Stripe will lay off 14% of its workforce, a move the payments company blamed on the “very consequential mistakes” of growing operating costs too quickly and underestimating the possibility of an economic slowdown in a Thursday (Nov. 3) message to employees.
“We overhired for the world we’re in … and it pains us to be unable to deliver the experience that we hoped that those impacted would have at Stripe,” CEO Patrick Collison said in the message.
Collison said the job cuts are happening at a time of high inflation, rising interest rates and decreased startup funding, as well as a looming recession.
“We think that 2022 represents the beginning of a different economic climate,” he said in the message, adding that in addition to the layoffs, Stripe will “firmly” rein in other sources of cost.
He said the company was too optimistic about the growth of the digital economy and the likelihood and impact of a slowndown. Fueled by success in some new product areas, the company allowed “coordination costs to grow and operational inefficiencies to seep in.”
“The world is hard to predict right now, but we expect that these changes will set us up for robust cash flow generation in the quarters ahead,” said Collison, who founded the company with his brother John Collison, who serves as Stripe’s president.
Earlier this year, Stripe reported that it handled more than $640 billion in payments in 2021 — an increase of 60% over the prior year.
Read more: Stripe Reports Strong 2021 Growth, Warns It Won’t Be Repeated
However, the Collison brothers cautioned at the time, “Since a lot of this came from one-time behavioral adjustments caused by the pandemic, 2022 won’t match the same level of growth.”
The brothers stated the growth was due in part to the average daily addition of 1,400 companies and nonprofits as customers. During 2021, an average of more than 100 Stripe clients per day surpassed the $1 million in lifetime Stripe-processed sales mark.
