This week, Wealthsimple joined the likes of Coinbase and Better.com when it laid off approximately 13 percent of its employees.
What seemed to be leading the era of new-age investments, challenging the cynical banking industry, and revolutionizing people’s investing behaviors and appetite, now seems to be fighting against its own burden of expectations.
Wealthsimple, which hit a market cap of US$5 billion and managed to infuse US$750Mn during the pandemic from a star-studded list of investors which includes the likes of Drake (rapper), Ryan Reynolds and Michael J. Fox, Hollywood actors, now faces the challenge to steer through the other side of the volatility as the pandemic unfolds.
Nearly a week ago, amid the volatility of the financial market, Wealthsimple had enforced a hiring freeze, a well-established indicator that the top bosses at Wealthsimple had already started the process of layoff.
The CEO of Wealthsimple, Mike Katchen, sent a letter, rather a broadcast, to his staff stating that out of the 1,262 employees, 159 will be let go and shall cease to be part of Wealthsimple as part of the layoff decision. The layoffs at Wealthsimple do not come as a surprise, and it is in sync with the trend followed by other startups in the FinTech world, overshadowed by Crypto volatility.
Wealthsimple seems to be grappled by the crypto and blockchain ecosystem. Although Wealthsimple was late to arrive at the party when it launched its crypto trading app in July 2020, it now aims to focus on creating core products providing solutions for investing and banking based on the technology of the future, such as crypto. It is interesting to see how Wealthsimple shifted its focus to crypto right amidst a market crash, a volatile space, and not so attractive for anyone like Wealthsimple that seems to take harsh corrective measures against market volatility. A decision to focus on crypto, at a time when Bitcoin has hit its lowest since December 2020 and Ethereum followed closely, seems like a smart move to embrace volatility instead of avoiding it, hinting at aspirations to benefit from future speculations.
The world, especially the world of tech, has seen layoffs before, and what could be a better example than Better.com. Here is what is different in the mass layoffs this time around. Wealthsimple attempts to give voice to the 159 employees, helping them secure another job. Welathsimple has also offered ‘generous’ severance packages, extended health benefits, and support to secure future employment with its investors Canada Life and IGM. But, this might be completely contrary to what it seems, i.e. this might be Wealthsimple’s attempt to preserve its market cap by highlighting that taking care of its 159 laid-off employees, including the ones who were in for a surprise on their first day of job. The effectiveness of the move is something that would unfold with time, after all, Better.com did lose US$ 200Million after it let go of 9% of its workforce and the firing style, which stirred an ethics controversy across the world might have fuelled its devaluation.
