The Scoop #11: The Tech Boom is Over
Layoffs, rescinded offers, hiring freezes, hiring slowdowns and a realistic look at the market.
The Scoop is a bonus series, covering patterns and trends I’ve heard within big tech and high-growth startups. Send me tips to firstname.lastname@example.org, as DMs on Twitter or on LinkedIn. I treat tips as anonymous.
There’s been plenty of gloomy news in the tech market in the past weeks. It feels like we are entering a time when increasingly more parts of the market are cooling off. Could we say that that the tech boom of the past few years is over? This is increasingly likely.
Today’s issue covers:
Inside the Pollen layoffs. Exclusive on how weeks after raising $150M, massive layoffs followed at travel and entertainment tech company Pollen.
More layoffs. Carvana, Zwift, and Netflix letting people go.
Hiring freezes and rescinded offers. Twitter, Wayfair, Redfin and Bolt join Meta in hiring freezes. Coinbase and Uber slow down hiring. YC urges portfolio companies to “cut costs and extend your runway within the next 30 days”.
A realistic look at the market. Is this a resemblance of the Dotcom Crash? Or is it something more tame?
Companies still hiring strong and increasing compensation. It’s not all gloom and doom: there are many places hiring, and Microsoft is raising compensation significantly. The Pragmatic Engineer Job board is also seeing increased traffic.
Advice for those interviewing or planning to interview. Is now a good or a bad time to look around for anyone thinking of switching jobs?
Pollen lays off 200 employees, weeks after raising a $150M Series C
Pollen is a UK-based travel and entertainment technology company that brands itself as a tech-first company. The company creates travel experiences related to music events for people, and patterns with music festivals to drive bookings through its platform. You can think of Pollen as a two-sided marketplace with travelers and music lovers on one side, and music festivals and events on the other.
The company announced its $150M series C on the 21st April. This raise came after the company raised more than $100M in the past.
Pollen laid off about a third of its workforce - about 200 people - on Tuesday, 10th of May. This was just a month after the $150M Series C fundraise was announced. About 20 of these people were in tech, and those let go included senior engineers, staff engineers, engineering managers and delivery roles.
The timeline of the events leading up to layoffs were these:
8th of April: Pollen CTO Bradley Wright sent an email instructing all teams to shift focus immediately to “improving our Bookings and Margin targets”. Most teams already had Q2 OKRs set by this time, and this change meant a major U-turn for many teams. This email caused mild panic among engineering leaders, who were second-guessing whether the company has revenue problems.
14th April: the company internally shares that they successfully raised a $150M Series C. Employees who were worried from the CTO’s email on the 8th of April breathe out.
21st April: Pollen announces raising $150M Series C, and celebrates this news both internally, and externally.
29th April: All contractors across tech terminated one week before mass layoffs were announced. In hindsight, such a move signaled that the company needed to put large cost savings in place.
10th May: Mass layoffs announced, those impacted get notified via email, and later talk with their managers. Those in the UK laid off enter into a mandatory consultation period.
17th May: consultation period finished for those laid off from the UK. No proposals were accepted and everyone with less than a year at the company laid off. Those laid off lose access to all systems.
Today (19th May): consultation in the UK continues for those with more than 2 years of tenure. These are the minority of people laid off.
A warning sign of things going badly was how leadership seemed lost on how to improve bookings and margin targets after sending out the email on the 8th of April. The C-level started to ping product teams directly with ideas that were not thought through and were unfeasible. All these requests achieved was making those product teams spend weeks researching data to justify to the C-level that their ideas won’t result in more bookings or more revenue.
Employees at Pollen had no access to revenue numbers. Similar to how Fast did not share revenue numbers with employees - and thus few employees realized just how little money the company was making - Pollen also doesn’t share this information. Pollen employees can access the number of bookings, but this number gives little context without knowing the average revenue per booking, or how much runway the company has left.
Employees speculated that leadership realized they were in trouble only a month before, likely as part of the fundraising. On my end, I would not be surprised if investors demanded cost-cutting as part of the financing deal. Investors would have had access to current and projected revenue numbers, and company spending.
Layoffs were poorly handled, according to multiple employees laid off whom I talked with. A tech employee mentioned how a colleague of theirs who had been promoted just one month before their termination was let go, shocking all of their team. People fired got no justification on why they were chosen: if the layoffs were done through tenure, performance, business need, or something else. Managers of those laid off also had no idea who would be fired on their team, and several of them were visibly surprised when finding out.
Even today, there is confusion internally on how many people were laid off. The number seems to be roughly 40% across most functions, and about 15% across tech. Not knowing how many people were cut is adding to the frustration of employees, who are feeling they are in the dark.
The response from leadership to those asking questions about layoffs has been to deflect these questions, claiming they cannot share specifics because of the UK law.
The company is actively hiring for roles they have fired people from, and this is very much the talk between people who have been let go. Has the company just forgotten to take down job ads? Or is this some strange cost-cutting move, trying to re-hire someone for less compensation? The latter would make no sense, as Pollen has an open compensation policy, so they could not hire someone for less. This leaves the explanation that the company was unable to coordinate layoffs with hiring, which is not a good look on leadership.
Pollen has communicated poorly about how many people they let go, and made no assurances if this was the end of layoffs. The company already made a smaller layoff that did not impact tech earlier the year. The lack of assurance, combined with the poor handling of this layoff is pushing morale further down.
Morale is very low inside the company. This should not be surprising after any layoff. However, the mood is further dampened due how employees see leadership not handling the layoffs in a transparent way, and deflecting questions and concerns, hiding behind the shield of “UK law”.
To add insult to injury: for those staying, the company changed how it pays out salaries in the UK. Up to now, this happened on the 25th of each month, as it is common in most UK companies. The company will now pay this out on the last day of the month. This is a small enough change, but it brings the message that the company holding on to salaries for another 4-6 days per month is an important enough cost saving to make.
Expect that raising funding followed by layoffs will be more common for companies bleeding money like Pollen. Though I have no access to actual numbers, it is very likely that the company is making a loss, and the cuts were a condition from investors who poured another $150M into the company.
The timing adds up as well. It’s likely that leadership realized they cannot raise on favorable terms early April, as they were finalizing the investment: hence the email from the CTO telling teams to focus on revenue generation. As part of the investment, investors likely added the condition to reduce costs by 40%. It likely took about three weeks for leadership to orchestrate a layoff - even if done rushed - and execute on it.
Two weeks ago I wrote, reflecting on layoffs at Cameo, how we’ll likely see more layoffs to conserve runways at unprofitable startups which are running out of money. From The Scoop #10:
“Expect that Cameo is just the start of layoffs at startups that last raised funding in 2021. Startups that had optimistic business plans during their 2021 fundraise, but where the business reality did not match up to this optimism will not be able to raise funds under similar conditions. Laying off, and conserving runway is something a large number of non-profitable startups will have to do and have to do soon: in the coming months.”
These layoffs are speeding up. From the past two weeks here are four companies that laid off software engineers: