By Sarah Roach and Nat Rubio-Licht
June 15, 2022
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Good morning! Some tech companies are expanding, while others are slashing staff and cutting costs. What’s really going on? And: Property tech firms are already feeling the pinch of rising mortgage rates. Thanks for joining us this Wednesday; let’s get to it.
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Binance hires, Coinbase fires
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It may seem like tech jobs are scarce or unstable, but that’s not exactly true. Just look at the crypto industry.
Binance just announced big plans to hire, with more than 2,000 roles open for applications.
- Crypto's having a rough, but Binance says WAGMI: "If we are in a crypto winter, we will leverage that. We will use that to the max," Binance’s Changpeng Zhao said.
- Zhao said it's a good time to recruit talent from companies that are making cuts. “Bull markets tend to care more about price while bear markets have more value-conscious teams that continue to build the industry,” he added.
But then, Coinbase was also hiring — until it wasn’t. The company planned to triple its workforce in early May, only to later announce a hiring freeze. And this week, Coinbase laid off 18% of its staff.
This firing-hiring tension exists across the broader industry. While there seems to be a new round of layoffs practically every day, things are actually a little more complex.
- New tech job postings in April and May were up 21% over the same time last year, according to recruiting intelligence platform Datapeople.
- And as for the layoffs? A hiring frenzy is likely contracting back to normal levels as companies look toward profitability. “[They’re] correcting or right-sizing their employee base,” Datapeople’s Amit Bhatia told me.
- Those same companies might still be hiring while cutting certain parts of their business that are no longer profitable, Bhatia said.
If you're hiring in an economic downturn, you'll need to appeal to skittish workers concerned about layoffs. But give it a year or so, Bhatia said, and the layoff fears will fade.
— Sarah Roach (email | twitter)
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Record-low mortgage interest rates led to a scorching real estate market — and real estate tech firms expanded accordingly. But now that interest rates are climbing, home sales are cooling, and those companies are feeling the freeze.
Compass and Redfin laid off hundreds of workers this week. Redfin cut 470 employees, or about 8% of its workforce, while Compass laid off 450 employees, roughly 10% of its staff.
- Compass said the layoffs were due to “clear signals of slowing economic growth.” Redfin CEO Glenn Kelman said falling demand, high interest rates and the rapid decline of its share price put the company “through heck.”
- This isn’t the first sign of proptech turmoil. Zillow last November announced it would cut 25% of its staff, or about 2,000 employees, when it shut down its home-buying business Zillow Offers due to the “unpredictability in forecasting home prices.”
The housing market whiplash is real. Low interest rates during the pandemic spurred home sales but also created an unsustainably frothy market in cities like Austin and Los Angeles. High interest rates are now causing demand to plummet.
- Thirty-year fixed mortgage interest rates reached an average of 5.23% this week, up from 2.96% at this time last year.
- “With May demand 17% below expectations, we don’t have enough work for our agents and support staff, and fewer sales leaves us with less money for headquarters projects,” Redfin’s Kelman said.
But the market may soon stabilize. Realtor.com forecasts that interest rates will tick up slightly to 5.5% while home prices are expected to rise just 6.6%. Buyers who waited for competition to cool could finally pull the trigger — which means property tech firms may not be on their heels for long.
— Nat Rubio-Licht (email | twitter)
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Fewer than half of executives (44%) see better communication with customers as a benefit of digitizing AR. Meanwhile, 72% state that their AR department isn't customer-oriented enough, implying that executives understand the need for customer-oriented AR departments, but aren't aware that they can close that gap as part of their AR digitization project.
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Former Netflix exec Joel Mier said the company’s shifting plans may only help in the short term:
- “The larger question is how they will impact the firm’s brand over the long-term.”
John Doerr said he made the mistake of backing Fisker instead of Tesla back in the day:
- “I won’t point any fingers. I’ll just say, ‘We got it wrong.’”
Former Facebook leader Matt Perault said political ad bans have hurt small campaigns:
- "It hurts challengers who might not have name recognition, who are trying to figure out: For 100 bucks, where can they get a good return on their investment?"
Ever wonder why Bill Gates isn't into crypto or NFTs? He has some clear thoughts:
- "Obviously, expensive digital images of monkeys are going to improve the world immensely."
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RIP Internet Explorer, which officially shut down today after almost three decades.
John McCauley is Calendly’s new CFO. McCauley’s a former Illumina, Seismic and ServiceNow leader.
Kip Larson is 8minute's first CTO. Larson previously worked at Amazon Web Services and Convoy.
Stacey Cunningham is a new adviser at Uniswap Labs. She was previously the president of the New York Stock Exchange.
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Union busting has consequences. Companies like Mapbox and Amazon have fought and staved off unionization in the past, but those efforts hurt relationships and culture in the long term.
Celsius brought in restructuring attorneys from Akin Gump Strauss Hauer & Feld to look into financing options, sources told The Wall Street Journal.
Tech leaders are seeing their net worth drop. Elon Musk lost over $70 billion, Jeff Bezos’ net worth fell by about $65 billion and Mark Zuckerberg’s by close to $65 billion this year.
Warner Bros. Discovery is looking to cut its global sales force by as much as 30%. The company will start offering buyouts to members of its U.S. ad sales team this week.
Microsoft is testing adding casual games to Teams. You might soon be able to play Solitaire, Connect 4, and Wordament with your coworkers instead of, you know, working.
Apple is partnering with Major League Soccer to stream every single MLS game for 10 years. Some games will be available for free on the Apple TV app starting in 2023.
The House may pass a landmark Big Tech antitrust bill soon. Rep. David Cicilline, chair of the House antitrust subcommittee, said he's “confident” it'll pass.
Netflix is turning Squid Game into a real game show, because of course it is.
Your bonkers tidbit of the day: Amazon didn’t report any COVID-related worker deaths and hospitalizations to California’s division of OSHA during the pandemic.
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The most trusted tech brands
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What do Google, PayPal and WhatsApp have in common? They’re among the most trusted brands in the world, according to a Morning Consult report released this morning. The United States, on the other hand, places its trust less in tech and more in CVS, The Weather Channel and Band-Aid. The only tech-adjacent brand that made the cut in the U.S. was Visa.
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A resounding 96% of respondents claimed that there is work to do in digitizing their AR departments, yet 60% agreed that their AR departments haven’t been prioritized as much as other departments for digitization. At a time when the importance of securing cash flow is higher than ever, many businesses are not putting enough focus on it.
Learn more
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Thoughts, questions, tips? Send them to sourcecode@protocol.com, or our tips line, tips@protocol.com. Enjoy your day, see you tomorrow.
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