Investor backed tech companies that were flying high, propelled by astronomical valuations and large cash balances are on a steep downfall. Tech startups are downsizing in an effort to save costs - which means PEPs (performance evaluation plans) for some, layoffs for others, and a PR crisis for all. This list does not even begin to cover it all.
It's not just startups. It's established tech giants as well who are taking a hard look at their operations and reevaluating projects, departments, and goals. The tune of "growth at all cost" has been replaced with "survival of the fittest" and fittest often means slimmer teams, budgets, and projections. Intel
However, despite this wave of layoffs, some companies are on a hiring spree. Late-stage U.S. startups are now going after experienced FAANG talent that has been impacted as a result of these layoffs. What might have seemed like an uncompelling offer just a year ago is now an opportunity that many are eagerly accepting.
Patrick McAdams, CEO of recruiting firm Andiamo, noted that: "Tech startups reliant on ongoing VC funding have cut back on hiring, but companies in the later funding stages with viable products in the market are faring much better. These companies have continued to hire strategically and are now able to take advantage of a softening tech hiring market to make key hires that were nearly impossible this time last year (when the pandemic drove up demand for tech workers)".
This creates an interesting, and quite frankly perplexing situation, as we are witnessing mass layoffs coupled with a relatively tight labor market. Despite downsizing, tech workers are still in high demand which indicates a reallocation of talent rather than outright purging meaning that they are able to find new jobs relatively quickly.
Unemployment claims for the week ending Oct. 8 rose by 9,000 to 228,000, according to the Labor Department. Unemployment claims are considered a proxy for layoffs and despite a cooling job market, applications for jobless aid have remained historically low when compared to the more than 20 million jobless claims at the start of COVID-19 in the spring of 2020.
Tech companies are fighting fierce backlash against these mass layoffs (along with their delivery). Vishal Garg, Better.com CEO, rose to infamy for firing 900 employees over Zoom
Braden Wallake, CEO of Hypersocial, posted a LinkedIn photo of himself crying over his company's mass layoffs. These are only two examples out of many others. And it's not just tech companies that have been hit hard in this economy. Banks such as Goldman Sachs have begun plans to lay off mid-level bankers as deal counts slow.
There is no way to prepare for that "let's chat" Slack