Aussie ‘larrikin unicorn’ Culture Amp has laid off 8% of its workforce, co-founder Didier Elzinga has confirmed.
The cuts are intended to secure the future of the startup, Elzinga tells SmartCompany, as it feels the effects of the COVID-19 economic slump.
Of Culture Amp’s 446 staff members, 36 have been let go. Those cuts span its global workforce, and are from the go-to-market and admin teams.
“We’re still building product, we’re still working with customers,” he says.
Elzinga stresses that the business is still growing. But, the pandemic has slowed that growth rate to about 50% of what it had predicted pre-COVID-19.
“For us, it was about what’s the right thing to do to set us up no matter which way the market goes, no matter which way the economy goes,” he explains.
“It’s really just recognising that we’re not going to get to the 500-odd people we otherwise would have got to this year, so it doesn’t make sense to hold on where we are now.
“We needed to get a little bit smaller.”
It’s not a life-or-death situation, Elzinga says. In fact, he considers himself “lucky in a sense”, having raised a massive $120 million funding round in September last year at a valuation of just over $1 billion.
“We have a long runway,” he notes.
“It’s more that, when I look forward, I don’t know how much longer it’s going to stay like this, and the answer is it could be quite a long time.
“We needed to be able to withstand that and last as long as possible.”
The announcement makes Culture Amp one of the first major Aussie tech companies to admit it’s feeling the effects of the pandemic.
While the business is not in a directly affected category, it’s not immune to the economic slowdown, Elzinga says.
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“The challenge is that the secondary and tertiary effects of the economy are starting to hit everyone,” he says.
“We have a lot of customers in lots of different industries,”
The startup has customers in all kinds of different industries, and many of those customers are facing their own challenges. It’s something of a double-edged sword.
“In some ways, we’re seeing even more need right now for people and culture, and being able to understand what matters to your people,” he explains.
“It’s just that the broader economy is that people are hiring less people, people have less people than they had before,” he adds.
“The overall opportunity has shrunk. But we think our opportunity inside that is still significant.”
“An awful process”
For an entrepreneur who’s built his whole business around company culture and employee wellbeing, this experience has not been a pleasant one.
“It’s awful. It’s an awful process to go through,” Elzinga says.
“All you can do is do it with as much compassion and dignity as you can for the people that are leaving.”
And, that’s also why he wanted to speak publicly about it.
There’s an economic crisis underway. A lot of companies are going through this process, or something similar.
“You want people to put as much care and energy and intention as they can into it when it happens,” Elzinga says.
“There’s a little bit of a stigma to it, so it’s all done behind closed doors.”
And, while the founder says he’s been “blown away” by the way his employees responded to the cuts, he’s not sure even Culture Amp has handled this as well as it could.
“There’s no right way of doing it … but there are lots of wrong ways,” he says.
At some point, he plans to follow up, discuss what the business did well, and what could have made the situation a little easier on employees.
“But, now is not the time for that.”