiel and Sequoia Capital. It will employ about 7,000 people after the redundancies.
Why is Stripe making layoffs?
In an email to staff, CEO Patrick Collison said the company was making the job cuts due to the challenging economic climate, which has seen budgets cut as businesses deal with growing inflation and soaring interest rates.
Collison maintained that “our business is fundamentally well-positioned to weather harsh circumstances”, telling staff: “We provide an important foundation to our customers and Stripe is not a discretionary service that customers turn off if budget is squeezed.”
But he added: “We do need to match the pace of our investments with the realities around us. Doing right by our users and our shareholders (including you) means embracing reality as it is. Today, that means building differently for leaner times. We have always taken pride in being a capital-efficient business and we think this attribute is important to preserve. To adapt ourselves appropriately for the world we’re headed into, we need to reduce our costs.”
He said he and the company’s co-founders take responsibility for the need to make cuts to their teams around the world, having made “two consequential mistakes”. “We were much too optimistic about the internet economy’s near-term growth in 2022 and 2023 and underestimated both the likelihood and impact of a broader slowdown,” Collison said. “[And] we grew operating costs too quickly. Buoyed by the success we’re seeing in some of our new product areas, we allowed coordination costs to grow and operational inefficiencies to seep in.”
Tech firms cut jobs as economic headwinds worsen
Many tech companies are cutting back their teams as demand for products and services, which boomed during the Covid-19 pandemic, falls away. Tech Monitor reported last month that chipmaker Intel was looking to make thousands of redundancies due to a slowdown in the PC market which has hit demand for chips.
Big Tech firms such as Microsoft have also been cutting back teams and imposing hiring freezes, with Amazon becoming the latest to announce a freeze yesterday. The news came on the same day as ride-hailing app Lyft revealed it was cutting its headcount by 14%.
Meanwhile, Twitter is set to announce the extent of its own job cuts today following the takeover by Elon Musk. It is thought up to half of the company’s 8,000 staff could be made redundant.