Roughly 17,000 workers got laid off from 71 tech startups around the world in May—the highest number since the early panic of the pandemic in May 2020, according to data compiled by the tech layoff tracking site Layoffs.fyi. The May layoff total was up 350% from April.
Investors were extremely optimistic about tech startups throughout the pandemic. Tech stocks hit all-time highs, tech startups debuted on the stock market at record valuations, and venture capitalists pumped record levels of investment into the sector, betting that the pandemic would accelerate the adoption of new technology in work and everyday life.
Although startups shed over 50,000 workers in April and May 2020, the layoffs soon slowed to a trickle as tech companies began expanding quickly and competing for talent.
Tech optimists were right that the pandemic would accelerate some trends, like the shift to hybrid work. But they overestimated how much people would be willing to use gadgets like Peloton bikes to replace real-world experiences like going to the gym. Consumers have reverted to many of their pre-pandemic shopping habits faster than investors and executives anticipated. And central banks have begun raising interest rates, making it more expensive to borrow money to fund the aggressive expansion of money-losing tech companies on the hope that they’ll one day turn a profit.
As a result, tech stocks have crashed, startup investment has slumped, and tech executives are beginning to tighten their belts. As startup layoffs tick up, established tech companies like Meta, Twitter, Microsoft, Snap, and Salesforce have frozen or slowed down hiring.
Getir, Peloton, and Klarna lead the 2022 layoff spike
The biggest layoff of 2022 so far came from Turkish delivery startup Getir, which sacked roughly 4,480 employees May 25 just two months after raising a $768 million funding round. The money-losing instant delivery service blamed rising inflation and a souring economy for spoiling its plans to expand quickly by spending millions of dollars on marketing and steep discounts.
Buy now, pay later startup Klarna slashed 700 jobs in May, blaming inflation, stock market volatility, a looming recession, and the war in Ukraine for slowing consumer spending. Peloton laid off 2,800 workers in February after the re-opening of gyms derailed its at-home exercise business.