Payment processor Stripe laid off 14% of its workforce — more than 1,100 employees, CEO Patrick Collison announced By email on November 3rd.
Collison attributes the layoffs to two management “mistakes.” he wrote:
“We were too optimistic about the near-term growth of the internet economy in 2022 and 2023 and underestimated both the potential and impact of a broader slowdown.”
He added that as the company’s product proved successful, the platform’s operating and tuning costs increased “rapidly” and operational inefficiencies increased. Stripe will strive to right these wrongs and control costs from all sources, he wrote.
Collison shared that Stripe continues its strong performance with a 75% increase in new customer signups in Q3 2022 compared to Q3 2021. The company also set a new daily transaction volume record on Nov. 1, Collison wrote.
However, Stripe remains resilient, but faced with rising inflation, a looming recession, energy shocks, rising interest rates, cut investment budgets and cut start-up funding, it had to cut jobs. Collison writes.
He added that the headcount cuts and cost savings should set Stripe poised to generate strong cash flow in the coming quarters.
After the layoffs, Stripe’s headcount will be reduced to about 7,000. The company offers a minimum of 14 weeks of severance pay to all laid-off employees.
Stripe reached a valuation of $95 billion last year, making it one of the most valuable unicorns in the US.However, the company reportedly cut its valuation to $74 billion in July amid economic uncertainty.
All major tech companies are cutting costs, freezing hiring and announcing layoffs as the economic outlook dims. This includes tech giants Amazon, Meta and Google taking steps to cut costs, and his Coinbase and Spotify laying off employees.
