One of the biggest latest news was that Plaid laid off 260 employees, or about 20% of its workforce. This may have come as a surprise to many, but not to all.
Rumors that Plaid laid off about 200 people began in late May. At the time, when questioned, the company denied that it was laying off any workers. But as the year progressed and the macro environment became more challenging, it seemed inevitable that Plaid, which last year was valued at $13,4 billion, join the long list of fintech giants laying off workers.
In particular, when describing the decision to reduce headcount, CEO and co-founder Zach Perret said that he "made the decision to hire and invest ahead of revenue growth, and the current economic slowdown has meant that this revenue growth has not materialized." materialized as quickly as expected.”
It's become a common refrain: CEOs take responsibility for overhiring and, in a way, are also bullish on revenue growth. Optimistic or myopic? It seems that there is a very fine line.
One of the most surprising things about the bunch of layoffs in the fintech space, though, is how many of them are taking place at some of the highest-value startups out there. Klarna was valued at $45 billion last year. This year, it saw a big drop in valuation and cut jobs more than once. Brex was valued at $12.3 billion earlier this year. Then layoffs. Stripe was valued at 95.000 billion dollars last year. Then mass layoffs. Chime was valued at $25 billion last year. Also massive layoffs.
Did they all get ahead? Were they trying to do too much too fast? (Brex co-CEO and Henrique Dubugras admitted him to the Disrupt stage.) Did everyone think that the boom fueled by the pandemic would last indefinitely? Did everyone think venture money would flow freely forever?
Also, maybe some of these companies really believed that they would need that many workers. I mean, who knew a recession of this magnitude was coming?
Maybe it was a combination of all of the above. Obviously, each company's circumstances are different and I am not aware of their internal discussions (as much as they would be very interesting!). But it's clear that a reboot may be on the map.
Hearing and writing about so many high-profile companies laying off workers is sobering for me as a transformation researcher. One can only speculate how sobering this is for other startups. My humble opinion is that we all need to learn from the mistakes of others. And I'm not pointing fingers specifically at the companies mentioned above. I mean generally.
Here are some probably obvious tips from someone who has covered startups for years:
- Keep focus. It's easy to get caught up in the competitive landscape and want to outdo your rivals. But really, before you start expanding into one new segment after another, you have to make sure that you've really hit the ceiling on the ones you're already working on.
- Hire responsibly and carefully. No, that doesn't mean you have to have people on staff doing the work of two or three employees. It means that every open position should have been carefully thought out. It's really necessary? Can this hiring wait until we are further along? Would it make more sense to hire a contractor for now?
- Stay humble. Don't brag. Don't hit your chest too hard. Being confident is one thing. Being arrogant is another.
- Limit/cut out junk talk. It's easy, especially on social media, to get caught up discussing how or why you think your company is better than others in your market. It's okay to talk about why you think the offer is better in a general sense than what's out there. But giving names and trying to make others look bad? Most of the time that has the opposite effect and just makes sand look bad
- Be authentic and real. Whether it's on social media (Twitter or LinkedIn or Post, where you're most likely to share) or when speaking to the media. Authenticity is huge, and it is highly appreciated and valued, especially considering that it is not as common as you would like it to be. Transparency goes hand in hand with that, especially internally. Do not leave employees in the dark, or mislead them.
- Oh, and don't lie or commit fraud.
Some news …
“Fintech was all the rage in 2021, but looking back… maybe a little too high on the high expectations level? The sector exploded last year, with record investment ($132.000 billion worldwide), and many new companies achieving high valuations, including Stingray at $95 billion, Klarna at $45 billion and Tartan at $13 billion. While these companies have very real customer and product bases, it's not hard to imagine that at least some of these valuations were backed by hype." Rebecca Szkutak on how much fintech valuations have fallen this year.
Robin Hood Last week it launched a waiting list for its new offering, Robinhood Retirement, which it describes as the "first and only" individual retirement account (IRA) with a 1% match on every eligible dollar contributed. The move is a big bet by the fintech giant that the traditional 9-to-5 employee is no longer the norm, targeting temporary workers and contractors, who have historically found it difficult to save for retirement without the benefit. of a full-time job and access to an employer-sponsored plan. It's also likely a strategy designed to help retain users considering the company reported a loss of 1,8 million monthly active users in the third quarter, a quarterly decline of 12,8% to 12,2 million, "the lowest level since it was listed on the stock market." according to yahoo news.
Tage Kene-Okafor reported that “chipper cash, an African cross-border payments company valued at $2.200 billion last year, has laid off part of its workforce. Last week, some affected and unaffected employees took to LinkedIn to break the news. More than 50 employees were affected across multiple departments; the engineering team took the biggest hit, with around 60% of those laid off coming from the department, according to people familiar with the matter.”
From Manish Singh: “Indian financial services company Paytm is considering buying back its shares, after a shaky year that has seen its share price fall by more than 60%. Paytm said it will discuss with the board on December 13 the proposal to buy back the company's fully paid-up equity shares, the Noida-based firm disclosed in a stock exchange filing.
Focused on fintechs Gilgamesh Ventures has appointed Paula You as its new (and third) partner and COO, overseeing the growth of the platform. The move comes as the company nears the second anniversary of its inaugural fund. Since its founding in 2020, Gilgamesh has raised more than $10 million and invested in nearly 30 early-stage fintech companies across the Americas, including Xepelin, Klar, Pomelo, Glean, and Modern Life.
De Finextra: “the UK bank for mobile only kroo has launched its flagship current account, which offers customers two per cent interest on amounts up to £85,000. Kroo's analysis of Bank of England data shows there was £271.000bn idle in UK household interest-free demand deposits as of September 30, 2022. Aimed at Millennials and Gen Z, Kroo says that it will plant two trees for every new customer that opens a checking account, through its charity partner, One Tree Planted.”
The latest startup from residential real estate upstart Adam Neumann Flow in partnership with startup Bond to create a digital wallet for residents. A variety of financial products will be incorporated into the digital wallet and specific capabilities will be announced at a later date. Neumann, remembering his days at a small tech company called WeWork, made headlines (and many people angry) in August when raised $350 million at a valuation of $1 billion, making Flow a unicorn before it even started trading.
Earlier this year, Mastercard launched the Start Path Open Banking program in an effort to provide startups with an Open Banking platform "access to a combination of hands-on mentorship, co-innovation opportunities, and engagement with the global network of banks, merchants , partners and digital Mastercard players. to help scale the business.” On Friday, Mastercard selected the following eight open banking startups to join the program: AIS Gateway (Poland); currensea (UK); Fego.ai (India); Floid (Chili); kaoshi (USA); Level (UK); percentages (United States) and Railz (Canada).
As reported by Reuters"dLocal (DLO.O) The Uruguayan fintech, which is facing allegations of possible fraud by a short seller, has applied for a UK regulatory license, the company's chief executive told investors in a recent call reviewed by Reuters, amid claims that it evaded rigorous regulatory oversight by relying on Maltese regulators. ”
The Brazilian fintech Matera which has created instant payment and QR code technology for financial institutions, has moved its headquarters to San Francisco. The move “comes amid tremendous adoption of pix, the instant payment system implemented by the Central Bank of Brazil in 2020 and used by 70% of Brazilians”. Specifically, Matera provides instant payment software for banks leveraging Pix, as well as providing core banking services to more than 250 global banks, credit unions, and digital banks, serving more than 55 million accounts. The company says that its leap into the US market "will allow it to empower many more financial institutions to expand their ability to pay.
De Forbes: “During a year of heavy losses in the financial markets, these entrepreneurs, traders and investors are cleverly navigating choppy waters.”
More financing and M&A
Eight wants to rethink (and rebrand) personal finance for business owners
Andreessen Horowitz leads the Serie A of $43 million for Setpoint, which purports to be the 'Stripe for credit
TripActions secures $400 million in credit lines from Goldman Sachs, SVB
SBM Bank India, which builds the BaaS platform, is seeking funding at a valuation of $200 million.
