Not too long ago, Coinbase (NASDAQ:COIN) announced it had paused hiring. Yesterday, Coinbase announced that it was extending the hiring freeze while rescinding certain “accepted offers” for an undisclosed number of new employees.
Coinbase is not the only Fintech that is eyeing the current economic malaise with concern. Several other Fintechs have already announced slashing staff as it is clear the economy is heading in a bad direction with things predicted to get even worse.
Last month, Coinbase reported earnings that showed a loss of $430 million for the quarter.
In a blog post, Coinbase Chief People Officer, L.J Brock said “it’s become evident that we need to take more stringent measures to slow our headcount growth. Adapting quickly and acting now will help us to successfully navigate this macro environment and emerge even stronger, enabling further healthy growth and innovation.”
Brock said the pause will be for as long as possible as the economy slows, interest rates rise and the risk of a recession increases.
Brock stated:
“As we manage through this downturn, we want to be transparent about the decisions we have to make in order to meaningfully manage expenses. For example, on our Q1 earnings call, we discussed that headcount and a variety of other expenses are the key ways for us to manage our costs. While we did not make this decision lightly, it is the prudent one given market conditions. We will continue to evaluate all of our options to responsibly navigate Coinbase through the current cycle.
We always knew crypto would be volatile, but that volatility alongside larger economic factors may test the company, and us personally, in new ways. If we’re flexible and resilient and remain focused on the long term, Coinbase will come out stronger on the other side. These challenges can be career-defining, helping us learn and grow. And at the end of the day, I think you’ll be proud to have helped Coinbase navigate this next part of its journey.”
Just this past week, two well-known names issued public statements on the choppy economy ahead. Jamie Dimon, CEO of JP Morgan, predicted a “hurricane” stating:
“You’d better brace yourself. JPMorgan is bracing ourselves and we’re going to be very conservative with our balance sheet.”
Elon Musk, of Tesla and soon Twitter, said that Tesla would be reducing its workforce by 10%. Tesla currently employs around 100,000 people so around 10,000 people may lose their job.
For early stage ventures or growth stage firms that are not yet generating a profit it is about reducing burn and saving resources. No one knows how long the economic downturn will endure. For more established businesses, it is about adjusting to slowing demand. Neither scenario is very good.