And the cuts just keep on coming
Good morning! Some companies are now on their second round of layoffs. Can we expect rounds three and four soon?
One round of layoffs wasn’t enough
HR leaders tend to agree that when companies have bad news to share, like layoffs, they should say as much as they can in one go.
But the cuts haven’t stopped. And now some companies are on their second round.
- Netflix laid off another 300 workers in late June, after laying off Tudum writers in April and another 150 employees in May.
- Mural told me last week that it laid off more employees, but didn’t confirm how many. At least nine employees were laid off in early May.
- Hopin cut 12% of its staff in February, and another 29% earlier this month.
- Gemini cut 10% of its staff in June, had a second round last week and more layoffs might still be on the horizon.
Sticking with one round of layoffs is preferable. But ECI Group’s Jay McDonald told me these companies likely underestimated just how many workers they needed to cut or jumped the gun on their initial announcement.
- “My bias is to try to minimize the pain and angst of these sorts of situations, and certainly there are times where companies feel like they’ve done that,” he told me. “And then a few months later they realize that business is not as good as they had hoped.”
- Mural, for example, is still coming to terms with just how much it scaled during the pandemic. “This year as market conditions have changed again, we have had to adapt again,” a spokesperson told me.
— Sarah Roach
Investing in a downturn
As a former dot-com-era founder, SignalFire CEO Chris Farmer had a feeling a downturn was coming. So he prepared for it by investing in startups early and focusing his firm’s work on helping portfolio companies develop and execute strategy.
Farmer started preparing at least three years ago for a potential downturn. He started trading “valuation risk for execution and technology risks,” he told me.
- For one, he shifted the company’s series B fund to a series A fund, and its seed fund to a pre-seed fund. Now, the firm’s “not sitting on a bunch of stuff we way overpaid for.”
- SignalFire also looks at “macro environment impacts” on industries. For example, the firm invested in health tech when the pandemic “blew the doors off” hesitancy toward telemedicine.
SignalFire runs like a tech company rather than a VC firm. The company has a C-suite, as well as engineering and data science teams.
- Employees have the opportunity to provide hands-on guidance to early-stage companies. Farmer called it “the ultimate sandbox.”
- And it seems like the model is working. Among SignalFire’s partners are former tech execs, including from Netflix, Stripe and Dropbox.
Hands-on advising can be a big draw for startups, he said. With funding rounds becoming less and less frequent, startups will want to partner with funds that are “going to be with you in the trenches."
Read the full Q&A with Farmer here.
— Nat Rubio-Licht
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People are talking
Su Zhu and Kyle Davies finally spoke out about Three Arrows Capital’s downfall:
- “Say that I absconded funds during the last period, where I actually put more of my personal money back in. That’s not true.”
SentinelOne's Tomer Weingarten said not to get "too romantic" about AI:
- "AI is just the ability to have an algorithm that understands anomalies and is smart enough to make a decision."
Jessica Rosenworcel wants mobile carriers to explain what geolocation data they collect:
- “Mobile Internet service providers are uniquely situated to capture a trove of data about their own subscribers.”
Coming this week
Lots of companies report earnings, including Alphabet, Microsoft, Visa and Texas Instruments tomorrow; Meta, ServiceNow, Qualcomm and Shopify on Wednesday; Apple, Comcast and Intel on Thursday; and Sony on Friday.
AWS re:Inforce starts tomorrow through Wednesday. This year it’s in Boston.
Scale 19x starts Thursday and goes through Sunday at the Hilton Los Angeles Airport.
Google fired software engineer Blake Lemoine, who made claims that the company’s AI bot became sentient.
Pacaso created a government advisory board that includes Austin mayor Steve Adler, Denver, Colorado mayor Michael Hancock, Florida Rep. Danny Perez and other former and current government leaders.
Apoorva Mehta will step down as executive chairman of Instacart once the company goes public.
Michael Casolo is Upflex’s new chief revenue officer. He will oversee the startup’s revenue planning, scaling and reporting.
In other news
Twitter blamed Elon Musk for its fall in quarterly revenue and a net loss, claiming the deal made its relationship with advertisers rocky.
Speaking of which: Tesla is going to a settlement conference to negotiate getting Musk out of his 2018 “Twitter Sitter” lawsuit. The meeting will take place in October.
California will let candidates accept crypto campaign donations, the Fair Political Practices Commission voted last week.
Meta's investing $150 million in its Oversight Board Trust. Meta previously contributed $130 million to the trust in 2019.
Tesla may let any EV use its fast chargers if the company gets the federal funding it's hoping for. The money could get approved by October.
It'll be illegal for websites in South Carolina to say how to get an abortion if a new bill passes.
Mark Zuckerberg sold his home in San Francisco for $31 million, the top price in the city so far this year.
The price of spam
Email spam is ubiquitous. But Andy Mowat, CEO of a new email tool called Gated, thinks he’s figured out how to defeat it: making it pricey. An unknown sender triggers an autoreply that prompts the spammer to donate money to the user’s nonprofit of choice. And if the spammer doesn’t pay, the email goes to a special Gated inbox. Now if only someone could invent this for all the junk mail in our physical mailboxes, too.
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Chip shortage could undermine national security: To ensure American security, prosperity and technological leadership, industry leaders say the U.S. must encourage domestic manufacturing of chips in order to reduce our reliance on East Asia producers for crucial electronics components.
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