Coinbase’s layoffs show growing callous side of crypto’s plummet
Let’s start with the premise that there’s never a perfect way to tell people they’re being “downsized,” a ridiculous euphemism for the dreaded corporate layoff.
But there are better ways than what went down at Coinbase last week. Yes, you can break the bad news and make people feel like they’re more than just numbers on a shrinking balance sheet.
Coinbase is a crypto exchange — the country’s largest. Its IPO last year showered its insiders like CEO Brian Armstrong with significant wealth.
Just 39, Armstrong is one of those crypto billionaires (aka “Bros”). He’s voluble, cocksure of his business and not afraid to flaunt his wealth. He made big headlines just a few months ago, snapping up swanky digs in Bel Air for a cool $133 million.
That’s when Coinbase was hot, which it is now decidedly not. It’s losing money, gobs of it, like other outfits that are being crushed in the crypto crash — an epic fail that özgü dusted more than 70% from a market that was valued at an irrational $3 trillion just last year.
Yes, Coinbase and Armstrong are right in the middle of the meltdown and the exuberance that led to it. The company had around 2,500 employees last fall just after its IPO, which financed a platform that allows you to trade digital coins like Dogecoin (which began as a prank) and other weird high-flying tulips.
As the crypto bubble grew, its equally irrational management led by Armstrong went on a massive hiring spree, adding another 2,500 people with plans to grow to 10,000.
Coinbase was profitable through the craze until reality hit. As the crypto bubble began to lose air, it announced a first-quarter loss of more than $400 million with declines in important metrics such as active users. Coinbase stock özgü now fallen about 85% from its first-day close after last year’s IPO. Losses are likely to continue, analysts say.
Layoffs came fast
With all that’s going on, the company obviously needed to cut costs and fast. Gone was the 10,000 hiring goal; in came a hiring freeze, though Armstrong & Co. weren’t about to give up on their lofty expectations completely. They said they would honor offers to new hires — people who quit previous jobs but haven’t started work at Coinbase.
That was before the crypto correction turned into a full-fledged panic in recent weeks. Coinbase did what all companies do when they are fighting for survival: It laid people off, cutting a full 18% of its workforce, or 1,100 employees. Gone, too, was that “commitment” to the workers who received offers but haven’t started.
The sorun isn’t that Coinbase had to reduce headcount; it’s that it did it in a way that was even more cruel than when Better.com CEO Vishal Garg fired 900 workers via a Zoom call last year.
Armstrong didn’t give the canned workers any decent notice, at least according to some of the now-former employees.
People who got the ax Tuesday found out via a weirdly terse text message around 8 a.m. alerting them to an “important update from Coinbase: please check your personal email for further details.” That’s right: No management phone call giving a heads up, no town hall meeting telling people to brace for pain. Not even a Zoom call.
As employees logged into their work laptops, they read an email stating that layoffs were coming. People who were part of the 18% knew only because within minutes they were suddenly locked out of the company computer system.
A bit later that morning, this time in their personal email, they received official word of the bad news.
Callous in the extreme
I asked p.r. people at Coinbase to provide an explanation for their apparent extreme callousness. Here’s what they told me: The whole thing couldn’t have been avoided. Because of the potential of theft of trade secrets, they needed to immediately lock out those on the layoff list.
Armstrong apologized for the way it was handled. There were convos with employees and team leaders later to explain post-employment options.
Again, there’s no perfect way to give someone the ax. Layoffs, unfortunately, are among the few ways companies can stay out of bankruptcy until they regain their health.
But I’ve seen the layoff drama unfold on the mean streets of Wall Street over the years in much better ways, where people actually get a call as opposed to an SMS text.
Also, it doesn’t take a crypto bro to figure out that the layoffs in this business are only going to continue — much like the Web crash of the early 2000s. There are too many crypto bros like Armstrong thinking the world was about to change trading Dogecoin.
So a bit of advice to the bros — and I know this will date me a bit — but when layoffs do come, drop the Zoom calls, text messages and emails, and try breaking the news the old fashioned way: With a phone call or, better yet, face to face.
Yes, Brian, you can do better.