Stripe to cut 1,000 jobs due to economic pressures
Founders Of And Patrick Collison, Stripe John Co
Digital payments processing giant Stripe, which was founded by two Limerick brothers in 2010, announced it will cut 1,000 jobs due to growing economic pressures.
Stripe staff were notified that the firm is cutting staff by 14% in a company email, seen by the Irish Examiner.
“We are facing stubborn inflation, energy shocks, higher interest rates, reduced investment budgets, and sparser start-up funding,” said founders John and Patrick Collison in the email.
The cutbacks will mean that Stripe’s workforce will return to its February headcount of almost 7,000 people.
Those that did lose their job got a notification 15 minutes after they received the email. It is not clear if any Ireland-based employees were impacted yet.
All those that did lose their jobs will receive 14 weeks of severance, and more for those with longer tenure. They will also get the 2022 annual bonus among other supports including the cash equivalent of six months of existing healthcare premiums or healthcare continuation.
The company is not applying job cuts evenly across the organisation.
“For example, our recruiting business will be disproportionately affected since we’ll hire fewer people next year,” said Stripe.
The cutbacks come as the founders said they needed to build the company “differently for leaner times”.
“To adapt ourselves appropriately for the world we’re headed into, we need to reduce our costs,” they said.
The job cuts are the consequence of being “much too optimistic about the internet economy’s near-term growth in 2022 and 2023”, the company said. It added that it underestimated both the likelihood and impact of a broader slowdown.
Stripe also said it grew operating costs too quickly.
E-commerce became more popular during the pandemic and Stripe witnessed “significantly higher growth rates” over the course of 2020 and 2021.
The company then transitioned into a new operating mode and its revenue and payment volume have since grown three times bigger.
“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,” the company said.
Stripe is one of the most successful start-ups in the world but the recent announcement shows it is not protected from growing economic uncertainties.
Yet, the company is confident going into 2023, while it slims down.
“The world is hard to predict right now, but we expect that these changes will set us up for robust cash flow generation in the quarters ahead,” the company said.
Stripe signed 75% more new customers in Q3 than in the same quarter last year and on earlier this week it set a new record for total daily transaction volume processed.
Its customers include Peleton, Google and Amazon.