Stripe and Lyft became the latest technology companies on Thursday to dismiss large portions of their workforce, while Amazon announced that they would freeze hiring.
Although macroeconomic headwinds have impacted most industries, the technology sector has witnessed the most pronounced stock market selloffs. Companies such as Meta recently issued dismal third-quarter earnings reports, leading some executives and investors to pursue layoffs in order to reduce costs through the choppy economic waters.
Stripe CEO Patrick Collison sent a note to employees at the payment processing platform announcing that executives would be reducing headcount by roughly 14% due to “sparser startup funding” and other trends stemming from the poor economy. “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 budget is squeezed,” Collison wrote. “However, we do need to match the pace of our investments with the realities around us.”
The move will reduce headcount to roughly 7,000, marking the same number of workers Stripe employed at the beginning of the year. Collison added that the company was “much too optimistic” about the internet economy’s growth and “grew operating costs too quickly.”
Meanwhile, Lyft CEO Logan Green and Lyft President John Zimmer said in an email obtained by CNBC that the ridesharing company would dismiss 13% of workers based upon “deprioritized initiatives, an effort to reduce management layers, broader savings goals, and, in some cases, performance trajectory.” The company currently has approximately 5,000 employees.
“There are several challenges playing out across the economy. We’re facing a probable recession sometime in the next year and rideshare insurance costs are going up,” the executives wrote. “We worked hard to bring down costs this summer: we slowed, then froze hiring; cut spending; and paused less-critical initiatives. Still, Lyft has to become leaner, which requires us to part with incredible team members.”
Also on Thursday, Amazon Senior Vice President of People Experience and Technology Beth Galetti informed employees that the e-commerce giant would institute a freeze on incremental hires in the corporate workforce. “We anticipate keeping this pause in place for the next few months, and will continue to monitor what we’re seeing in the economy and the business to adjust as we think makes sense,” she said.
Several technology companies, including Microsoft, Tesla, and Coinbase, already announced hiring pauses or layoffs earlier this year. Elon Musk, who recently took control of social media platform Twitter, plans to dismiss 3,700 of the company’s 7,500 employees as soon as Friday, according to a report from Bloomberg News.
In a recent letter, Altimeter Capital Management CEO Brad Gerstner told Meta CEO Mark Zuckerberg that his company, which has more than tripled its workforce from 25,000 people to 85,000 people over the past four years, could reduce costs by cutting bloated payrolls.
“It is a poorly kept secret in Silicon Valley that companies ranging from Google to Meta to Twitter to Uber could achieve similar levels of revenue with far fewer people,” the investor remarked. “I would take it a step further and argue that these incredible companies would run even better and more efficiently without the layers and lethargy that comes with this extreme rate of employee expansion.”
