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Out of the saddle:
Investors are holding back money.
Not only prominent start-ups like the delivery service
Gorillas
or the payment
service Klarna
have to save.
A wave of layoffs rolls across the industries
Photo: TOBIAS SCHWARZ / AFP
The job engine is humming – actually: US companies created 372,000 jobs in June, in Europe and in the USA the shortage of skilled workers and significantly rising wages are increasing fears of a wage-price spiral.
The latest job and wage data doesn't fit in at all with recession concerns around the world.
But some sectors are already showing that after years of boom, things can quickly go in the other direction: A wave of layoffs is rolling in the once celebrated tech and start-up scene, which has rocked again in the months of May and June .
The focus here is not on salary and bonus, but on who can stay on board.
Last year, start-ups were showered with cheap money, but now venture capitalists are holding back their money and letting the ratings of the stars of yore plummet.
The start-ups switch to emergency mode and in some cases drastically reduce the number of employees.
The wave of layoffs is increasing: In
May
alone , 71 tech start-ups laid off around
17,000
employees worldwide, according to data from the tracking site layoffs.fyi.
That was more than three times as much as in April.
In
June
, the number of redundancies rose sharply again to around
24,000.
Around 50,000 employees worldwide have lost their jobs in start-up companies since the beginning of the year
.
But not only start-ups are currently sending employees home, well-known corporations such as Netflix, Tesla or Coinbase are also stepping on the brakes.
From January to mid-July, according to tracking site trueup.io
around 400 tech companies worldwide separated from a total of almost 70,000 employees.
The following overview shows where the pressure is particularly high.
The established ones: Netflix, Peloton, Tesla
The streaming giant
Netflix
sent shockwaves through the tech industry at the end of April.
The number of subscribers has fallen for the first time in years and is likely to fall further in the summer.
At the end of June, Netflix boss Reed Hastings sent
450 employees
home - 4 percent of the workforce.
The cuts were even more drastic at the exercise bike manufacturer
Peloton
, which was still one of the three biggest winners on the Nasdaq in Corona year 2020.
2800 employees
and thus almost one in five employees have had to leave since people are increasingly training outdoors and in the gyms again.
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Cost brakes:
Tesla boss
Elon Musk
expects a recession - and fires employees
Photo: ODD ANDERSEN / AFP
The electric car
maker Tesla cut
3,500 jobs
in June
because Tesla boss Elon Musk firmly assumes a recession in the United States.
Musk wants to lay off every tenth permanent employee by autumn and at the same time increase the number of hourly workers.
Since companies such as
Microsoft, IBM, Meta or Salesforce
have also imposed hiring freezes and closed their Russian business, the following applies: Not only the former Corona winners have to save, the majority of established corporations are now also driving on sight.
Start-ups: Klarna, Gorillas and Getir are unsettling the entire industry
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Klarna boss Sebastian Siemiatkowski:
Show the financiers that you can quickly become profitable
PHOTO: SUPANTHA MUKHERJEE/ REUTERS
The Swedish payment
service Klarna
was and still is the most valuable start-up in Europe: However, the valuation of the "Buy now pay later" specialist has shrunk from $46 billion to just around $6.5 billion.
In May, Klarna laid off one in ten
of its approximately 7,000 employees
, citing inflation, volatility on the stock markets and an impending recession as the reason for the hard cut.
The message is clear: If venture capitalists like Sequoia or the Abu Dhabi sovereign wealth fund have already closed their doors to flagship and role model companies like Klarna and only issue money on new terms, how difficult will the coming months be for the smaller start-up companies? become a company?
Panic prevails, especially in the delivery service industry, which is still burning a lot of money.
Growth instead of profit was the motto there for years - now it's time to save, shrink and survive.
The
Berlin delivery service Gorillas
was hit particularly hard: According to manager magazin, Gorillas boss Hakan Sümer had to lay off
around 300 employees and thus half of the global team in
order to become more attractive to investors again.
Despite these austerity measures, the latest round of financing failed: Gorillas, which once reached a billion dollar valuation in record time, is struggling to survive.
The Turkish gorilla competitor
Getir
, which was already active in nine countries with around 32,000 employees, according to information from "Gründerszene" recently parted ways with around
4,400 employees
, that is around 14 percent of the team.
Companies in the supply industry, which is characterized by fierce competition, are now faced with the task of significantly reducing costs and becoming profitable as quickly as possible - otherwise there will be no more money.
Fintechs: Back to economy mode
Fintechs are redefining the rules of the game in the financial sector.
That may still be true, but they will do it with fewer employees for the time being.
With venture capital running low,
New York-based fintech Better laid off
5,000 employees
, half of the workforce , at the
end of April .
At the competitor
Bolt
in San Francisco there were
250
and thus every third employee, at the US
insurtech Root Insurance around 330
and thus around every fifth employee.
The
Berlin neobank Nuri (formerly Bitwala)
has also announced around
45 of its 200 employees
to be dismissed: One must now show the investors that one is on the home straight to profitability, wrote Nuri boss Kristina Walcker-Mayer to the workforce.
Layoffs also affect the payment start-up
Sumup
, which has had to reduce its number of employees due to problems at the Brazilian site.
The latest interest rate hikes by the US Federal Reserve also hit those fintechs that specialize in
real estate brokerage
hard .
The US fintechs
Compass and Redfin
each had to lay off around 500 employees
in June
because the overheated US housing market cooled down noticeably after the Fed's latest rate hikes.
Crypto companies: Coinbase warns of crypto winter
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Coinbase boss Brian Armstrong: Headcount
shaved
Photo:
Matt Winkelmeyer/AFP
Even in the once hyped crypto industry, the heavyweights are leading the way with layoffs.
The
US crypto exchange Coinbase
cut around
1,100 jobs in June, 18 percent of the jobs worldwide
.
Coinbase CEO Brian Armstrong warned of an impending recession that could cause a crypto winter with new price falls for Bitcoin, Ether and Co.
The cryptocurrency lender
Celsius
, which has already caused shock waves with its impending insolvency, cut
150 jobs at the beginning of July, or one in four jobs
.
At the Celsius rival
BlockFi, every fifth employee had
to go, at the Viennese
crypto specialist Bitpanda
there were
270 laid-off employees
around a quarter of the workforce.
As long as the willingness to take risks does not return to the stock markets and crypto assets, more employees will have to fear for their jobs.
Increase in May and June - and probably also in July
The wave of layoffs is currently being felt most strongly in start-ups and in the tech industry.
But it doesn't stop at other companies either.
In the booming mobility industry, the US company
Rad Power Bikes
recently had to lay off around 10 percent of its employees, and the London company
Cazoo
, with 750 employees, even 15 percent.
The Los Angeles
-based scooter rental company Bird
, which is also caught up in tough cut-throat competition in Germany, recently parted ways with 20 percent of its employees worldwide.
Interest rates in the US are likely to rise again by at least 0.75 percent in July.
The Fed wants to contain inflation in the US at all costs.
Investors are likely to maintain their new, cautious course.
It is therefore also likely that after the significant increase in layoffs in May and June, July will mark a new monthly high in layoffs.
The wave is rising, it's not breaking yet.
