Snapchat’s Layoffs

By: Roni Leider  |  September 19, 2022
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By Roni Leider

Snap, the maker of the social media platform Snapchat, has announced its plans to lay off about 20% of its employees. As of June 30, Snapchat employed over 6,400 people. The company as of this publishing, they have laid off 1,300 employees.

Snap’s plan to lay off many of its employees comes as a result of the financial hardships they have been facing. For the most part, tech companies have experienced financial growth as a result of the pandemic. Due to this financial growth, Snap, along with many other tech companies, was obtrusively energetic in hiring new employees.

In March of 2020, right before the pandemic, Snap had around 3,427 full-time employees. They ended last quarter with 6,446. Now, the these pandemic hires have proved to be unsustainable.
Moreover, current economic turmoil and fears of a recession have caused some companies to decrease payroll. For example, companies such as GoodRx Holding Inc. have had to make the executive decision to announce staff cuts as well.

Snap’s decision to lay off employees was somewhat predictable. Since the beginning of this year, Snap’s stock prices has significantly decreased. So far, they have lost approximately 80 percent of their value from a year ago. In May, Snap announced that they would try to find ways to draw back on spending. They also stated that they would need to decelerate the hiring of new employees. They proceeded to earn insufficient earnings for the second quarter and refused to predict third quarter results.

Aside from the economic turmoil, Snap has been undergoing, there are other factors that have contributed to their cuts. Chief Executive Evan Spiegel came out with a statement clarifying the company’s goal of reconstructing. He stated, “We are restructuring our business to increase focus on our three strategic priorities: community growth, revenue growth, and augmented reality…“Projects that don’t directly contribute to these areas will be discontinued or receive substantially reduced investment.” Snap disproportionally laid off some departments more than others, as these departments aligned less with their new vision for the company.

For example, Snap Games, Snapchat’s gaming business, will be suspended. Snap Games works differently than other partnerships of the company. Other game publishers make promotional filters from time to time and have exclusive sales on Snapchat. Snap Games is more consistent and has a goal of allowing developers to build mini apps and games within the platform. In fact, over 300 million users currently play Snap Games, which is over 90% of all Snapchat users. Although there is such a high engagement rate, as compared to other social media platforms, financing it has been difficult.

Another department that will be deeply affected by the staff cuts will be Zenly. This is a French app that was bought by Snapchat in 2017. It focuses on the social mapping of others, allowing users to see where their friends are in real-time.

According to Bloomberg, Snap’s hardware division has experienced staff cuts as well. The hardware division is responsible for Snapchat’s Spectacles – AR sunglasses that can record video. Although the Spectacles attracted positive publicity to the company in March, they are not a major source of revenue. This is why the Spectacles have not been of prime concern to the company since its IPO. Additionally, the hardware division is also responsible for the Pixy camera drone. After only a few months of being on the market however, it was canceled.

Snap also plans on reconstructing its ad sales organization. The chief business officer of the department, Jeremi Gorman, has left to work for Netflix instead. Despite Gorman’s departure, Snapchat has announced that it will be focusing on improving sales through its reconstruction of the ad sales division. There will be three new president roles that will supervise different regions throughout the world.

Employees were not satisfied with the way Snap chose to execute its layoffs. The majority of people who were laid off had brief meetings with their direct managers. These meetings appeared on employees’ calendars without explanation. The managers allegedly “read a script” telling them about their termination and where to access more information about their benefits and severance. Employees were left confused with little information.

Some employees even had their access cut to their work tools before they even entered the meetings where they got laid off. Other employees had their access to work tools taken away during the meetings themselves. One worker described the process, stating, “Before we were even finished being told what was happening, teams were kicked off the calls, computers completely wiped.. some people couldn’t even login to get laid off,”.

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