Top of mind. Happy Sunday!
It’s been a gruelling week for tech companies – layoffs, uncertainty, hysteria.
The only upside in today’s news is Kuda Bank’s U.K. expansion. The others indicate the shi*t show that is this generation’s tech industry.
P.S. – I’m on a much-needed vacation next week, so you’ll have a newsletter-free Sunday. Like Kendrick Lamar says, I’ll be protecting my soul in the valley of silence, somewhere between a lake and mountains.
I’m back again in your inboxes on the 27th 🙂
Let’s get to it:
- Layoff extravaganza
- FTX in hell
- Kuda’s expanding
You get a layoff, you get a layoff, everyone gets a layoff…
The short: It’s been a brutal year for big tech companies. Hiring freezes, stock market bloodbath, and over 100,000 staff laid off in 2022.
A good year: The pandemic year was a boom for tech companies – profits soared, market cap records were broken, and very low-interest rates made borrowing a no-brainer.
And so it began – aggressive hiring and rising headcounts across the board. For companies like Meta, as its valuation rose to $1 trillion, it doubled its headcount to over 87,000 in the last three years. For Robinhood, it grew its workforce six times over in under a year. TikTok, Amazon, Microsoft, etc., all hired rapidly during the pandemic.
Big tech companies hedged their bets on things remaining as they were, and 2022 showed these companies just how wrong they were. First, a shrinking economy in free fall, then rising interest rates, and the market capitalisations that gave companies big shoulders were obliterated.
Annus horribilis: 2022 launched the wave of global layoffs for tech companies. According to Layoffs.fyi, more than 100,000 tech employees have lost their jobs since the start of the year, including at least 20,300 in November.
- Twitter: about 3,700 people.
- Coinbase: around 1,100 people.
- Meta: about 11,000 people.
- Netflix: about 450 people.
- Tesla: 10% of salaried employees.
- Lyft: about 700 people.
- Microsoft: less than 1,000 people.
- Robinhood: 31% of its staff people.
- Stripe: about 1,100 people.
- Chime: about 160 people.
- Snap: more than 1,000 people.
- Coinbase: about 1,100 people.
Security as a myth: The global tech industry has been considered a “job-secure” industry, i.e., you get a job – high salary, great perks, it’s safe, guaranteed, and you stay in said job till you’re ready to leave.
These days, job security in this industry is a myth. Senior executives, exceptionally talented staffers, long-term employees and entire departments are getting notified via media and email about getting axed, with the retained employees grappling with survivor’s guilt.
The implications: The layoffs will undoubtedly create a ripple effect in the economy, with fierce competition in recruitment and hiring. Some companies that plan to go public are less likely to chase this milestone in a bear market, making investment banks deal with the potential loss of earnings. To save money, companies will cut advertising spend, affecting media companies.
What’s next: Laid-off employees now have options to contemplate as the fierce competition and aggressive talent acquisition that plagued the industry are in hibernation.
But… recruiters are optimistic…
With companies struggling to find talent in the last year, talent acquisition teams are sitting at the ready to download the spreadsheets listing laid-off workers to start making calls.
– Julia Pollak, chief economist at ZipRecruiter.
Or, as Nigeria’s President likes to remind people, there are lots of opportunities in farming. I reckon with good calves and strong arms, you’re set to go.
Final thoughts: It’s been a difficult week for tech employees. People who once had job security now have to figure out new careers and immigration status.
On the upside, they might go on to build enduring companies, like Airbnb, Uber, WhatsApp and Slack – which got built during crippling recessions.
I’m rooting for everybody laid off!
FTX goes belly up
The short: In a plot twist reserved for Hollywood blockbusters – FTX, the world’s third biggest crypto exchange, goes belly up.
Checkmate: Changpeng “CZ” Zhao and Sam Bankman-Fried, the CEOs of top crypto exchanges Binance and FTX, have been long-time rivals. While Bankman embraced regulation, CZ had an opposing philosophy.
CZ sent the crypto world into a frenzy when he tweeted Binance would sell all its FTT (FTX’s token). To protect the token’s value, Caroline Ellison, CEO of Bankman-Fried’s hedge fund Alameda Research, offered to purchase all of Binance’s FTT outside the market. But CZ declined, and Binance dumped all its FTT, causing chaos for FTX.
Dying breath: A moment of panic in the crypto market, and FTX saw $5 billion in withdrawals on Sunday. Faced with the harsh realities of insolvency and failing to convince any sensible investor to give them money, FTX begged for Binance’s assistance.
CZ accepted the request (not). On Wednesday, within 24 hours of due diligence, Binance said they could not proceed with the deal because FTX’s books were a sinkhole. On Thursday, FTX suspended onboarding new users and withdrawals as FTT’s price fell by 80% from over $20 during the weekend to about $3.
On Friday, FTX and its affiliated companies filed for bankruptcy in Delaware.
Dominos: FTX’s disaster had a significant impact on the entire market. Many cryptocurrencies lost value that took years to build, with Bitcoin falling as low as $15,700 this week.
I think basically we’ve been set back a few years now. Regulators rightfully will scrutinise this industry much, much harder, which is probably a good thing, to be honest.
– CZ (new regulation-convert)
Final thoughts: There’s no free lunch or “friends” in this industry. CZ listened to Sam Bankman-Fried’s plea but sent him to hang, mafia style.
The bad news is that it wrecked the entire crypto market, and investors are emerging from this with bloodied eyes and on their way to ruffle some feathers.
Kuda lands in the UK
The short: Kuda bank expands to the UK.
The UK play: Kuda has had a challenging year but is attempting to turn its fortune around through its UK expansion.
The startup has about 5 million users, three times its size when it raised a $55 million Series B investment in August last year. Kuda had planned to use that funding to expand into African countries like Ghana and Uganda, but while those plans remain on hold, Kuda has a new focus – the UK.
Kuda’s UK expansion will begin with its remittance product to Nigerians in the diaspora. The neobank hopes to compete with players like NALA, Flutterwave Send, Grey Finance, and Lemonade Finance, serving a similar market with its flat fee of £3 and £10,000 transfer limit.
The UK is the first of the ‘outside of Africa’ destinations. We plan to be in other African countries and expand the remittance services to customers there and the diaspora market.
– Babs Ogundeyi, CEO of Kuda.
Final thoughts: Kuda’s had a hell of a year, recording significant losses and managing internal leaks. This new expansion gives the startup new life as it navigates its evolution. I wish ‘em all the best and then some.
That’s it for the week. I’d love to hear your thoughts about this week’s issue. Please respond to this email or find me on Twitter @fatuogwuche 🙂
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See you next Sunday!