Plaid lays off 20% of employees • TechCrunch

Fintech decacorn Plaid is laying off 260 employees, or approximately 20% of its workforce, the company announced today.

While specific details surrounding who was affected remain unknown, sources have told TechCrunch in recent months that the San Francisco-based startup’s engineering team is likely to take a big hit. In March, Plaid CTO Jean-Denis Greze told TechCrunch that he was growing his engineering team 17.5x in just four years, from 20 engineers to 350 people. Today’s cuts likely reverse some of that hypergrowth.

A company spokesperson did not disclose how many engineers are affected, saying that “teams across the company” were affected. She added that since Plaid is “adjusting to updated headcounts, teams like recruiting are affected more than others.”

IN a letter to employees posted on Plaid’s website, CEO and co-founder Zach Perret said the company saw a rapid increase in usage by its existing customers, a large number of new customers and “significant revenue acceleration” during COVID. As such, the company “hired aggressively” to meet customer demand and invest in new products. However, macroeconomic changes resulted in Plaid customers experiencing “slower-than-expected growth”, causing the company to scale back.

The simple reality is that because of these macroeconomic changes, the pace of our cost growth outpaced our revenue growth. I made the decision to hire and invest ahead of revenue growth, and the current economic downturn has meant that revenue growth has not been as rapid as expected.

All affected employees will receive 16 weeks’ basic salary as severance pay. Those who have been with Plaid for more than a year will get more weeks. Plaid will also pay cash corresponding to six months’ health premiums for medical, dental and vision insurance for employees and their relatives. In a practice that is becoming increasingly common, the company is also accelerating equity grants for employees who have worked at the company for more than a year until the vesting date of February 15, 2023. It is also waiving the one-year cliff for workers with equity who have not yet reached their one-year accrual.

In addition, it says it will provide six months of career support and coaching services as well as six months of continued mental health cover for all departing employees. The company also says it has “dedicated immigration counsel” for those on a work visa.

Affected employees lost access to many Plaid systems in a move that Perret acknowledged may seem “abrupt” but which he deemed necessary “given the sensitive nature of data” in the industry.

In April 2021, Plaid raised a Series D of $425 million led by Altimeter Capital, which valued the company at around $13.4 billion. This was after the deal to be acquired by Visa for $5.3 billion fell through due to regulatory concerns.

A lot has happened since that high valuation, and Plaid is now in direct competition with one of its partners, payments giant Stripe – which recently laid off its own, let go of more than 1,100 people. Earlier this year, Stripe announced a new product called Financial Connections, which provides Stripe’s customers a way to connect directly to customers’ bank accounts, to access financial data to speed up or run certain types of transactions. Sounds familiar?

Then two weeks later, Plaid announced that it was officially extended from the core product account link — its first major expansion since its inception in 2013. The startup specifically said it was moving into identity and income verification, fraud prevention and providing new tools for account funding and payments — a move that put it in even deeper competition with Stripe.

For its part, Stripe was last valued at $95 billion when it closed a financing round of 600 million dollars in March 2021.

More recently, Plaid announced tit had appointed Meta veteran John Anderson to act as its new head of payments as it began personally facilitating payments through its Transfer offer, in addition to facilitating their partners’ payments.

Plaid’s layoff comes amid a particularly turbulent year for fintech startups. Besides Stripe, neobank Chime recently temporarily laid off 12% of employees, or around 160 workers.

TechCrunch Senior Reporter Natasha Mascaren contributed to the reporting of this article. You can contact her on Signal, a secure encrypted messaging app, at 925 271 0912. You can reach Mary Ann at [email protected].

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