Stripe, the global online payments system founded by Limerick brothers Patrick and John Collison, has announced that it is laying off 14% of its staff worldwide, citing the 'overhiring' in the current economic climate.
The reduction in staff will return the company to 7,000 employees worldwide, down from 8,000 currently.
In an email to staff today, Patrick (CEO) said he and John are very sorry to be taking this step, and that they take full responsibility for the decisions leading up to it.
The brothers admitted that they were "too optimistic about the internet economy’s near-term growth in 2022 and 2023" and underestimated a slowdown, and increased their 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."
Explaining the decision, Mr Collison outlined how, as a result of the pandemic, the world rotated towards e-commerce overnight.
"We witnessed significantly higher growth rates over the course of 2020 and 2021 compared to what we had seen previously," Patrick said. "As an organisation, we transitioned into a new operating mode and both our revenue and payment volume have since grown more than 3x.
"The world is now shifting again. We are facing stubborn inflation, energy shocks, higher interest rates, reduced investment budgets, and sparser startup funding.
"We think that 2022 represents the beginning of a different economic climate."
While they do not think the Stripe service is a discretionary one that can be turned off when customers' budgets are squeezed, he said "we do need to match the pace of our investments with the realities around us."
"Today, that means building differently for leaner times. We have always taken pride in being a capital efficient business and we think this attribute is important to preserve. To adapt ourselves appropriately for the world we’re headed into, we need to reduce our costs."
Mr Collison clarified that the founders made the decision to lay off staff, citing that they have "overhired" for the world today.
Those who will be laid off will receive 14 weeks severance pay, with more for those who have been in longer tenure.
Departing employees will also receive the 2022 annual bonus, regardless of their departure date, with all unused paid time off also being paid.
The company will also pay the cash equivalent of six months of existing healthcare premiums or healthcare continuation.
Career support will be offered, as well as immigration support for those whose employment is contingent on visas.
"Most importantly, while this is definitely not the separation we would have wanted or imagined when we were making hiring decisions, we want everyone that is leaving to know that we care about you as former colleagues and appreciate everything you’ve done for Stripe. In our minds, you are valued alumni."
The recruitment departments of the company will be disproportionately affected by the announcement, as fewer people will be hired next year.
"While the changes today are painful, we feel very good about the prospects for innovative businesses and about Stripe’s position in the internet economy.
"For the rest of this week, we’ll focus on helping the people who are leaving Stripe. Next week we’ll reset, recalibrate, and move forward," the brothers signed off.
Stripe was founded in 2010 by the brother who hail from Limerick.
In March last year, Stripe announced plans to create 1,000 jobs in Ireland over the coming five years.
It came as it raised $600m in fresh funding, which at the time valued the firm at $95bn.
However, since then it has been reported that Stripe has cut the internal valuation of the business.