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The job cuts, which are expected to affect about 1,000 of the platform’s employees, were announced by the platform’s founders, brothers Patrick and John Collison, in a company-wide letter to staff issued this Thursday. I was.
In it, they cited “stubborn inflation, energy shocks, rising interest rates, cut investment budgets and sparse start-up capital” as reasons behind the decision.
There is no escape from the precarious position of the global economy, and in acknowledging this environment, the founder’s statement acknowledged two fatal mistakes that have put the platform in its current unfortunate position.
The first mistake, as the Collisons put it in their announcement, was that the company was “too optimistic about the near-term growth of the Internet economy in 2022 and 2023,” and that it “predicted the likelihood and impact of a broader slowdown.” We underestimated both.
For the second mistake, the founders admit to “increasing operating costs too quickly.”
The success we have seen in some new product areas has increased alignment costs and allowed operational inefficiencies to permeate, the statement continued.
But in retrospect, and in light of the global pandemic, the company’s ten-year prosperous start is solid.
It expanded its services into emerging areas of the industry, such as cryptocurrencies and new banking infrastructure, and its reach spanned everywhere from Latin America to the Far East.
this is Funding Round March 2021 It boosted the platform’s total valuation to a whopping $95 billion and quickly became a household name on the sunny slopes of Silicon Valley.
However, according to reports, wall street journal, a sustained sale of shares this summer caused this once-promising number to plummet to $21 billion, bringing its final valuation to $74 billion. Was this the first sign of trouble in paradise?
A statement on Thursday described Stripe as being “fundamentally well-positioned to weather the tough times,” but now needs to “match the pace of its investments with the reality around us.” said the latest culling of employees should prepare the company for “less wasted time.”
The company’s retiring staff are set to receive a retirement package that includes severance pay, paid vacation and an annual bonus. Other condolences.
In addition to this, the company has established a dedicated alumni community to provide support to alumni. “In our opinion, you are a valued graduate,” the statement read.
The company’s disappointing announcement this week all but confirms a worrying new trend dominating the fintech industry.
On the same day Stripe announced, Jeppe LyndhamCo-founder and CEO of Expense Management Solutions Pleo, confirmed that the Danish unicorn will lose 15% of its workforce. It accounts for about 150 jobs.
In his online statement, Lindham painted a similar picture of the changing world painted by the Collison brothers.
His statement confirmed that the company “no longer operates under a ‘growth first’ mandate, but under the reality of ‘growth through focus and efficiency.'”
We are focused on the many markets that we currently serve and are focused on increasing efficiency in everything we do, he continues. What brought us here didn’t bring us there.”
But the list goes on.
Just 24 hours before the announcement of Pleo and Stripe, of information Confirmed its online banking startup chime The company’s spokesperson Reuters It blamed “current market dynamics” as the reason behind the decision.
Unfortunately, US online lenders start-up It announced it would follow suit by eliminating 140 jobs. About 7 percent of all employees.
among them 8K filing United States and Securities and Exchange Commission The (SEC), a cloud-based AI lending platform, cited a challenging economy and a declining volume of loans on our platform as key drivers for the decision.
The company’s stock has fallen 84% this year, and its lending platform faces weakening demand for loans. federal reserveGlobal inflation is triggering interest rates to rise.
And just when we didn’t think the situation could get any worse, credit monitoring and building platforms credit karma This week, it announced it was suspending all new hiring.
In an email to the staff seen by Fintech Timesthe company “continues to see earnings challenges due to uncertainty in the macroeconomic environment”.
The statement acknowledged the turmoil the company had over the past two years when it was forced to cut salaries by 15% to 50% across the board to avoid layoffs, reiterating that “this will not be the same as 2020.” says.
the company is obtained by intuition At the beginning of 2020, a $7.1 billion deal was paid in cash and stock to help protect the company from the full force of the pandemic.
But like its contemporaries, credit karma now faces the full reality of recession. However, a company statement confirmed that there will be no new salary cuts and that newly vacated positions will be filled internally.
Fintech companies have appeared to have weathered the pandemic fairly well, but even this seemingly unstoppable sector seems unable to outrun the current dark clouds in the global economy.
