SynapseFI, the startup once billed as the 'AWS of banking,' has cut 'a number of employees' and plans to move part of its workforce to Texas
San Francisco-based fintech startup SynapseFI cut down its workforce this week and plans to grow its presence in Texas as a move to weather the coronavirus outbreak, according to an email sent by Synapse CEO Sankaet Pathak to the startup's customers. Pathak later made the email available to Business Insider. The company, which provides businesses with a suite of back-office financial products, will be broadening its stack of offerings in an effort to grow its customer base beyond small startups, and also cater to larger enterprise companies, the email said. One screenshot from an employee message reviewed by Business Insider placed the layoffs at 63 — more than half the startup's workforce. Synapse did not specifically confirm or deny that estimate. The pandemic is the latest in a series of hurdles for Synapse, which is already dealing with a gender bias lawsuit brought against the company and an employee exodus, according to an April report by Forbes. Visit Business Insider's homepage for more stories.
Fintech startup SynapseFI cut a significant number of employees from its workforce this week, Business Insider has learned. The San Francisco-based company made the staff cuts as it restructures its business and and shifts more of its operations to Texas, in a move to weather the coronavirus outbreak. After the layoffs, Synapse CEO Sankaet Pathak sent out an email to the startup's customers to inform them that "a number of employees" had been let go from the company, as a part of the broader changes that he was making to strengthen the company and expand its customer base as the coronavirus continues to wreak havoc on the economy. Pathak later made that email available to Business Insider. Cutting the staff was "a difficult decision to make on a personal level, but on a business level I am confident that this was the right step to ensure that we are set up to emerge even more competitive than before," Pathak wrote in the email. The layoffs could shrink Synapse's current workforce of roughly 120 significantly. One text message reviewed by Business Insider said that 63 employees — more than half of the company — were affected. Another screenshot of a Slack message indicated that the layoffs were announced at an all-hands meeting. Although Synapse confirmed the news of the layoffs, neither Pathak nor a company spokesperson confirmed or denied that layoff count of 63 in response to Business Insider's inquiries. Pathak's email also outlined plans to change the San Francisco-based startup's geographic footprint. Synapse will grow its nascent Texas presence by recruiting employees for its customer-facing teams, Pathak said. Meanwhile, the company's product and design teams will remain in California. Layoffs slam Silicon Valley Over the past few months, the coronavirus pandemic has forced Silicon Valley's startup ecosystem to reckon with tightening sources of revenue and funding. Layoffs began at startups directly affected by shelter-in-place orders, and soon spread to the enterprise, data analytics, and fintech sectors. In recent weeks, fintech startups like Credit Sesame and Brex have made cuts to their workforces, attributing the reasons to the pandemic. In certain cases, the fintech startup layoffs were either preceded or accompanied by rounds of fresh funding. For Synapse, which secured $33 million in funding from investors in the summer of 2019, and was once hailed by Andreessen Horowitz as the "AWS of banking," the coronavirus-driven downturn has placed many of its customers on shaky footing. Any pains felt by fintech startups would ripple across and hit the company itself. The layoffs are the first of a series of steps undertaken by Synapse to restructure its teams in an effort to grow its product stack to better serve large enterprises in addition to the small banks and fintech startups that now rely on the company's suite of back-office products. While Pathak's email said it had already begun dedicating resources to those efforts for the past two years, it noted that the economic downturn had prompted the company to speed up the process to diversify its customer base. Company-specific problems preceding the pandemic But Synapse was also reportedly going through internal troubles in the months leading up to the coronavirus. Three former employees filed a gender bias lawsuit against both the company and Pathak back in December. In the complaint, they alleged that Pathak "undermined, intimidated, and toyed with the female employees." At the time, a Synapse spokesperson denied the allegations. Neither Synapse nor attorneys for the plaintiffs immediately responded to Business Insider's inquiries about the current status of that case. In April, a lengthy piece by Forbes reporter Jeff Kauflin detailed an exodus of both employees and customers from the company. Synapse did not immediately respond to Business Insider's request for comment on the piece. Employee dissatisfaction continues to follow the company. Although Synapse attempted to sue the former employees who posted stinging reviews of their experiences on Glassdoor, according to Forbes' Kauflin, the still-pending case hasn't stopped others from following suit. Still more employees have posted negative reviews about the company on Glassdoor between January and March, despite a notice on Synapse's Glassdoor page now warning reviewers to be cautious about posting a review. Join the conversation about this story » NOW WATCH: Why Pikes Peak is the most dangerous racetrack in America
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Brex and Zendesk crunched their customer data and created a presentation to help startups jolted by crashing sales. Here's what they learned.
Brex, the fintech startup that sells primarily to other startups, just shared its framework for handling...Brex, the fintech startup that sells primarily to other startups, just shared its framework for handling customer support during the economic crisis. Many startups have been advised by investors and advisors to cut costs and extend their runway, but without clear guidance on how to do so while maintaining customer relationships. In an analysis of startup data, Brex found that those with the best chance of successfully retaining customers, and therefore retaining revenue streams, was to standardize the customer experience process. See the playbook and guidelines Brex just released together with HR startup Zendesk. Click here to get BI Prime's weekly 'Trending' tech newsletter in your email inbox. Fintech startup Brex has advice for other startups struggling through the economic crisis: It may be difficult to sell your wares to new customers right now, but there are things you can do to get more from the customers you already have. Brex, which provides credit cards to startups, analyzed data from its own customers and worked with HR company Zendesk to produce a set of customer service and support guidelines. The idea of the project, which the companies presented this month in one Brex's ongoing series of webinars, is to provide insight and actionable tips that can help young businesses jolted by the coronavirus pandemic. According to Brex and Zendesk, customer service is a vital skill that more startups would do well to focus on. "We really have to change our mindset in this moment away from selling and towards retention by trying to find growth, if possible, through that existing customer base that we have," Zendesk vice president of startups Kristen Durham said. That's important because sales prospects are bleak for a lot of startups, especially those that cater to sectors hard hit by the virus. "One of the things that really has been striking for us is some of this data around the fact that businesses are no longer selling," Durham said. "Sales teams are sending about 50 percent more emails to prospects than they were pre-COVID but the responses just keep dropping." The drop in raw sales numbers is a scary situation for startups that have been advised by their investors to cut costs and extend their runways. Without much guidance on how exactly to make that happen, startup founders are walking something of a tightrope — if revenue drops off, they might have to resort to executive salary cuts or layoffs just to stay upright. Keeping customers happy is as important as keeping employees happy, Brex chief customer officer Roli Saxena said, and requires founders to employ similar tactics to sales, such transparent communication. Overall, startups need to have a standardized plan in place to make it through the rough waters ahead, and out the other side, Saxena said. Here is the customer service and support strategy Brex developed with Zendesk.SEE ALSO: See the deck that top growth-stage investor Insight Partners is using to prepare its founder network to weather a prolonged economic downturn
A memo from Airbnb's CEO announcing huge staff cuts is a case study in how leaders can conduct layoffs in a compassionate way
Airbnb is laying off 1,900 employees, which is about one quarter of its staff. CEO Brian...Airbnb is laying off 1,900 employees, which is about one quarter of its staff. CEO Brian Chesky's memo to the company shows respect and compassion for all employees affected. It's a model for how leaders should conduct layoffs. The memo explains how management decided which positions to cut, what will happen to remaining employees, and the level of job support that departing employees will receive. Click here for more BI Prime stories. On Tuesday, Airbnb CEO Brian Chesky announced to employees that the company is laying off 1,900 employees. That's about 25% of its staff. In the last few months, Business Insider's Troy Wolverton reported, the company has laid off most of its contractors, postponed its summer internships, and slowed its hiring process. Layoffs are not a great experience for anyone, and especially not for the people losing their jobs. But Chesky's memo to employees is a prime example of how to do layoffs right, in a way that's respectful, compassionate, and pragmatic. It's rare to find such an example these days. As Business Insider previously reported, startups including the scooter-maker Bird, the employment marketplace ZipRecruiter, and the women's coworking space The Wing have recently conducted layoffs via massive Zoom calls. Some employees at these companies said they were caught off guard and confused about what was happening. Chesky, perhaps taking a hint from widespread indignation at the idea of layoffs via videoconference, did things differently. His memo to employees followed, almost to a tee, the advice that HR experts have previously shared with Business Insider around conducting layoffs. You can read the full text of the memo here. Here's exactly what Chesky's memo did right. It outlined the decision process for cutting positions In the memo, Chesky was transparent about Airbnb's financial decline. "Airbnb's business has been hit hard," he wrote, "with revenue this year forecasted to be less than half of what we earned in 2019." (The company's 2019 revenue was $4.8 billion, Wolverton reported.) To help alleviate some of the financial burden, Chesky said Airbnb is "reducing the size of our workforce around a more focused business strategy," specifically the business of helping people rent out their homes and find homes to rent. The company is "pausing" its investments in areas like transportation and hotels, Chesky added. That means staff who worked in those areas will likely be let go. Chesky listed as one of his "guiding principles" in conducting the layoffs the desire to "map all reductions to our future business strategy and the capabilities we will need." Elaine Varelas, managing partner at career-management firm Keystone Partners, previously told me that executives doing layoffs should let the business' strategic direction and financial situation guide them. "The positions are what's eliminated," she said, and not the people. It made a justifiable argument for why certain employees will be let go Chesky went one step further, outlining how management reviewed each employee's skill set and considered "how well those skills matched our future business needs." Some employees whose teams were not eliminated will be asked to assume new roles, Chesky wrote. Again, Chesky made it clear that these layoffs are about positions and skills, which are more easily quantifiable and justifiable than how much the CEO likes someone. As Buffer CEO Joel Gascoigne (who conducted layoffs a few years ago) previously told me, it's important to identify how and why positions will be eliminated. Otherwise, executives are vulnerable to subjectivity seeping in — and to employees accusing them of making biased decisions. To that end, Chesky also listed as one of his guiding principles the desire to "be unwavering in our commitment to diversity." It explained why information about staff cuts was kept confidential until now Chesky noted in the memo that management opted to "wait to communicate any decisions until all details are landed" because "transparency of only partial information can make matters worse." This decision to keep news of the impending layoffs private was wise. Varelas told me that a common mistake she sees is not keeping information about layoffs confidential until you're ready to make the announcement. That can lead to rumors — and terror — spreading throughout the staff. It prepared affected employees for one-on-one meetings with their supervisors In contrast to the startup execs that conducted layoffs via a mass Zoom call, Chesky wrote in the memo that the employees who were getting laid off would have one-on-one meetings with a senior leader in their department. Yair Riemer, president of career transition services at CareerArc, previously told me that a one-and-done videoconference isn't the right way to announce layoffs, as efficient as it may seem. Similarly, Varelas said leaders should have one-on-one meetings with everyone who's let go, giving those employees time to process the news and ask questions. It addressed the employees who will be staying on, too Chesky dedicated a few lines of the memo to the Airbnb employees whose positions were not cut: "One of the most important ways we can honor those who are leaving is for them to know that their contributions mattered, and that they will always be part of Airbnb's story." He also wrote that some employees would receive emails about their new roles at the organization, in line with the restructuring, as well as invitations to discuss their new role with a manager. Riemer said it's important to explain to remaining employees how the layoffs are going to affect the organization. The result? "You end up losing that talent anyway," Riemer said. "They're going to start thinking about moving to competitors. They're going to start getting poached. They're going to start losing faith and confidence in your leadership." It treated departing employees with respect and compassion The most important piece of Chesky's memo is that it acknowledged what a disruptive life event layoffs can be. Employees may not know where their next paycheck is coming from, or whether they can afford their next visit to a doctor. In the current economic environment, they may not be certain they can find another job. Varelas previously told me that respect for employees is key. No one should be "treated suddenly like they're a criminal," she said, or even like someone who hasn't worked hard to help the company grow. Chesky outlined what will happen to employees' benefits after they leave. Specifically, employees in the US will receive at least 14 weeks of severance pay, with additional severance pay available depending on employees' tenure at the company. Employees in the US will also receive 12 months of health insurance coverage beyond their departure date. (In all other countries, health insurance extends until the end of 2020.) Most notably, Chesky wrote that Airbnb has dropped the one-year cliff on equity for everyone the company has hired in the past year. That means they don't have to wait one year, as they typically would, for their stock options to vest. All employees have the chance to become shareholders in the company on May 25, Chesky wrote. It outlined the support employees would receive around career development Departing employees will receive relatively substantial support as they look for a new job, according to Chesky's memo. That support includes an alumni placement team, made up of some Airbnb recruiters who help find departing employees their next role at another company. Those employees also have access to a company that specializes in career transition and job placement services. And they're allowed to keep their company laptop, which Chesky said is an important tool in finding a new job. These provisions for employees are important not solely because they're the right thing to do, ethically speaking. The business case for taking care of employees after layoffs is that they're more inclined to stay loyal to the company. "This is the moment where brands are built or brands are dented," Riemer said. If the company mishandles layoffs, Riemer added, "it absolutely will impact recruitment and talent because the world is small." When former employees, say, write reviews on Glassdoor, they won't say terrible things that will dissuade prospective hires from applying if they were shown compassion. And should Airbnb ever want to hire these folks back, they'll remember how respectfully they were treated at this time. It will make a big difference.SEE ALSO: The startup founder's guide to letting people go efficiently and compassionately, if you have no other choice in a time of crisis Join the conversation about this story » NOW WATCH: A cleaning expert reveals her 3-step method for cleaning your entire home quickly
Venture-backed startups are laying off thousands of tech workers as the coronavirus strains finances. Here's a list of all of the startups that are cutting headcount.
Venture-backed startups have begun laying off employees, as the coronavirus and the subsequent economic shutdown has...Venture-backed startups have begun laying off employees, as the coronavirus and the subsequent economic shutdown has wreaked havoc on companies large and small. Business Insider is keeping a list of running list of startups that are slashing headcount. Visit Business Insider's homepage for more stories. Technology Lyft is laying off nearly 1,000 employees — 17% of its workforce — as the coronavirus sends the ride-hailing industry into a nosedive Envoy, the Andreessen Horowitz-backed startup that sold software to Airbnb, Asana and Slack, just cut 30% of its workforce as a work-from-home era disrupted its pitch to revolutionize the workplace Leaked memo: Troubled SoftBank-backed robotics startup Zume just conducted a 2nd round of sweeping layoffs after funding fell through Austin unicorn startup RigUp went from hiring 'at a rapid pace' to cutting 25% of staff in a matter of weeks. Now a data breach is adding to its woes. $967 million startup DataStax laid off 15+ employees last week — its third round of job cuts since its new CEO joined in October $1.5 billion ZipRecruiter just laid off hundreds only days after the CEO said the economy was headed for a steep increase in hiring after the end of the coronavirus The CEO of Voi, scooter rival to $2.5 billion Bird, goes public on why it furloughed and laid off staff to cope with COVID-19 Electric scooter startup Bird has laid off 30% of the company in a scramble to preserve a 'cash runway' to last until the end of 2021 TripActions, the $4 billion Andreessen Horowitz-backed corporate travel startup, just laid off 296 employees as the travel industry grinds to a halt Andreessen Horowitz-backed Wonderschool just laid off 75% of staff on a Zoom call, telling employees the coronavirus could dry up any more funding for 2 years O'Reilly Media, known for its influential open source conferences and books about coding, has laid off 75 people and shuttered its events business Pay-by-the-minute fitness app Popin has shut down, according to an email sent out to its users Consumer Buzzy luggage startup Away has furloughed half of its staff and laid off 60 employees as the coronavirus continues to crush the travel industry ThirdLove, the buzzy lingerie upstart that challenged Victoria's Secret's dominance, just laid off nearly 30% of its workforce as the coronavirus crushes DTC companies Iris Nova, the buzzy direct-to-consumer startup backed by Coca-Cola, has laid off half its staff as the coronavirus pandemic hits its retail business Startups like ClassPass and The Wing have cut significant portions of their workforce Media A leaked memo reveals that the Kevin Durant-backed sports media startup Overtime just laid off 20% of its staff, and won't give affected employees healthcare or severance unless they sign a confidentiality agreement Real Estate and Travel Airbnb is cutting 25% of staff — 1,900 jobs — after its business has been slammed by the coronavirus crisis SoftBank-backed iBuyer Opendoor just slashed 35% of staff after the coronavirus forced the startup to halt its home-flipping operations Flex-space unicorn Knotel just laid off 30% of workers and furloughed another 20% as the coronavirus cripples a once buzzy industry SoftBank-backed real estate brokerage Compass just slashed 15% of staff and is pausing marketing as coronavirus slams the housing market Days after laying off 20% of its workforce, Brookfield-backed Convene furloughs more than half of remaining employees due to coronavirus closures Airbnb-backed Zeus Living just laid off 30% percent of staff as the coronavirus upends travel and hospitality startupsJoin the conversation about this story »