US-based fintech giant Stripe said it is laying off 14% of its workforce in what it described as the ‘hardest change’ to the company.
The move would see about 1,120 of the fintech company’s 8,000 workers booted out.
Announcing this on Thursday in a memo seen by Nairametrics, Stripe CEO Patrick Collison said the layoff became necessary for the company to cut its costs.
A cost-cutting measure: According to Collison, tough economic conditions such as ‘stubborn inflation, energy shocks, higher interest rates, reduced investment budgets. Also, sparser startup funding’ made the decision unavoidable.
The company added that it realised it ‘overhired’, given the current economic realities. The CEO said:
- “Today we’re announcing the hardest change we have had to make at Stripe to date. We’re reducing the size of our team by around 14% and saying goodbye to many talented Stripes in the process. If you are among those impacted, you will receive a notification email within the next 15 minutes. For those of you leaving: we’re very sorry to be taking this step and John and I are fully responsible for the decisions leading up to it.
- “Around 14% of people at Stripe will be leaving the company. We, the founders, made this decision. We are overhired for the world we’re in and it pains us to be unable to deliver the experience that we hoped those impacted would have at Stripe. There’s no good way to do a layoff, but we’re going to do our best to treat everyone leaving as respectfully as possible and to do whatever we can to help.”
Narrating the circumstances leading to the action, he stated:
- “At the outset of the pandemic in 2020, the world rotated overnight towards e-commerce. We witnessed significantly higher growth rates over the course of 2020 and 2021 compared to what we had seen previously. As an organization, we transitioned into a new operating mode and both our revenue and payment volume has since grown more than 3x.
- “The world is now shifting again. We are facing stubborn inflation, energy shocks, higher interest rates, reduced investment budgets, and sparser startup funding. (Tech company earnings last week provided lots of examples of changing circumstances.) 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.
- “Our business is fundamentally well-positioned to weather harsh circumstances. We provide an important foundation to our customers and Stripe is not a discretionary service that customers turn off if their budget is squeezed. However, we do need to match the pace of our investments with the realities around us. Doing right by our users and our shareholders (including you) means embracing reality as it is.
- “Today, that means building differently for leaner times. We have always taken pride in being a capital-efficient business and we think this attribute is important to preserve. To adapt ourselves appropriately for the world we’re headed into, we need to reduce our costs.”
The optics: Recall that in 2020, Stripe acquired one of Nigeria’s biggest fintech firms, Paystack, in a much-talked-about $200 million deal. It is unclear, at this point, if the job cuts will also affect Paystack employees.
