Stripe Lays Off More Than 1,000 Workers, 14% Of Staff
Silicon Valley payments giant Stripe announced that it has let go of 14% of its staff. Citing global economic challenges including inflation, higher interest rates and “sparse startup funding,” cofounder and CEO Patrick Collison said in an email to employees that Stripe needs to cut costs.
Collison acknowledged missteps Stripe management has made over the past two and a half years. He said the company “overhired” during the pandemic and was “too optimistic” about the near-term growth of e-commerce. According to LinkedIn data, Stripe’s employee base more than doubled over the past two years. As of last month, it had more than 8,000 employees, and the new cuts bring it slightly below 7,000, the same staff size it had in February 2022. Collison also said Stripe “grew operating costs too quickly” and “allowed operational inefficiencies to seep in.”
He said some departments, such as recruiting, are being cut more deeply than others. For affected employees, Stripe is offering 14 weeks’ severance and “the cash equivalent of 6 months of existing healthcare premiums.” It’s also paying out full-year 2022 bonuses.
The announcement comes a couple weeks after Forbes reported that Stripe was taking steps to prune its workforce, with some senior leaders asking managers over the summer to give lower ratings on performance reviews. Some current and former employees felt the company wasn’t being transparent and was trying to do layoffs without calling them layoffs. “They didn’t really explain what was happening and why . . . they were trying to sugarcoat it by calling it ‘performance management,’” a former employee told Forbes.
In response, a Stripe spokesperson said in a statement, “One of Stripe’s operating principles is to obsess over talent. Good times and abundant hiring can make performance management less conspicuous, but we’ve worked hard on this front in the past in order to sustain the talent bar that we benefit from today—and we will continue to do so.”
Now that layoffs have been announced, one former employee says, “I think they had the layoff planned since the beginning and tried to just fire low performers initially. But given that the economic climate continued to worsen, they had to pull the lever even more.” A Stripe spokesperson declined to comment. Typically, however, a layoff round that isn’t strictly based on seniority would also take into account employee performance as well as job function and a business’ needs.
Compared with Amsterdam-based payments competitor Adyen, Stripe has historically released more products and had significantly higher costs. In 2021, Stripe processed $640 billion in payments and ended the year with roughly 6,000 employees, according to LinkedIn, while Adyen processed $516 billion and ended 2021 with about 2,500 employees.
In July, Stripe reportedly slashed its own internal valuation, used to help determine equity-based compensation packages for workers, by 28% to $74 billion.
Stripe’s layoffs come near the close of a year when it seems that most fintechs are doing staff cuts. Companies small and large, including Robinhood, Klarna and digital bank Chime, have announced layoffs so far in 2022.
Stripe Lays Off More Than 1,000 Workers, 14% Of Staff. (2022, November 3). Forbes. https://www.forbes.com/sites/jeffkauflin/2022/11/03/stripe-lays-off-more-than-1000-workers-14-of-staff/?sh=55af5f7fc1dd