Experts believe that layoffs in startups are inevitable. The question is all about time and impact, which will only be clear in the months to come.
With the global economy in freefall amid the COVID-19 pandemic, layoffs, furloughs, pay cuts have hit many corners of the corporate world including startups which are having the worse of it.
On Wednesday, in a companywide meeting, the Chief Executive Officer of Eventbrite Julia Hartz had to announce that they were going to cut off 45% of employees. Headquartered in San Francisco US, Eventbrite is the world’s leading event management and ticketing platform.
This humongous layoff at Eventbrite is one of the most dramatic examples of how the COVID-19 has affected the live events business as well as business in general for startups. Eventbrite employed anywhere between 1,000 and 1,100 people which means that around 500 employees got axed from their jobs.
It was reported that the office scenario became chaotic on Wednesday morning when all the employees and team members of Eventbrite came to know about their fate. An anonymous employee said that 90% of their company’s incredibly robust sales team was let go of. This employee further added that they were calling the day “Blood Orange Wednesday”.
A spokeswoman for Eventbrite in a statement said that the company will be connecting with every single one of their employees to further clarify the drastic changes that took place on Wednesday by connecting with them on a 1:1 video meeting and in some case group video conferences as they are all working remotely.
According to another employee, the announcement was done via Google Hangouts wherein Hartz seemed to be reading from a statement she had prepared. The announcement lasted for less than a mere 10 minutes only as the CEO didn’t take any questions from the team post delivering the heartbreaking message.
“It was pretty brutal,” said the employee, who found out shortly after the meeting they were being let go. “Everyone just logged on this morning and saw there were an all-hands. There are only so many ways that can go.”
It was reported that besides slashing almost the entire sales team, the field operations team, as well as the customer success teams, were axed as well.
As the entire business of Eventbrite is built around live events, the onset of the COVID-19 single-handedly made their revenue projections fall of a cliff. Past month, the share price of the company was seen to hover around $7 which was less than 20% of the share price when Eventbrite went public in the year 2018.
Are Startups Having The Worst Of COVID-19?
Despite all the claims and assurances, the situation doesn’t seem to be very promising, especially for startups. Multiple studies are indicating of pay cuts, layoffs and more in the months to come. While there are companies like LinkedIn which have ruled out any possibility of job cut due to Coronavirus, hundreds of millions of employees are staring at the uncertain future.
Startups are often pushed to grow fast or die instantly. They are often advised to follow ‘hire fast fire faster’ practice to stay in the game. Therefore, this makes them even more vulnerable to the economic downturn amid the COVID-19 than other businesses which might just pull through and survive.
Eventbrite is not the only startup which has had to cut off a major portion of its employees due to the pandemic induced business slowdown.
The SoftBank-backed OYO has recently laid off hundreds of their employees in the U.S. across various divisions such as sales, business development and HR since March-end due to the pandemic. It has also been reported that OYO had previously laid off about 360 employees, a third of its then staff in the US, in February as well.
In India, the online insurance firm Acko has laid off around 50 employees, across segments such as customer service, operations, sales and marketing.
Facebook backed Meesho has also decided to let go 35% of its workforce. Meesho, the India based startup, is in the space of social commerce and have nearly 700 employees. A majority of the layoff is done from the Vendor Management team as Meesho wants to pivot from the structure of the fixed payout to key account managers to more effective vendor acquisition based payout.
Exotel which is a cloud telephony platform that powers communication for enterprises, startups and small and medium enterprises in India has capped salaries at Rs 40,000 for the next two months.
Another Indian startup Bounce, a bike rental firm, had laid off a sizeable number of employees since December last year. As the current lockdown and slowdown in markets will last for the next 3-6 months, the is reportedly exploring the possibility of pay cuts, ranging from 20%-60%, to ensure 30-32 months runway for the business.
Now it remains to be seen how quickly can these startups regain their financial health post the ongoing lockdown and the pandemic being curbed. Whether the recent layoffs are just a tip of the iceberg or most of the companies have got some solid plan to keep the effects minimal, is the question that only time will answer. Whatever the scenario, we will keep you posted.