Finally, some long-awaited good news: the number of newly-reported startup layoffs has been steadily declining for the past 5 weeks, today’s Uber layoff not withstanding. After a coronavirus record of 99 startups conducted layoffs in the first week of April, this past week saw only 22 startups cut jobs, a decline of 78%.
Unfortunately, the number of employees laid off has not benefited from a similar trend. During that same 5-week period, the number of new employees laid off per week dropped from 7,692 to 6,562, a decline of just 15%.
Part of the reason is that even though fewer startups are laying off, the average layoff has gotten bigger. Last week, Stone laid off 1,300 employees and Deliv laid off 669 employees. The week before, Airbnb laid off 1,900, and Juul laid off 900. Including today’s layoff, Uber has cut 6,700 employees in May alone.
In fact, 4 of the 10 biggest tech layoffs since COVID-19 have occurred in just the past two weeks.
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In the early weeks of the coronavirus pandemic, smaller cash-strapped startups were the first to conduct layoffs to avoid going out of business. Later-stage startups and recently-public tech companies had more buffer to hold off on layoffs due to their larger cash reserves. At the time, smaller travel startups like Lola, Remote Year, and WanderJaunt were laying off dozens of employees each even though the likes of Airbnb and TripAdvisor hadn’t yet cut staff.
Two months into nationwide lockdowns, these bigger tech companies couldn’t keep holding off. They’ve now also had enough time to properly budget, plan, and execute their layoffs, something that takes longer at a 4,000-person company than a 40-person one. Small wonder that in the first half of May, it’s felt like dominoes falling when it comes to late-stage startup layoffs.
The media has also started selectively covering only the bigger startup layoffs, as layoffs have gotten too frequent to keep up. We’re still trying, though! The Layoffs.fyi Tracker has counted 430+ startups that have laid off 50,000+ employees since the coronavirus was declared a pandemic, though there are hundreds more layoffs that haven’t been reported publicly.
Uber just announced another mass layoff today, and WeWork expects to continue performing rolling layoffs through the end of the month. But once the smoke clears from those layoffs, will we finally see some ecosystem renewal? Here’s hoping.