Stripe CEO Acknowledges Company Mistakes, Says 'We Overhired'
CEO Patrick Collison acknowledged that Stripe management has made some mistakes over the past two and a half years, saying that the company "overhired" during the pandemic.
It is with a heavy heart that we announce that Silicon Valley payments giant Stripe 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. This is a difficult time for all of us, but we know that Stripe will emerge stronger from this challenge. We are grateful for the contributions of everyone who has been a part of our company, and we wish them all the best in their future endeavors.
Stripe's CEO, Patrick Collison, has acknowledged that the company has made some missteps over the past few years. In particular, he cites overhiring during the pandemic and being too optimistic about the growth of ecommerce. According to LinkedIn data, Stripe's employee base more than doubled over the past two years, and as of last month, it stood at over 8,000. The new round of cuts will bring it back down to around 7,000, the same level it was at in February 2022. Collison also says that Stripe allowed operational inefficiencies to creep in and that it grew operating costs too quickly.
Stripe is making deep cuts to some departments, including recruiting, and is offering affected employees 14 weeks' severance and the equivalent of 6 months' healthcare premiums. The company is also paying out full-year 2022 bonuses.
At Stripe, we believe in being transparent with our employees and giving them the information they need to succeed. We are committed to performance management and ensuring that our workforce is aligned with our company's goals. We are taking steps to prune our workforce and will continue to do so in order to ensure that we are operating efficiently and effectively.
Stripe is committed to attracting and retaining the best talent. The company has worked hard to build a strong performance management system that will help it continue to attract and retain top talent.
I think that the layoffs were planned from the beginning, and that the company tried to fire low performers first. However, given the worsening economy, they had to pull the trigger and lay off more employees. A Stripe spokesperson declined to comment, but typically a layoff round that isn't strictly based on seniority would also take into account employee performance, job function, and a business' needs.
While both Stripe and Adyen are based in Amsterdam, Stripe has historically been the more aggressive company, releasing more products and incurring higher costs. In 2021, those trends continued, with Stripe processing $640 billion in payments, compared to Adyen's $516 billion. Stripe also ended the year with 6,000 employees, while Adyen had 2,500.
Stripe's recent decision to slash its internal valuation by 28% is a troubling sign for the company's future. While equity-based compensation packages for workers will be affected, the bigger concern is the message that this sends about Stripe's current financial situation. If the company is struggling to maintain its value, it could be a sign of trouble down the road. Only time will tell how this decision will impact Stripe's long-term prospects.
While it's certainly been a tough year for many industries, it seems that fintech companies have been particularly hard hit. Numerous firms have announced layoffs, including Robinhood, Klarna, and Chime. Here's hoping that things start to turn around soon for the sector.
Alex Konrad is a talented reporter who has a knack for getting the scoop. He has a bright future in the journalism field, and I believe he will continue to excel in his career.