Start-up growth grinds to a halt

This Sydney tech company has axed 30 per cent of its staff due to COVID-19, and it’s far from the only one.

Deputy chief financial officer Jacqueline Purcell. Source: Supplied.

Some of Australia's technology start-ups are being hit hard by the coronavirus pandemic, with some of the country's fastest growing companies forced to axe up to a third of staff and adjust to a period of economic downturn.

Sydney-based start-up Deputy has laid off 30 per cent of its staff, making the difficult decision after use of its rostering and time clock software halved.

Speaking to The Australian, Deputy's new chief financial officer Jacqueline Purcell said that the COVID-19 impact to restaurants and small businesses meant that hours worked by the company's 2 million user base halved, and the company's growth subsequently ground to a halt.

Ms Purcell joined Deputy from fellow high-growth start-up Culture Amp, which announced recently it was cutting 8 per cent of its workforce. US start-up giants Airbnb and Uber recently announced they were cutting 25 per cent and 23 per cent of their headcounts respectively.

As of early this year Deputy had almost 100,000 businesses – and more than 200,000 workplaces – subscribing to its HR software worldwide, and about 360 staff. In November 2018 closed an $111 million Series B funding round, a deal touted at the time as Australia’s largest ever such funding round.

"It definitely was not easy, and we are still getting questions about how and why we made those decisions," Ms Purcell said. "We started with a scenario analysis and trying to have a sense of how the business would be impacted under different scenarios. We made the decision to make redundant about 30 per cent of the team globally, and that decision was driven by a few things.

"Deputy was, prior to COVID, on an aggressive growth path. And given the company serves a lot of small businesses, including a lot in retail and hospital, we knew that COVID was going to impact that trajectory. From a resourcing standpoint we just didn't have the capacity to have all of those employees who were really focused on growth, in a period where the business, in the short term at least, was going to be contracting."

Ms Purcell said that the company also did not want to have to do multiple rounds of redundancies.

"We wanted to do it in a way that would put the company in the best position to get through the crisis and rebuild, and give those employees the best package we could afford," she said. "If we delay it, the company can be in a worse position and your ability to be as generous as less."

She added that she expected the downturn to be temporary, and that Deputy would likely soon return to its normal growth patterns.

"It certainly doesn't change the long term mission and the importance of Deputy, and if anything this crisis has shown how critical shift workers are to the functioning of the economy and the role that they serve," Ms Purcell said. "We're setting ourselves up to be in a better position for the recovery and take advantage of the longer term opportunity.

"Technology start-ups are almost recreating themselves almost every 18 months because of the rate at which they're growing and the rate at which new people are coming in to the organisation.

"If you have strong core tenets, you'll continue to evolve in a positive way and that's what I love about working in these kinds of companies."