Stripe, the parent company of Nigerian payment company Paystack, has announced that it will reduce its total workforce by around 14 percent. This means the company is laying off 1000 workers.
Stripe announced the acquisition of Paystack in October 2020 and since then has allowed it to operate almost like an independent unit of the company. A source close to the company told BusinessDay that workers at Paystack are not affected by the lay-off.
Patrick Collison, CEO of Stripe, noted in a memo to Stripe workers on Thursday that the company is repositioning itself for the changing macroeconomic situation in developed markets such as the United States experiencing accelerating inflation, energy shocks, higher interest rates, reduced investment budgets, and shrinking startup funding.
“Doing right by our users and our shareholders (including you) means embracing reality as it is. Today, that means building differently for leaner times. We have always taken pride in being a capital-efficient business and we think this attribute is important to preserve. To adapt ourselves appropriately for the world we’re headed into, we need to reduce our costs,” Collison said.
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Stripe is not the only big tech reducing costs by laying off workers. This week alone, Lyft, CloudKitchens, OpenDoor, Chime, Dapper Labs, Gem, MessageBird, and Kry have laid off staff. Apple also announced that it plans to freeze hiring until the middle of next year. Layoffs.fyi estimates that 3,572 jobs have already been cut in November.
“I haven’t seen a job market look this bad for college grads in my entire career,” Dare Obasanjo, a Lead Product Manager at Meta tweeted.
Collison admits the company made two mistakes that need to be corrected. According to the CEO, Stripe was 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. Also, Collison says the company grew operating costs too quickly.
“Buoyed by the success we’re seeing in some of the areas of our new product, we allowed coordination costs to grow and operational inefficiencies to seep in,” he noted in the memo.