The massive financial-technology unicorn Stripe plans to lay off 14% of its employees, becoming the latest tech company to acknowledge that it had been too upbeat about growth trends levered to e-commerce.
Chief Executive Patrick Collison outlined the layoff plans in a Thursday email to employees, saying that he and his brother John, the company’s president, were “fully responsible for the decisions leading up” to this move.
Collison was blunt in discussing the errors made by him and other Stripe executives.
“In making these changes, you might reasonably wonder whether Stripe’s leadership made some errors of judgment,” he said. “We’d go further than that. In our view, we made two very consequential mistakes.”
One mistake was that the company was “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.” That commentary sounded similar to what Shopify Inc.
SHOP,
acknowledged when its CEO announced the company’s own layoff plans in July.
The other mistake was allowing operating costs to balloon too quickly, Collison said.
“Buoyed by the success we’re seeing in some of our new product areas, we allowed coordination costs to grow and operational inefficiencies to seep in,” Collison wrote.
With the planned staff reductions, Collison expects Stripe’s headcount to be back at roughly 7,000, as it was in February. The company will also be “firmly reining in all other sources of cost” in an effort to position the fintech company for “robust cash-flow generation in the quarters ahead.”
He sees Stripe as “fundamentally well-positioned to weather harsh circumstances” but says that “embracing reality as it is” means that the company needs to be “building differently for leaner times.”
Stripe was valued at $95 billion after a March 2021 private funding round that made it one of the most valuable startups, but The Wall Street Journal reported earlier this year that the company trimmed its internal valuation to an implied $74 billion.
