Robinhood employees describe belt-tightening before job cuts

  • Robinhood on Tuesday laid off 23% of its workforce after its first round of job cuts this April.
  • Former employees say they’ve seen signs of belt tightening recently, including plans to reduce office space.
  • On the quarterly earnings call, Robinhood said the company would not be acquired, but is considering an acquisition.

It’s been a tough week for Robinhood.

On Tuesday, Robinhood was fined $30 million by New York state’s financial regulator. Later that day, the company announced plans to lay off about a quarter of its nearly 3,500-strong workforce and reported a loss in second-quarter earnings. On Wednesday, a top executive, Chief Product Officer Aparna Chennapragada, announced her departure from the company.

While the second round of job cuts came as a shock to some, after a 9% staff reduction only four months ago, insiders say they saw signs.

For Robinhood employees, the disappointing financial figures — monthly average users fell by a third compared to 2021, for example — weren’t surprising. Neither were the layoffs themselves, which have been a major topic of the company’s rumor mill since this spring. That’s because in recent weeks, the startup had been sending out warning signs of tough times — from manager emails about an impending restructuring to the sight of potential tenants at other companies visiting Robinhood’s office space.

Now, the morale of the remaining 2,600 employees is poor. And questions from both insiders and industry players about the company’s future are heating up more than ever. Insider spoke to five former Robinhood employees, all of whom asked to remain anonymous to protect their future employment opportunities. He described a company, a year after its public debut, facing a slowing market and looking for any and all ways to cut costs – and no apparent need for a workforce at Tenterhook. The line is not when downsizing can end.

Sharing his opinion about the company’s publicly reported, quarterly financial figures, a former employee said, “The company is bleeding money, and that’s bad.” “I believe in the mission itself, but people can’t trust us since Gamestop,” he said.

A Robinhood spokesperson declined to comment.

layoff

Exid Robinhood employees were hit by the scale of Tuesday’s job cuts, which affected 23% of the company’s headcount, or about 800 employees. The layoffs, which are expected to cost Robinhood up to $60 million in severance and expenses, hit marketing, operations and customer service divisions the hardest-hit, with two offices in Tempe, Arizona and Charlotte, North Carolina being closed .

in a blog post In announcing the cuts, Robinhood CEO and cofounder Vlad Tenev wrote that the blame for the massive drop lay entirely with him.

“As CEO, I approve of our ambitious staffing trajectory and take responsibility — it’s on me,” wrote Tenev, referring to employees as “robinhoodies” and “hoodies.”

Tenev announced the layoffs on Tuesday over a brief, five- to 10-minute Zoom call with Robinhood employees, according to former employees. He also announced the closure of offices in Tempe and Charlotte, and then echoed the message of Robinhood’s public blog post: The startup added headcount too quickly and was unprepared for further weakness in the economy.

When the Zoom call ended, employees eagerly waited to see if they would be let go; Tenev had said that employees would be notified via email and Slack soon after the call.

“We all started trading contact information and phone numbers,” said one former employee. “After the announcement, we were all sitting there and refreshing our screens over and over to see if we were about to receive the notification. The whole company paused for that 15 minutes to see what their What happened?”

While Tenev’s blog post said that laid-off Robinhood employees would be given the opportunity to stay with the company through October, some former employees said they lost access to Robinhood’s systems after the call on Tuesday and now Not working for the company. This is an understandable move, given the brokerage’s access to sensitive customer information, he added.

falling morale

Employees said morale at Robinhood had plummeted since the company laid off 9% of its employees in April.

“That was a ‘come to earth’ moment for us,” said a newly hired employee. “For a lot of people, we were living in fantasy land.”

“People just weren’t the same, if you went into the office the morale was down,” said one laid-off employee. “I know this time the morale is going to really go down. The people who are still there are just like, ‘What should we do now?'”

The employee said that in the weeks leading up to Tuesday’s massive layoffs, he had heard from his direct manager about a possible restructuring of his team. It was a signal, this person said, to start applying for other jobs.

Another precursor came in the weeks before the layoffs when former employees saw representatives from other companies visiting the Charlotte office, Which Robinhood opened in 2021, To potentially occupy space, he said.

“My mind went to one of two things: Either they’re getting rid of the Charlotte office or they’re moving us to a smaller office space,” said a former Charlotte employee who worked in customer service. “There was no communication about it being like, ‘Hey, people are coming to the office to see, don’t worry about it.’ They were walking through the office, getting water from our snack station, it was so weird.”

Other former Robinhood employees said the company had informed them in recent weeks that it planned to trim its footprint in the building from two floors to one, which they also found concerning.

Meanwhile, in Arizona, a former employee based there, who had left the company in recent months, told Insider that Robinhood was looking to trim its footprint. At a WeWork in downtown Tempe downtown, which opened in 2020.

Returning to the company’s office is constantly being pushed back and only a handful of people are coming into the office, said the former Arizona-based employee, “With an expensive building having an entire floor, they might bleed money.” were.” The employee estimated that about 200 Robinhood employees were based in the Tempe office.

uncertainty ahead

In its Tuesday blog, Tenev said the “additional deterioration of the macro environment” since the April layoffs had left the brokerage in a weaker position than they anticipated.

But the economy hasn’t shown many signs of budding, and as Chief Financial Officer Jason Warnick explained on the company’s second-quarter earnings call: “The first half of the year has been the worst we’ve seen in nearly 50 years, It is difficult to know exactly when it will go down and when it will reverse.”

The former Charlotte employee said, “We saw Vlad talk about how it was a product of the macro environment. Rising interest rates, all that stuff, but it hasn’t really changed a whole lot from April until now. ” “The business didn’t feel in any better position than it was before, so it felt inevitable from that point of view,” he said of the layoffs.

On Wednesday, the company’s Chief Product Officer, Chennapragada announced linkedin and Twitter that she would step down but remain as an advisor to Tenev. Chennapragada, a former Google executive, joined Robinhood a year ago in April 2021.

“The world has changed. As Robinhood adapts to this new context, it is time for me to move on,” she wrote in her post.

Meanwhile, Tenev was keenly optimistic on Robinhood’s earnings call on Wednesday. When asked if the company was up for an acquisition – another rumor that’s been floating around since Sam Bankman-Fried of crypto-exchange FTX Took 7.6% stake In the fintech company to invest in — Tenev said no, but Robinhood itself was looking to acquire more.

In April, just weeks before a 9% staff reduction, Robinhood announced the acquisition of crypto-asset firm Ziglu. Robinhood has about $6 billion in cash on its balance sheet, and the company has a $2.5 billion budget for acquisitions, Warnick said on the earnings call.

Robinhood stock soared above $80 a share after going public last summer. The stock has since fallen more than 80% to nearly $10. Following the most recent layoff announcement, Robinhood stock jumped 15% on Wednesday morning and then rose again sharply on Thursday morning.

Are you an employee or former employee of Robinhood? Contact our journalists: it’s martin, Carter JohnsonAnd Bianca Chano,

Be the first to comment

Leave a Reply

Your email address will not be published.


*