Plaid, a leader in open banking technology, is the next Fintech to reduce its staff due to a slumping economy.
In a team update, Plaid founder and CEO Zach Perret announced the company was reducing its headcount by 260 positions. Offices around the world were impacted. As Plaid currently employs about 1250 individuals globally, this represents about a 20% workforce reduction.
Perret explained that during COVID, the company experienced robust demand for their services, and the company hired accordingly. Unfortunately, the global economic environment has not sustained that same trajectory.
Today was a tough day for Plaid. We are parting ways with many wonderful teammates. If you'd like to hire any of the amazing folks who are leaving, you can find a list of recent alumni below. https://t.co/4Z4SjBFjQn
— Zachary Perret (@zachperret) December 7, 2022
“Macroeconomic conditions have changed substantially this year. Despite being well-diversified across every category of financial services, we are seeing customers across the industry experiencing slower-than-expected growth. The simple reality is that due to these macroeconomic changes, our pace of cost growth outstripped our pace of revenue growth. I made the decision to hire and invest ahead of revenue growth, and the current economic slowdown has meant that this revenue growth did not materialize as quickly as expected.”
While calling it a difficult day, Perret said he remained optimistic for the future and confident that demand for their services will evolve as they continue to “sign up customers at a rapid rate.”
Plaid included a severance package for impacted employees that included:
- 16 weeks of separation pay – plus additional weeks for employees who have been with Plaid for more than one year
- Six months of healthcare coverage
- An acceleration of equity grants
- Career support as well as mental health coverage
- Counsel for those working on a visa to help manage immigration issues
- European and UK employees will adjust according to jurisdiction.
Plaid is not the first company to slash employees this year nor the first Fintech to do so. The global economy continues to contract – probably faster than policymakers realize, as demand drops, inflation hits home, and interest rates continue to rise. The irony in all of this, at least for the US, is the Fed wants to see waning employment before they hit pause on rate hikes. It will just take some time for the data to filter through the system.