May 26, 2022

Startups are one time Redundancy as a way to control cash consumption and attract new capital.

The news that Fast, a one-click payment software provider focused on the e-commerce market, is offering investors a drastic layoff in the hope of raising new capital is remarkable, but that’s just one data point. However, a public database that tracks layoffs at startups shows that the company is not alone in cutting staff.

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It is doubtful that rapid layoffs will make the initial job market less favorable to talent. Startups aren’t the only companies in the market that are hiring technical people. Tech startups must compete for talent with established companies like Apple and Microsoft, as well as traditional companies that build their own in-house engineering and data teams. Thus, it is likely that the job market for tech professionals will remain subdued despite the downsizing of start-ups.

But reducing the workforce is a quick way to reduce burns and expand the runway. If money is the oxygen for a business, laying off employees makes the company breathe more slowly, thereby increasing life expectancy without external capital (air).

It doesn’t look like we’re on the cusp of the same surge in layoffs that the onset of COVID-19 brought with it in 2020. Reconstructing this moment from a business point of view is almost impossible. This time, people know better what awaits them. Changes in public market valuation of technology companies and a frozen IPO market have skewed private market sentiment in favor of fast-growing startups. But losses will grow more slowly as each startup calculates the amount differently, meaning they won’t have both difficult staffing choices.

Let’s take a quick look at the latest news from the Fast saga, take a look at recent startup layoffs to see if we can follow the trend, and wonder what we’ll see in Q2.

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