Looking at the layoff patterns, we can see there are firms who got involved in pre-emptive strikes to tighten the belt and factor in the revised market estimates for growth, and then there are firms who had to make tough calls to part with a significant fraction of their workforce to extend their runway and ensure sustainable business operations.

While the underlying theme of layoffs this year has a lot to do with an economic slowdown, it was almost Business As Usual for many FinTechs that discharged less than 10% of their employees. Companies like PayPal and Affirm, which had the lowest layoffs, did not make public disclosures per se and went about the process in a clinical manner. SumUp, which laid off around 100 people forming a large part of its Brazilian workforce, was driven by the economic instability in the Latin American country.

For most companies, though, these decisions were Unavoidable Tough Calls where significant job cuts ─ about 10-19% of the total workforce ─ were seen. Among the many were companies like Brex, Klarna, Stripe, WealthSimple, Varo etc. A few companies took Extreme Measures by slashing more than 20% of their workforce. The most concerning of the lot includes LayBuy and OkCredit, which reduced their employee count by almost a third, and Better.com, which slashed its headcount by half.

Better.com, a US-based online mortgage marketplace, had raised $500M from SoftBank in the 2021 funding boom. A year later, CEO Vishal Garg admitted his mistake and that the company wasted $200M by over-hiring. What began as a controversial Zoom layoff in December 2021 continued over three more layoff rounds in 2022, totalling over 4200 people being sacked over a span of 12 months.

Meanwhile, these firms used various platforms to announce the bad news. Announcements were made via the CEO messages on official websites or press releases, as Robinhood did; an empathetic email sent directly to employees, as Stripe did; or even a Slack message, as Bolt did. Whatever the public or private method of disclosure, bad news does end up travelling to the ears of the press one way or another.

A Little Kindness Goes a Long Way

Even though there is no playbook for employment termination, empathy and support offered to separated employees contribute substantially to reducing the pain and negativity.

Among the list, Stripe went with honesty when doing the ‘necessary.’ CEO Patrick Collison announced the impending layoff of 14% of its workforce in one of the most humane ways possible – by apologising, showing empathy, and taking responsibility. The layoff memo also showcased transparency along with a generous severance package. To support the departing staff, the company provided severance pay, bonuses, health benefits, career support and, most importantly – immigration support – for foreign national employees.

Layoffs are brutal no matter what you call them – reorganisations, restructurings, or redundancies. While taking such extreme steps, a founder’s intent and behaviour determine whether the departing employee will be your spokesperson or a slanderer.

Hope on the Horizon

It is expected that the industry and the workforce will have to bear the brunt of the tough times and tough calls for a while. The resilience of both the FinTech segment as well as individual employees will determine how the segment evolves. Exposure to startup cultures, working in a fast-paced environment, improved awareness of the customer pain points and skills to build technology-powered solutions and business models are great assets to have. These may act as much-needed support pillars for the impacted employees to look for alternatives in other emerging FinTechs, established financial institutions, or other digital sectors.