Startup layoffs decline to lowest level since mid-March

After peaking in mid-May, the number of new employees laid off from tech startups has declined to its lowest level since the beginning of the coronavirus pandemic.

2,803 employees were laid off from tech startups during the week of 5/27-6/2. This represents the lowest weekly number since the week of 3/18-3/24, and is 68% lower than the pandemic peak 2 weeks ago.

The number of startups cutting jobs continues to fall as well. Only 16 startups conducted layoffs during the week of 5/27-6/2. There’s now been a clear downward trend over the past 8 weeks, ever since a whooping 100 startups cut jobs during the week of 4/1-4/7.

Although both the number of layoffs and the number of employees laid off have been falling, the average layoff has gotten bigger. Of the 10 biggest tech layoffs since the coronavirus was declared a pandemic, 6 of them have occurred in the past month. Stitch Fix laid off 1,400 workers just last Monday.

Company# Laid Off%IndustryDate
Uber6,70025%Transportation5/6, 5/18
Groupon2,80044%Retail4/13
Airbnb1,90025%Travel5/5
Agoda1,50025%Travel5/18
Stitch Fix1,40018%Retail6/1
Ola1,40035%Transportation5/20
Stone1,30020%Finance5/12
Toast1,30050%Food4/7
Swiggy1,10014%Food5/18
Magic Leap1,00050%Consumer4/22

In total, 490+ startups have now laid off 63,000+ employees during the coronavirus pandemic, according to the Layoffs.fyi Tracker.

Though the cumulative damage has been severe, there are signs that the worst may be behind us. Mirroring the trend in tech layoffs, nationwide unemployment filings also recently reached its lowest weekly level since mid-March. And the overall unemployment rate unexpectedly fell last week, a major surprise compared to prior forecasts.

As states ease months-long lockdown restrictions, the tech sectors hit hardest by layoffs (like transportation, travel, and retail) may finally be recovering. Yesterday, Airbnb reported a surge in domestic rental bookings following months of pent-up demand. And Lyft announced that rides booked grew 26% in May compared to April.

Though recent signs look promising, people are still tempering their expectations. “I had a rule that even in our darkest of hours I wouldn’t get too low because that’s just a moment in time,” Airbnb CEO Brian Chesky told Bloomberg. “And if I can’t get too low, then I can’t get too up.”

Magic Leap

Magic Leap avoids further layoffs with new $350 mm investment

Magic Leap, an augmented reality startup that laid off 1,000 employees (50%) last month, secured $350 million in a new investment round. As a result, the company will be able to prevent additional layoffs in the near future. (See? This site doesn’t only have bad news! 😸)

In late April, Magic Leap warned employees that a further staff reduction might be necessary if it wasn’t able to raise additional funding. Now, with $350 million more in the bank from existing and new investors, the company will be able to avoid the potential cut.

See below link 👇for an opt-in list of Magic Leap employees laid off last month, including over 100 engineers.

Our live Layoffs Tracker has a real-time report of all startups that have done layoffs.

Startup layoffs slowing down, but more employees laid off on average

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.

Company# Laid Off%IndustryDate
Uber6,70025%Transportation5/6, 5/18
Groupon2,80044%Retail4/13
Airbnb1,90025%Travel5/5
Stone1,30020%Finance5/12
Toast1,30050%Food4/7
Magic Leap1,00050%Consumer4/22
Yelp1,00017%Consumer4/9
Lyft98217%Transportation4/29
Juul90030%Consumer5/5
TripAdvisor90025%Travel4/28

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.

Uber and Airbnb’s layoffs rank as two of the biggest in tech since COVID-19

This morning, Uber announced it was laying off 3,700 employees (14%) in its customer support and recruiting teams. The CEO’s letter to staff strongly hints that more cuts are coming in the next two weeks. As many as 5,400 employees are expected to ultimately be laid off.

Yesterday, Airbnb laid off 1,900 employees (25%) across all teams. It expects revenue to fall by more than half in 2020 as global travel stays frozen.

This means that in the past two days alone, we’ve seen two of three biggest tech layoffs since the coronavirus was declared a pandemic on March 11:

Company# Laid Off%IndustryDate
Uber3,70014%Transportation5/6
Groupon2,80044%Retail4/13
Airbnb1,90025%Travel5/5
Toast1,30050%Food4/7
Yelp1,00017%Consumer4/9
Magic Leap1,00050%Consumer4/22
Lyft98217%Transportation4/29
TripAdvisor90025%Travel4/28

Not surprisingly, nearly all of these mass layoffs — including Uber’s and Airbnb’s — can be attributed to shelter-in-place orders. Our previous analysis showed that 2/3 of startup employees laid off have come from industries directly affected by shelter-in-place, such as transportation, travel, real estate, food, and fitness. The layoffs have hurt sales and customer success roles most.

Unfortunately, more big layoffs are still to come. Juul is reportedly planning to lay off 800 to 950 employees, roughly one-third of staff. WeWork, which has already cut thousands of employees across multiple rounds of layoffs, expects to continue making cuts through the end of May. Square has managed to avoid a layoff so far, but remains exposed to small business customers in food and retail that have been shutting down en masse.

Our live Layoffs Tracker is tracking all startup layoffs, and has now tallied over 42,000 employees laid off across 374 companies. Best wishes to those affected and here’s hoping that we reach the bottom soon.

Magic Leap

Magic Leap laid off 1,000 employees

🌎 Miami ∙ 👩 1,000 employees (50%) ∙ 🖥 All departments

Magic Leap, one of the most prominent augmented reality startups, laid off 1,000 employees (50%) last week. It joins Groupon, Toast, and Yelp as companies that have laid off over 1,000 people since COVID-19. If you’re recruiting, see below link 👇for an opt-in list of employees laid off. There are over 100 engineers on the list, mostly in Florida (but also a handful of other locations).

Source: Google Sheets

See our live Layoffs Tracker for a real-time report of all startups that have done layoffs.