Ecommerce platform Stripe and ride-hailing service Lyft became the latest technology companies to lay off staff on Wednesday, while Amazon said it would pause new hires in its corporate workforce, as businesses tighten their belts to cope with an economic slowdown.
The job cuts at Stripe and Lyft come as a host of tech businesses have slashed or paused expansions to their workforces in 2022 to cope with rising costs and interest rates. Twitter is set to lay off up to half of its staff under new owner Elon Musk, the Financial Times reported earlier on Thursday.
In an email sent to staff on Thursday, Stripe’s chief executive Patrick Collison said the payments processor “overhired for the world we’re in” and would cut 14 per cent of its workforce, about 1,000 people, as it prepared for “leaner times”.
Stripe’s leadership had been “much too optimistic about the internet economy’s near-term growth in 2022 and 2023 and underestimated both the likelihood and impact of a broader slowdown”, he added.
Also on Thursday, Lyft, a rival to Uber, also announced it was cutting 683 jobs — 13 per cent of its 4,000 employees — in a bid to cut costs.
The lay-offs at Lyft, first reported by The Wall Street Journal, are the second round of cuts in recent months for the ride-hailing company. The company is also selling its vehicle service business, it added.
“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,” said Logan Green and John Zimmer, Lyft’s co-founders, in a memo to staff.
In a filing to the US Securities and Exchange Commission, the ride-hailing company said the lay-offs would cost it between $27mn-$32mn in restructuring fees and severance packages.
The job losses are a sign of how darkening economic conditions are forcing tech companies to cut costs and build buffers to cope with a slowdown in consumer spending.
Beth Galetti, an Amazon recruitment director, told employees on Wednesday that the company would pause “new incremental hires in our corporate workforce”, in an effort to “balance our hiring and investments with being thoughtful about this economy”.
As ecommerce soared during coronavirus pandemic lockdowns, Stripe, an online payments processor founded by Irish brothers Patrick and John Collison in 2010, became the most valuable private company in Silicon Valley in 2021 with a valuation of $95bn.
Mentioning “stubborn inflation, energy shocks, higher interest rates, reduced investment budgets and sparser start-up funding”, Patrick Collison said on Thursday that this quarter’s earnings reports provided “lots of examples of changing circumstances” for tech companies.
Shares in tech companies tumbled last week after Alphabet, Microsoft and Meta all reported disappointing third-quarter earnings.