Twilio is the latest technology company to aggressively cut staff – culling up to 900 jobs in what CEO Jeff Lawson described in a letter to employees as a “wise and necessary” move following undisciplined growth.
“We’ve made the extremely difficult decision to restructure and reduce Twilio’s workforce by approximately 11% – teammates and friends who helped build Twilio” he said, adding: “I’m not going to sugarcoat things.
“A layoff is the last thing we want to do, but I believe it’s wise and necessary. Twilio has grown at an astonishing rate over the past couple years. It was too fast, and without enough focus on our most important company priorities. I take responsibility for those decisions, as well as the difficult decision to do this layoff.”
The Twilio job cuts include marketing, admin, R&D roles and beyind.
Twilio’s Elena Donio (President, Revenue) hinted at marketing cuts on August’s earnings call, saying: “We’re also finding efficiencies in marketing and ensuring our pricing is reflective of the value that we’re providing, in exploring new and novel ways to tap into that vibrant partner ecosystem that you mentioned. All of that is leading to an opportunity for us to shift to more of our selling capacity to software, while also making sure that we’re leveraging more self-service capability for customers that don’t actually require hand-to-hand account coverage.”
Twilio, which describes itself as a “customer engagement platform” – it provides communication APIs for companies to bake SMS, voice, video etc. into their offerings underpinned by its cloud platform – has raised over $600 million in funding and is now listed on the NYSE after going public successfully in 2016.
Like many other growth-focussed and heavily venture capital-backed companies it has come under pressure to move towards profitability as an era of cheap money begins to end as interest rates rise. Whilst in early August 2022 it reported $943 million in quarterly revenue it is still hugely loss-making, reporting a GAAP loss from operations in Q2 alone of $311.9 million: “Twilio has always been a growth company. And as you know, we’re committed to being a profitable growth company. At our scale, being profitable will make us stronger. It requires us to ask more rigorously which activities and investments are working,” said Lawson to staff.
All affected staff are getting “at least 12 weeks of pay, plus one week for every year of service at Twilio.”
As of June 2022 over 180 tech companies have slashed more than 36,000 staff from their teams in the first half of the calendar year. VC investor Bill Gurley said in April: “An entire generation of entrepreneurs and tech investors built their entire perspectives on valuation during the second half of a 13-year amazing bull market run.
“The ‘unlearning’ process could be painful, surprising, & unsettling to many. I anticipate denial.”
As TechCrunch reports, paperwork filed with the U.S. Securities and Exchange Commission “shows that the headcount reduction will cost between $70 million to $90 million, by Twilio’s estimates.”