All data pulled on July 26th, 2022
Just this week, Shopify cut 10% of its workforce.
According to Layoffs.fyi, a crowd-sourced tech layoffs tracker, this makes them the 410th company to conduct layoffs this year. From Coinbase and Carvana to Peloton and Better.com, it seems every day a new company follows suit.
Protocol compares this climate to the dot-com bust saying, “What goes up must come down.”
But which companies are truly on a downward trajectory? And where are layoffs taking place?
As a tech startup ourselves, we have a vested interest in these questions. So we decided to dig into the data and visualize our findings. Here’s where layoffs are taking place, including which companies have made cuts in 2022.
Click to jump ahead:
- Where are layoffs really happening?
- Where have the most employees been laid off?
- Which companies have laid off employees?
- Which Canadian companies have laid off employees?
Where are layoffs really happening?
Unsurprisingly, the San Francisco Bay Area is at the epicenter of the layoff epidemic. (Pardon the nomenclature.) Home to thousands of startups and over 30 businesses in the Fortune 1000, this area has seen 100 layoffs since the start of 2022.
New York City comes in second with 56 companies laying off employees this year. In addition to headquartering tech giants, like Google and Meta, New York City has seen an upswing in venture capital funding and new startups in recent years. So again, the numbers add up.
The remaining cities on the list are a drop in the bucket compared to both the San Francisco Bay Area and New York City. When you tally up the numbers in these areas, as well as Los Angeles, Boston and Seattle, the United States far outstrips any country for layoffs, too.
This is only logical considering the United States is one of the world’s largest nations and has the highest rate of startup investment relative to its population. What may surprise you is what happens when we look at how many employees have been laid off, as opposed to how many companies have conducted layoffs.
Where have the most employees been laid off?
Now, New York City and the San Francisco Bay Area switch places. This role reversal can largely be attributed to two massive layoffs that took place in the Big Apple: Peloton and Better.com.
Peloton let go of a chart-topping 2,800 employees — around 20% of its corporate workforce. The connected-fitness brand cited the need to right-size production after a roller coaster couple of years and a drop in demand.
Not to be upstaged, Better.com let go of 3,000 employees — an estimated 33% of its workforce. But Better.com’s layoff count is likely much higher. Just a month later, they conducted another layoff (the company’s third mass layoff in five months if you look back to 2021).
Though numbers are unconfirmed, sources estimate this layoff affected 1,200 to 1,500 employees, reducing Better.com’s total headcount to less than 5,000 or 50% of its pre-December personnel.
Yet Peloton and Better.com were both considered “unicorns”. That is, they were part of an elusive club of companies that reached a valuation of over one billion without being listed on the stock market.
Peloton has since gone public to the tune of a 3.24B net worth as of July 22nd, 2022. And despite reducing its workforce by half, Better.com was valued around 7.7B in 2021 and has raised a whopping $905M in funding to date.
Knowing their valuation, it’s hard to believe Peloton and Better.com had to make such severe cuts. And it begs the question, are these instances anomalies or are other unicorns conducting layoffs, too? Are tech startups who raised a lot of money indeed realizing they over-promised a growth trajectory?
Let’s see what the data has to say…
Which companies have laid off employees?
On the whole, most companies raised a relatively low amount of money by startup standards and didn’t lay off as many people. Specifically, companies raised on average $20M and laid off hundreds of employees, not thousands.
At a glance, it also seems not all unicorns are going bust. And certainly, not all layoffs were as dramatic as Better.com’s. That said, there are some interesting outliers…
If you consider companies in the United States, you can see Carvana joins the ranks of supposed unicorns conducting large layoffs. This online used car retailer’s worth has plummeted from over $30B in 2021 to under $5B in 2022. As a result, the company laid off 2,500 employees (around 12% of its workforce) this past May.
But it’s not just unicorns in the United States that are making cuts. Getir, a Turkish delivery company worth around $12B, let go of 4,480 employees in May as well. And Canadian companies haven’t come through unscathed either.
Which Canadian companies have laid off employees?
Though modest compared to our southern cousin’s numbers, several Canadian tech companies have laid off employees.
Most notably, Shopify let go of approximately 1,000 employees or 10% of its workforce this week. The e-commerce giant did a smaller round of layoffs earlier in July as well, saying goodbye to 50 or so employees.
In a letter to his team, Shopify’s CEO Tobi Lütke, attributed these layoffs to a miscalculated bet that the e-commerce industry would “permanently leap ahead by 5 or even 10 years” post-pandemic.
Also of note, former unicorn Wealthsimple let go of 159 employees in June of 2022. This layoff came in the wake of Wealthsimple’s parent company, IGM, revealing it marked down the company’s valuation to $925M. For context, Wealthsimple’s value was around 1.153B at the end of 2021.
On a microscale, Canadian tech layoff trends seem to mirror the United States (and the world as a whole) with most companies raising a modest amount of money and letting go of a hundred or less employees — with one or two outliers.
So, what can we take away from all this?
Tech layoffs are happening everywhere, but most are modest in size
Over 400 tech companies have laid off employees in 2022. That said, most of these layoffs have been modest in size with under 200 employees let go on average. Of course, this is small consolation to those affected.
For the newly unemployed, a more useful insight might be which companies are susceptible to layoffs. Based on location data alone, it’s hard to answer this question. The fact that most layoffs took place in the San Francisco Bay Area and New York City is undoubtedly a matter of volume.
But perhaps, if we analyze layoffs compared to industries within tech, we might shed some light on this question. Check out our next data dive on the topic below!