Tech Startup Layoffs: What, Where, Who And The Impact On Freelancers
Layoff Tracker has been a key go to site for anyone in recruiting, freelancing or HR tech. In a recent article in Crunchbase, Mary Ann Azevedo tells how entrepreneur Roger Lee, co-founder of Human Interest, a retirement plan provider for small and medium-sized businesses began a side project tracking tech startup layoffs globally primarily in the US and Canada. The author describes the origin story this way, “Lee told me he got the inspiration because Human Interest was fortunate to still be hiring during the COVID-19 pandemic, and had been able to find “great candidates” among those laid off.”
This week, the US Labor Department reported an extraordinary rise in unemployment claims. The individuals seeking unemployment support March 15-April 4 surged to 16.8 million. According to Politico, “the number of jobs lost in a mere three weeks now exceeds the 15 million that it took 18 months for the Great Recession to bulldoze from 2007 to 2009.”
Tech jobs have been lost all over the country, and across a variety of sectors. And, one obvious area that has recently been hard hit is the startup community in the Bay Area and elsewhere. Layoff Tracker has done a super job of tracking the layoffs that have troubled both well-known and established companies like Yelp, Groupon and Zenefits, and dozens of new businesses that were just starting up or had recently received angel funding.
Layoffs are a critical source of information for freelance marketplaces. Many times, young and poorly funded startups lack the means to hire full time staff, but are able to pull together essential skills and keep the business moving forward by combining full-time and freelance professionals together as a flexible, blended workforce. And increasingly, talent marketplaces are able to organize entire engineering or development teams on a “bolt-on” or plug and play basis.
What’s the impact of COVID 19 layoffs on freelancers and freelancing? First, layoffs mean that critical work must be resourced by other means. Layoffs often create freelance opportunity as leaders recognize that projects must be completed, see product or service investments that will quickly drive profitability, or identify new technical skills needed to reignite sales growth and customer interest. Moreover, individuals who are laid off by their startup may have competencies that are urgently needed by other companies, and can convert their situation into a freelance gig that offers interesting and financially attractive work.
So, what is Layoff Tracker telling us about the startup layoffs right now? What are the trends? What industries and geographic markets point to higher rates of startup staff reduction? And, where might be the opportunities for freelancers?
Bottom line: between March 11 and April 12, Layoff Tracker identified 231 tech startups reporting layoffs. A total of 19,830 individuals were laid off as of Easter Day today. Here are the top 10 industries losing full-time jobs as of today:
- Food was the largest source of layoff with 2321 positions lost. The largest single layoff reported was Toast, which laid off 1300 positions. Toast, which makes software for restaurants, cut 50% of its staff . The layoffs impacted 1,300 employees. As Layoff Tracker pointed out, “Toast’s success is “tightly coupled” with the restaurant industry, which has seen sales decline by 80% in most cities.” Other impacted startups included ezCater in Boston (400), Ritual in Toronto (196) and Restaurant365 (175).
- Consumer services was second with 2295 layoffs. Yelp, Eventbrite and Thumbtack were the largest sources of lost jobs with reductions of 1000, 500 and 250 respectively. Other companies losing significant staff include Booksy in SF (200), Rover in Seattle (194) and Taki in Nashville (130).
- Fitness was the third largest industry for layoffs with 2122 as of today. Flywheel Sports and MindBody accounted for the largest number of lost jobs, with 784 and 700 individuals laid off respectively. Gympass in Sao Paulo (467) and ClassPass in NYC (154) were other job losers.
- Travel services was fourth with 1933 people laid off in over 20 startups. Sonder and Trip Actions were the largest individual layoffs with 400 and 300 layoffs and furloughs respectively. Other companies losing job altitude include Indian companies TravelTriangle (250) and FabHotels (80), Fareportal in NYC (200), and Remote Year of Chicago (50).
- Real Estate was number five among industry layoffs with 1591 jobs lost to the pandemic. Redfin, WeWork and Compass were most hard hit with 236, 250 and 375 individuals having lost work. Blueground (130) and Knotel (127), both in NYC also struggled with staff size.
- Retail, with 1471 laid off individuals, was sixth. B8ta, Everlane and Groupon accounted for the largest layoffs, with 250, 227 and 200 respectively. Meesho of India (200), ThirdLove (65), 1stdibs (70) and Away (60) all reported reductions in staff. Reporting companies included a wide variety of locations td
- Transportation was seventh with 1344 layoffs. Companies reporting the largest reductions included Bird, Zipcar, Velodyne Lidar and Zoox, all contributing more than 100 lost positions. Other losses included Turo (108), Getaround (100), and Passport of Charlotte NC (44). Scoop and Spot Hero didn’t provide specific numbers but Scoop announced a reduction of one third of the workforce.
- Marketing was eighth with 1165 lost jobs. Sojern, AdRoll and Branch Metrics, reduced the most in this sector, with 300, 174, and 100 positions respectively. Many other startups reported smaller numbers. For example, BounceX reduced by 77 positions, Button of NYC by 48, Quantcast by 30, and Media Math by 53.
- HR/Recruiting was ninth with 977 staff reductions. Although Layoff Tracker treated the two categories as separate, they are better considered part of one industry. Among companies laying off staff, no company reduced by 100 employees or more in HR, and only ZipRecruiter and Lever reduced their staff by large number, with ZipRecruiter dropping 400 jobs and Lever taking down 109 jobs.
- Finance comes in at number ten among industries laying off staff with 937 reductions as of today. Monzo, Omie, Metromile all dropped at least 100 of its employees. Other companies like Ernin (50), C6 Bank (60) and Unison (89) reduced by fewer jobs.
In addition to the top 10 layoff categories by industry, Layoff Tracker reported meaningful reductions in staff in a variety of other industries. Going from large to small, the data on job losses in other industry categories is as follows as of today:
- Healthcare (549)
- Media (504)
- Data (354)
- Construction (300)
- Legal (225)
- Energy (167)
- Support (120)
- Product (107)
- Infrastructure (80)
- Security (84)
- Education (64)
Without doubt layoffs are still accelerating. As of April 2, 94 startups had laid off 7,793 employees since the coronavirus was declared a pandemic. Today, 10 days later, the number of lost positions had more than doubled. Moreover, Layoff Tracker isn’t capturing all the lost positions. Lee estimates that at least an equal number of layoffs is unreported to date.
Not surprisingly, the San Francisco Bay Area accounts for the largest percentage of startup layoffs, or about an estimated one-third, according to Layoff Tracker, with other hard-hit cities including New York City, Los Angeles, Boston and Austin in the US and many other cities around the world.
Viva la Revolution!