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Shopify Says It Will Lay Off 10% of Workers, Sending Shares Lower

entremet

entremet

You wouldn't toast a NES cartridge
Member
Oct 26, 2017
60,069
Shopify Inc. SHOP -16.24%▼ is cutting roughly 1,000 workers, or 10% of its global workforce, rolling back a bet on e-commerce growth the technology company made during the pandemic, according to an internal memo.

Tobi Lütke, the company's founder and chief executive, told staff in a memo sent Tuesday that the layoffs are necessary as consumers resume old shopping habits and pull back on the online orders that fueled the company's recent growth. Shopify, which helps businesses set up e-commerce websites, has warned that it expects revenue growth to slow this year.

Shopify's shares fell 15% to about $31 in Tuesday morning trading after The Wall Street Journal first reported on the layoffs. The shares have fallen more than 80% since they peaked in November near $175 adjusting for a recent stock split. The company reports quarterly results on Wednesday.
Mr. Lütke said he had expected that surging e-commerce sales growth would last past the Covid-19 pandemic's ebb. "It's now clear that bet didn't pay off," said Mr. Lütke in the letter, which was reviewed by the Journal. "Ultimately, placing this bet was my call to make and I got this wrong."
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Shopify's workforce has increased from 1,900 in 2016 to roughly 10,000 in 2021, according to the company's filings. The hiring spree was made to help keep up with booming business. E-commerce shopping surged during the pandemic, and many small-business owners created online stores to sell goods and services.
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www.wsj.com

WSJ News Exclusive | Shopify Says It Will Lay Off 10% of Workers, Sending Shares Lower

CEO Tobi Lütke says it made a wrong bet on the pandemic-fueled boom in e-commerce growth lasting.
www.wsj.com www.wsj.com

That's a lot of jobs for a "smaller" tech darling.
 

ErrorJustin

Member
Oct 28, 2017
2,464
Tech layoffs in 2022 are no joke. Look up some charts -- it's like 50k high-earning, high-skill jobs this calendar year and counting.

I do a decent amount of hiring/recruiting in my job and we've been seeing it for months - in Jan-Feb there was just no one in the job pool. We would have to actively poach/recruit people away. Now for most open roles we immediately receive many qualified applicants.
 
CitizenVectron

CitizenVectron

Member
Oct 27, 2017
5,407
There isn't exactly a tech crash at the moment (as tech jobs are still far above what they were 5 years ago), but there are certainly a lot of layoffs happening, which can make it harder for these people to find replacement jobs.
 
Getting Away With It

Getting Away With It

Member
Oct 27, 2017
799
Coolluck said:
Maybe tech salaries will become more reasonable.
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Define reasonable. Most tech salaries aren't what I would consider unreasonable (with exceptions for certain engineer RSU allowances).

Edit: Also wanting salaries to come down is never something that should be rooted for, but particularly in this instance where for many tech companies they aren't necessarily directly driving the cost of the products up (since they're generally "free" products, ala Google, Meta and so on).
 
Charizard

Charizard

Member
Oct 25, 2017
2,905
Getting Away With It said:
Define reasonable. Most tech salaries aren't what I would consider unreasonable (with exceptions for certain engineer RSU allowances).

Edit: Also wanting salaries to come down is never something that should be rooted for, but particularly in this instance where for many tech companies they aren't necessarily directly driving the cost of the products up (since they're generally "free" products, ala Google, Meta and so on).
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Yes, I would argue it's more that everyone else outside of tech/finance/etc is severely underpaid TBH
 
julia crawford

julia crawford

Took the red AND the blue pills
Member
Oct 27, 2017
35,251
wonder if this is happening just for bigger companies 🤔 haven't head of any layoffs in smaller companies or companies that i know of personally, this seems to be happening thousand plus companies

but this one seems reasonably explainable by online purchases cooling off after the pandemic which i imagine everyone is going through, any company that grew on the back of people not leaving their homes is likely to suffer something similar

hope they keep developing hydrogen... that thing look banging
 
PumpkinPieAddict

PumpkinPieAddict

Member
Oct 28, 2017
3,792
I have a friend's friends in hr just laid off by this. Sucks.

Also a wild story of capitalism and the bubble as a pandemic stock.
 
Autumn

Autumn

Avenger
Apr 1, 2018
6,320
The money is drying up and the big bosses are calling. They want real profits. A lot of companies will get exposed.
 
navanman

navanman

Member
Oct 27, 2017
1,716
Dublin
Feels like the end of zero interest rates or free money is going to cause several loss making or low margin tech companies to cuts back on staff & expenses this year.
 
Gentlemen

Gentlemen

Member
Oct 25, 2017
9,516
julia crawford said:
wonder if this is happening just for bigger companies 🤔 haven't head of any layoffs in smaller companies or companies that i know of personally, this seems to be happening thousand plus companies
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It's happening. soon. It's going to be very bad.

www.theverge.com

Zuckerberg has a plan to rescue Meta, but can he convince his own employees?

“Realistically, there are probably a bunch of people at the company who shouldn’t be here.”
www.theverge.com www.theverge.com
 
The Albatross

The Albatross

Member
Oct 25, 2017
39,006
The firms laying off are generally the firms who grew too aggressively in 2020 and 2021 thinking that the pivot to online was going to carry through once the strongest affects of the pandemic abate. E-learning, E-shopping, digital services, etc. I interviewed at an e-learning company that was pitching an aggressive offer, but it wasn't a good fit for me personally, ended the interview process, and they did aggressive layoffs back in April, ~40% of their staff, which definitely would have been me.

hiring in tech has been very aggressive the last 3-4 years, and then when the pandemic hit it poured fire on that as tech revenue, profit, and valuations skyrocketed. A reset was likely even back in 2019, but the pandemic led to more aggressive growth goals than was likely sustainable, and I think this year and into next will be a small reckoning there.

In April 2022, unemployment rate in tech was 1.3%, effectively one of the lowest unemployment rates that is possible in any industry, but full employment is no something that can be infinitely on-going, there has to be an ebb and flow:

www.prnewswire.com

Tech Unemployment Rate at Near-Record Low on Strength of Employer Hiring Activity, CompTIA Analysis Finds

/PRNewswire/ -- The unemployment rate for technology occupations fell to a near-record low, tech companies added workers for the 16th consecutive month and...
www.prnewswire.com www.prnewswire.com

For some comparison, the overall unemployment rate in the US in April 2022 was 3.6%, which at the time was the highest level of employment vs. unemployed people in American history, and has since been surpassed only by May 2022, June 2022, and July 2022.

For Shopify, declines in growth coming out of the pandemic make sense. People forced home during the pandemic and people with some extra savings from stimulus were likely to launch businesses they could run out of their homes, and Shopify is the most popular platform for starting an online business. As public life starts to transition back to in-person, things shift back in the other direction.
 
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Xando

Xando

Member
Oct 28, 2017
27,309
navanman said:
Feels like the end of zero interest rates or free money is going to cause several loss making or low margin tech companies to cuts back on staff & expenses this year.
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Not only that but also a lot of these companies hired like crazy during the pandemic to keep up with their growth and now that things are slowing down again they have way too many employees.
 
Getting Away With It

Getting Away With It

Member
Oct 27, 2017
799
julia crawford said:
wonder if this is happening just for bigger companies 🤔 haven't head of any layoffs in smaller companies or companies that i know of personally, this seems to be happening thousand plus companies

but this one seems reasonably explainable by online purchases cooling off after the pandemic which i imagine everyone is going through, any company that grew on the back of people not leaving their homes is likely to suffer something similar

hope they keep developing hydrogen... that thing look banging
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Those companies are just so small that (a) you wouldn't hear about it because they're not big enough to announce or (b) are unlikely to have ballooned in headcount so seriously.

Most mid sized tech companies also have announced hiring freeze/slowdown (Twitter, Salesforce, Zendesk, Hubspot just to name a few).
 
julia crawford

julia crawford

Took the red AND the blue pills
Member
Oct 27, 2017
35,251
Getting Away With It said:
Those companies are just so small that (a) you wouldn't hear about it because they're not big enough to announce or (b) are unlikely to have ballooned in headcount so seriously.

Most mid sized tech companies also have announced hiring freeze/slowdown (Twitter, Salesforce, Zendesk, Hubspot just to name a few).
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i wouldn't... call those mid sized...
 
Coolluck

Coolluck

Member
Oct 27, 2017
5,408
Getting Away With It said:
Define reasonable. Most tech salaries aren't what I would consider unreasonable (with exceptions for certain engineer RSU allowances).

Edit: Also wanting salaries to come down is never something that should be rooted for, but particularly in this instance where for many tech companies they aren't necessarily directly driving the cost of the products up (since they're generally "free" products, ala Google, Meta and so on).
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Rye-soakedhuskofaman said:
Shopify salaries seem pretty reasonable on Level.fyi. https://www.levels.fyi/companies/shopify/salaries/software-engineer L6 senior developer for 200k. That is low enough I'm sure they are not attracting tier 1 talent.
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I meant more broadly in the tech industry rather than just for Shopify as these layoffs/hiring freezes and reductions have been hitting across the board. As for what number is reasonable, I actually don't know what that figure is. That's definitely a deficiency in my opinion on the subject. I look at it from the impact those salaries have had in the COL for surrounding areas in the cities they're in as well as the burn rate that tech companies have. You also see companies trying to create talent pipelines where the cost of labor is much cheaper but still in the US since offshoring doesn't turn out well. Yes, these companies will try to short workers whenever they can, but it still seems like there's some middle ground here.
 
zyvorg

zyvorg

Member
Oct 25, 2017
572
Know someone personally affected and seems like only Recruitment and Sales where affected, they know how hard it would be to replace those Engineers...
 
RisingStar

RisingStar

Banned
Oct 8, 2019
4,849
This is a warning sign for anyone risking their livelihood right now to pivot to tech. Assuming they can get an offer considering everyone is in a hiring freeze. I'm in operations but I'm definitely keeping my guard up and cooling off my expenses.
 
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