Startups Weekly - Tech layoffs are back with a vengeance

Friday, October 27, 2023

Welcome to Startups Weekly!

For my column this week, I told the story of how an ex-colleague was impersonated by an AI-powered spambot and almost tricked me. It a nutshell: AI is often used for good, but it is increasingly used for nefarious purposes as well. Of course, AI-powered spam is going to get really interesting, really fast: Some of the generative AIs are good enough to pass as humans. So, what happens when every spam message is customized to you, and different from every other spam message? Things are about to get really bad — before they hopefully get better.

Let me take you on a tour of the highlights and lowlights of startup world over the past week.

Image Credits: jayk7 / Getty Images

Layoffs are back

Last month, Alex wrote that tech layoffs were pretty much a thing of the past. Shouldn’t have said that, buddy, you jinxed it.

Despite signs of economic recovery and predictions of avoiding a recession, tech companies continue to lay off employees. In October, Nokia announced it was laying off 14,000 employees following a quarter that saw profits drop by 69%, and other major tech companies like Qualcomm, Qualtrics, and LinkedIn also announced significant layoffs. Experts suggest that while the economy is improving, the recovery process is slow, leading many companies to prepare for a longer period of economic sluggishness. Moreover, a shift in investor mindset from growth to efficiency has led to cost-cutting measures, including layoffs. These trends, combined with tighter buying budgets and slower sales cycles, could continue to impact the tech sector into 2024. Ron has the full skinny on TC+ at “What’s behind the fresh round of tech layoffs?“

Product Hunt slashes staff: Product Hunt, a discovery site for startups, apps, and tech tools, has laid off approximately 60% of its team, including roles in design, product, and sales. The cuts were made for “strategic reasons,” Sarah reports.

The stack overfloweth: Stack Overflow, a developer community site owned by Prosus, has announced a 28% reduction in its workforce as part of its drive toward profitability. The company did not disclose the exact number of affected employees. It seems like AI may be the culprit, Ivan writes.

Don’t miss our comprehensive guide: The tech industry has faced a significant blow in 2023, with job losses exceeding 240,000, a 50% increase from the previous year. Major tech giants like Google, Amazon, Microsoft, Yahoo, Meta, and Zoom, along with numerous startups, have announced significant workforce reductions. We have our full guide here.

Image Credits: MirageC / Getty Images

Hong Kong Welcomes YOU to StartmeupHK Festival 2023

Transportation Terror and Triumphs

The Rebelle Rally 2023, a 2,120-kilometer off-road and navigation competition for women, has become a testing ground for stock manufacturer vehicles, including electric vehicles. Out of the 65 teams that competed in the Rally’s eighth annual event, 10 were electrified vehicles, including four Rivian R1T pickups, marking a significant entry of EVs into this traditionally non-tech event. A Rivian team clinched first place in the 4×4 class, marking the first time an all-electric vehicle topped the podium.

Meanwhile, Tesla released its Q3 earnings report. And it wasn’t super pretty: The report showed a fall in gross margin to 17.9%, down from 25.1% last year. That caused a 44% profit drop (yikes). Tesla’s long-awaited Cybertruck is set to start initial deliveries, and Elon Musk warned that it will take 18 months for the pickup to become profitable.

It was stormy days for driverless taxis, too, as Cruise’s permit to operate as a robotaxi was joinked: The California Public Utilities Commission (CPUC) has suspended Cruise’s permits to operate and charge for its robotaxi service in San Francisco, following a similar move by the DMV. The DMV’s suspension came after Cruise allegedly withheld footage from an investigation into an incident wherein a pedestrian was hit and dragged by one of its autonomous vehicles. Cruise denied the claims. The suspension comes just three months after it granted the company the necessary permits to charge for rides. This led to more pushback against robotaxis in LA.

Who’s raising, and for what?

I Own My Data (IOMD), a startup founded by former PayPal executive Rohan Mahadevan, is aiming to revolutionize online shopping by eliminating the need for consumers to create new accounts with every purchase, Mary Ann reports. IOMD’s Node platform allows consumers to manage and store all their online interactions, purchases, and profiles on their own devices. Node has emerged from stealth with a $2.75 million seed funding. The startup points out it is not a payments company but an information company, storing users’ private information on their devices for instant transactions.

Navan (formerly known as TripActions), a fintech startup specializing in expense management, has partnered with Citi to provide a jointly branded travel and expense system for Citi Commercial cardholders, Mary Ann reports. The partnership is a huge deal, especially given Citi’s status as the third largest bank in the U.S, with over 25,000 global commercial card programs and 7 million cardholders, all of whom may soon be able to wave goodbye to expense reports. In other news, Darrell did his expenses in VR this week and actually enjoyed it. He is, truly, a strange human.

FFS, that’s not even a rounding error: Black founders in the U.S. raised a mere 0.13% of all capital allocated to startups in Q3, a significant drop from the $1 billion they raised in Q3 2022. The trend has been consistent since 2020 despite efforts, Dominic-Madori reports.

Back once again: Oh goodie, Tucker Carlson, the controversial former Fox News host, plans to launch a media startup called Last Country, following a $15 million investment, Rebecca reports.

That’s a big sack o’ cash, y’all: Global investment firm KKR has announced the final close of its third tech growth fund with approximately $3 billion in capital commitments. The group targets companies with strong long-term growth prospects, typically writing checks ranging from $50 million to $250 million, Connie reports.