Clubhouse, Dropbox cut hundreds of jobs
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Cloud storage company Dropbox and once-booming audio community Clubhouse are the latest San Francisco tech firms to conduct mass layoffs.
Dropbox will lay off 500 employees or 16% of its workforce, CEO Drew Houston said in a memo.
Clubhouse will lay off over half of its workforce, founders Paul Davison and Rohen Set wrote in a memo. The company didn’t disclose how many workers would be affected, but late last year Davison told TechCrunch that Clubhouse had nearly 100 employees.
The layoffs add to another brutal week for San Francisco companies, including those outside the tech sector: Gap Inc. said Thursday it would cut 1,800 jobs and First Republic Bank plans to cut 20% to 25% of its workforce, or up to around 1,800 people. Experts said the bank is at risk of collapse.
Houston cited the rise of artificial intelligence as a major reason for restructuring Dropbox in order to capitalize on the sector.
Houston said “our next stage of growth requires a different mix of skill sets, particularly in AI and early-stage product development. We’ve been bringing in great talent in these areas over the last couple years and we’ll need even more.”
Slowing growth, an economic downturn and cuts to some projects with less potential than expected also led to the cuts.
Dropbox has sharply reduced its office space due to remote work and reported a $175.2 million loss in February related to the Bay Area real estate downturn. The company has sought to sublease most of its Mission Bay headquarters, but demand has been weaker than expected.
San Francisco’s unemployment rate, a lagging indicator, rose to 3% in March, up slightly from 2.9% in February and a full percentage point higher than December’s 2%.
Air Quality Tracker Check levels down to the neighborhood Ratings for the Bay Area and California, updated every 10 minutes
Clubhouse soared in popularity during the pandemic as people yearned to socialize safely. Celebrities including Oprah Winfrey and tech moguls like Elon Musk and Mark Zuckerberg made appearances, and millions of users signed up.
“But as the world has opened up post-COVID, it’s become harder for many people to find their friends on Clubhouse and to fit long conversations into their daily lives. To find its role in the world, the product needs to evolve. This requires a period of change,” Davison and Set said.
They said the company’s current size was hindering communication and coordination and cutting down to a smaller product-focused team was necessary. Remote work — one of the trends that helped make Clubhouse popular in the first place — was also an obstacle, they said.
“We arrived at this conclusion reluctantly, as we have years of runway remaining and do not feel immediate pressure to reduce costs. But we believe that a smaller team will give us focus and speed, and help us launch the next evolution of the product,” they said.
Source: San Francisco Chronicle
