Digital broker Robinhood has announced, as part of a restructuring push, it will close two offices and slash its headcount by around 23%, equating to approximately 780 people.
The move follows earlier redundancies made in April, when the trading app let go of 9% of its staff.
Robinhood CEO Partly Blames Inflation for 23% Cut in Employees
The company’s CEO, Vlad Tenev, partly blames inflation and a broader cryptocurrency crash for declining trading volumes. In a blog post, Tenev shared information about the reasons behind the redundancies. He said:
“Earlier this year, I announced that we would be letting go of 9% of our workforce and focusing on greater cost discipline throughout the organization. This did not go far enough.
“Since that time, we have seen additional deterioration of the macro environment, with inflation at 40-year highs accompanied by a broad crypto market crash. This has further reduced customer trading activity and assets under custody.”
Changes to Organizational Structure
The CEO went out on talk about the company’s mandate to drive greater cost discipline and accountability, which he deems as making it clear that Robinhood needs to change its organizational structure.
“We will be moving to a General Manager (GM) structure, where GMs will assume broad responsibility for our individual businesses. This change will flatten hierarchies, reduce cross-functional dependencies, and remove redundant roles and positions,” said Tenev.
Robinhood is not the only high-profile company in the US that has announced big redundancies in staff in recent months.
Twitter Announces Staff Layoffs
In July, Twitter announced it was laying off 30% of its talent acquisition team. The announcement came two months into a companywide hiring freeze. Twitter employees have reportedly voiced concerns about potential layoffs in response to the macroeconomic environment. In a meeting with employees, Twitter’s short-lived CEO Elon Musk had said:
“Right now, costs exceed revenue. That’s not a great situation.”
Microsoft Makes Redundancies
On July 12, Microsoft announced it was making job cuts during a period of mounting economic uncertainty. In an email to Bloomberg, Microsoft said:
“Today we had a small number of role eliminations. Like all companies, we evaluate our business priorities on a regular basis and make structural adjustments accordingly.
“We will continue to invest in our business and grow headcount overall in the year ahead.”
As Tech Crunch reports, redundancies within the tech sector have accelerated over the past few months, as investors are fearful of a recession and are subsequently pulling back.
Google to Slow Pace of Hiring for Rest of the Year
Amid decades-high inflation and continued pressure the Ukraine crisis is putting on businesses, Google has also said it would slow the pace of hiring for the rest of 2022.
Google CEO Sundar Pichai told employees that the company will have to ‘be more entrepreneurial’ and work with ‘greater urgency’, sharper focus, and more hunger than we’ve shown on sunnier days.”
With inflation rising, many small business owners are also being forced to make ways to save money as rising costs result in tighter profit margins. Cutbacks often include reducing inventory and cutting marketing operations, and, as we have seen with many of the tech giants in recent weeks, making staff redundancies.
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Blaming inflation is a stretch. Like a pull-your-hamstring kind of stretch. There are so many more salient reasons for why Robinhood has struggled. I wouldn’t have put inflation in the top 10.