Payment company Stripe cuts 14 per cent or 1120 employees from its workforce
A company has revealed the “painful” decision to cut 14 per cent of its workforce, but has unveiled what impacted employees will receive.
Business Technology
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A global payment services provider called Stripe has sacked 14 per cent of its workforce, impacting around 1120 staff, but employees will be given an incredible redundancy package.
Stripe had employed more than 7000 employees and was heralded as Silicon Valley’s most valuable start-up last year with a valuation of $US95 billion ($A124 billion).
But it’s been a dramatic reversal in the company’s fortunes with the announcement of the widespread cuts made on Thursday.
Stripe CEO Patrick Collison said it was a “painful” change and he was “very sorry” to make the cuts after the company experienced a boom during the pandemic as e-commerce skyrocketed while people were trapped indoors.
“The world is now shifting again. We are facing stubborn inflation, energy shocks, higher interest rates, reduced investment budgets, and sparser start-up funding,” he wrote on a blog post.
“On Tuesday, a former Treasury Secretary said that the US faces ‘as complex a set of macroeconomic challenges as at any time in 75 years’, and many parts of the developed world appear to be headed for recession.
“We think that 2022 represents the beginning of a different economic climate.”
Mr Collison revealed a raft of payouts and other measures that would be given to staff who were made redundant.
This includes 14 weeks pay, and even more for those with longer tenure, meaning employees would be paid until at least February 21, 2023, while staff would also receive their annual bonus.
Employees would also be paid out all their time off owed, even where it wasn’t legally required in certain regions, the cash equivalent of six months of existing healthcare premiums as well as their stock options even if they hadn’t reached the year qualification period.
He also revealed that it would do its best to connect departing employees with other companies and had created a new tier of extra large Stripe discounts for anyone who decides to start a new business now or in the future.
Those employees who needed immigration support would be provided with consultations and assistance to transition to non-employment visas where possible.
Mr Collison owned up to the fact that leadership had made “errors of judgment” that had led to the sackings.
“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,” he said.
“We grew operating costs too quickly. Buoyed by the success we’re seeing in some of our new product areas, we allowed co-ordination costs to grow and operational inefficiencies to seep in.”
He added that the company was “well-positioned to weather harsh circumstances” but the reality was it needed to reduce costs as it had “overhired for the world we are in”.
The tech sector has taken a particular battering this year with both overseas and local companies letting go of hundreds of staff.
After soaring to a valuation of $US7.8 billion ($A11.58 billion) during the pandemic in August 2021, London-based events-tech company Hopin recently laid off 29 per cent of its staff.
Global streaming juggernaut, Netflix also sacked roughly 450 staff out of its 11,000 worldwide talent pool in two rounds of lay-offs in May and June.
In Australia, tech company Megaport sacked around 10 per cent of its staff despite announcing its revenue had jumped by 40 per cent to $109.7 million in the past financial year, while social media start-up Linktree which was valued at $1.78 billion sacked 17 per cent of staff from its global operations.
Other Aussie companies to make cuts include crypto firm Immutable, healthcare start-up Eucalptys after its funding was pulled at the last minute, buy now, pay later providers Brighte and BizPay, as well as 5B Solar after it completed a $30 million capital raise.
Originally published as Payment company Stripe cuts 14 per cent or 1120 employees from its workforce
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