In November 2022, Stripe, a financial services and software company, announced in an internal memo it was cutting 14% of its workforce as part of cost-saving measures. News of layoffs – especially at tech companies – is becoming common in the shifting and weakened economic landscape, but what makes Stripe’s announcement stand out is the transparency and accountability CEO Patrick Collison and President John Collison took for their bottom line AND their people.
While the announcement briefly touches on the company’s path forward, its focus is on its acknowledged misjudgments and how the company will take care of those impacted.
In making these changes, you might reasonably wonder whether Stripe’s leadership made some errors of judgment. We’d go further than that. In our view, we made two very consequential mistakes, and we want to highlight them here since they’re important:
- We were much too optimistic about the internet economy’s near-term growth in 2022 and 2023 and underestimated both the likelihood and impact of a broader slowdown.
- We grew operating costs too quickly. Buoyed by the success we’re seeing in some of our new product areas, we allowed coordination costs to grow and operational inefficiencies to seep in.
In those few sentences, Stripe’s executive leadership did something too infrequently seen in these types of difficult situations – they took full accountability for the reasons for the reduction in staff and what got the company to that point. While the steps needed to correct course unfortunately included cutting costs across the board, including staff, the leaders were very clear about how they were taking care of their impacted employees, including a severance package, bonus and PTO pay, healthcare coverage, and career and immigration support.
The leaders keep their people at the forefront throughout the memo, showing humility, empathy and genuine concern for those impacted while continuing to take accountability for the consequences of their mistakes. “For those of you leaving: we’re very sorry to be taking this step and John and I are fully responsible for the decisions leading up to it…it pains us to be unable to deliver the experience that we hoped that those impacted would have at Stripe.”
There’s no easy way to handle layoffs, but it’s refreshing to see Stripe’s leadership handle it with transparency, accountability, and – most importantly – empathy and support for the people impacted. Hopefully we’ll see more leaders taking this open approach when dealing with difficult situations, and treat their employees like actual people.