- Startup layoffs are hurtling toward the 30,000 milestone, as shelter-in-place directives and social distancing measures have hit startups with particular ferocity.
- Business Insider caught up with Roger Lee, a startup founder who created a website to publicly track layoffs hitting different startups.
- Lee, who has also begun analyzing the data to draw out trends from the layoffs he has tracked, ranked the industries that appear to have been hit hardest by the virus.
- Retail, consumer, food, real-estate, fitness, travel, and transportation startups have accounted for more than two-thirds of the total layoffs that Lee has tracked so far.
- His findings point toward a combination of factors influencing startup layoffs: their ability to fundraise again, their burn rates amid times of slow revenue, and the amount of runway each startup has.
- Visit Business Insider’s homepage for more stories.
The coronavirus has spared few industries as it has worked its way through the country. But startups, often given a mandate to grow fast or die, have been hit with particular ferocity.
And startup employees have also been slammed, as companies slash away chunks of their workforce in an effort to quickly lower their costs. Around 306 startups have laid off 29,948 employees as of Friday, according to Layoffs.fyi, a website that has been tracking the virus’s effect on startups. And as the website notes, there are still many more startup layoffs that have not yet been reported.
Roger Lee, also the co-founder of retirement-benefits service company Human Interest, created Layoffs.fyi in mid-March as a side project. He’d already been keeping track of startup layoffs before the coronavirus outbreak picked up speed, as his personal guide to recruiting new employees for his own startup. But once the virus began to damage the broad economy, he quickly realized that more companies needed the resource to help startup employees land on their feet.
The website tracks new layoffs in real time, using verified data (mostly from news articles and CEO blog post announcements). As the website gained popularity, Lee said, some CEOs began sending him emails to inform him about their startup’s layoffs to include in the tracker.
“Everybody understands that that no one could have foreseen or planned for this or predicted this virus, and so it’s very much something out of everybody’s control,” Lee explained. “I think that’s why we’re seeing a much more public discussion and transparency around the layoffs.”
That transparency is also helpful to Lee, who has found himself spending more and more time updating the Layoffs.fyi tracker to keep up with the surging numbers. It’s tough to keep this one-man show going without any help at all, but Lee notes that he’s been grateful to his readers for continuing to send him news links, blog post announcements, and even LinkedIn posts broadcasting news of staffers being let go.
“I’ve been fortunate to get a lot of help from the community, in the form of leaders submitting news and articles that I hadn’t seen yet,” Lee said. “I think without that, it would be impossible for one person to be keeping up right now.”
Tracking trends: DTC startups hit especially hard
As startup layoffs keep racking up, Lee has been busy analyzing the trends among the industries hit hardest.
More than two-thirds of startup employees laid off have come from 7 top industries, which are all directly impacted by shelter-in-place directives: retail, consumer, food, real-estate, fitness, travel, and transportation. But even then, the trends reveal some surprising results.
Revenue for many startups in the travel and transport sector may have spiralled to zero, but startups in the retail sector — mostly direct-to-consumer startups, according to Lee — have experienced a significantly higher surge in layoffs.
These numbers may be influenced by the level of funding available to startups, as well as the amount of money needed to keep them afloat.
Business Insider has previously reported that these DTC companies, which were already battling to attract consumers in a crowded market, are now struggling with a drought in consumer demand. Startups that had physical shop fronts, like Away or Iris Nova, are also dealing with high fixed-costs that are sucking up their cash.
Because of those considerations, Lee offers two other factors that need to be included when evaluating a startup’s risk of layoffs: its business model, and its level of available cash on-hand. The matrix he developed, seen below, could help explain why cloud and software startups like D2iQ and Envoy (which embarked on a hiring push in the months leading up to the coronavirus outbreak) were badly affected by the virus.
Join the conversation about this story »
NOW WATCH: Tax Day is now July 15 — this is what it’s like to do your own taxes for the very first time