The financial technology decacorn Plaid has laid off 260 employees, 20% of its workforce.
While specific details about who exactly was affected are unknown, the San Francisco-based startup's engineering team is likely to take a hit. In March, Plaid CTO Jean-Denis Greze said that he grew the engineering team 17.5x in just four years, from 20 engineers to 350 people. Today's cut is likely to reverse some of that hypergrowth.
A company spokesperson would not disclose how many engineers are being affected, saying "teams across the company" were affected. He added that Since Plaid is "aligning with the updated results targets, teams like recruiting are affected more than others."
En a letter to employees Posted on its website, CEO and co-founder Zach Perret said the company saw a rapid increase in usage from its existing customers, a slew of new customers, and a "substantial acceleration in revenue" during COVID. As such, the company "hired aggressively" to meet customer demand and invest in new products.
However, macroeconomic changes resulted in Plaid's clients experiencing "slower-than-expected growth," causing the company to pull back.
“The simple reality is that because of these macroeconomic changes, our cost growth rate has exceeded our revenue growth rate. I made the decision to hire and invest ahead of revenue growth, and the current economic slowdown has meant that this revenue growth did not materialize as quickly as expected."
All affected employees will receive 16 weeks of base pay as severance pay. Those who have been with Plaid for more than a year will get additional weeks. Plaid will also pay the cash equivalent to 6 months of health premiums for medical, dental and vision insurance coverage for employees and their dependents. In a practice that is becoming more common, the company is also accelerating capital grants for employees who worked at the company for more than a year until the award date of February 15, 2023. It is also waiving the one-year cliff for workers with capital who have not yet reached their one-year vesting cliff.
In addition, it says that it will provide 6 months of professional support and training services, as well as 6 months of continuous coverage of mental health for all departing employees. The company also says it has "dedicated immigration advisers" for those on a work visa.
Affected employees lost access to many Plaid systems in a move that Perret acknowledged may seem "abrupt" but deemed necessary "given the sensitive nature of data" in his industry.
In April of 2021, the raised in a Series D of $ 425 million led by Altimeter Capital, it valued the company at about $13.400 billion. This was after its deal to be acquired by Visa for $5.3 billion fell through due to regulatory concerns.
A lot has happened since that lofty valuation, and Plaid now competes directly with one of its partners, payment giant Stripe, which recently made layoffs of its own: more than 1.100 people. Earlier this year, Stripe announced a new product called Financial Connections, which provides Stripe customers a way to connect directly to their customers' bank accounts, to access financial data to speed up or execute certain types of transactions. whatSounds familiar?
Two weeks later, Plaid announced the official expansion of your main product of account linking: the first since its inception in 2013. Specifically, the startup said it was moving toward verifying identity and income, preventing fraud, and providing new tools for account funding and payouts, a move that will put you in even deeper competition with Stripe.
For its part, Stripe was last valued at $95.000 billion dollars when it closed a round of financing of 600 million dollars in March 2021.
More recently, Plaid announced tthat he had appointed Meta veteran John Anderson to serve as his new head of payments as he began personally facilitating payments through his service Transfer, in addition to facilitating payments.
Plaid's layoffs come amid an especially tumultuous year for fintech startups. In addition to Stripe, the neobank Chemistry recently has fired 12% of its staff, about 160 workers
