Beautiful view of business center in downtown San Francisco at sunset. (Photo: f11photo/Shutterstock)
1,700 Layoffs At SF-Based Stitch Fix Capped off a Rough First Week of 2023
More Silicon Valley tech layoffs expected soon
By Evan Symon, January 6, 2023 12:23 pm
A massive 20% layoff at San Francisco-based fashion tech company Stitch Fix on Friday capped off a rough first week for Bay Area tech companies, as thousands of more tech workers in the area continue the trend started last year of tech companies quickly downsizing.
Beginning in October of last year, tens of thousands of jobs in the tech sector across the Bay Area have announced mass layoffs. Amongst others, these have included Twitter, Peloton, Facebook parent company Meta, Lyft, Opendoor, Chime, Stripe, Intel, Microsoft, and numerous others. This week alone, Salesforce cut 10% of it’s staff, or around 7,000 jobs, with most coming in San Francisco, with Seattle-based Amazon also announcing 18,000 jobs being slashed. For the former, it’s only the latest round of cuts following several big ones last year. For the latter, even though it’s not California-based, many cuts will be taking place Sunnyvale and elsewhere in the area, as well slamming the breaks on a new logistics center set to be built in the Showplace Square area of San Francisco.
Both of those companies also noted that instead of many reasons by companies given last year, including a more expensive Bay Area and other higher costs, they were cutting jobs because of the end of COVID-19 and the areas of growth they received in the last few years now being too much for current demand.
“This year’s review has been more difficult given the uncertain economy and that we’ve hired rapidly over the last several years,” said Amazon CEO Andy Jassy said in a memo to employees this week. “In November, we communicated the hard decision to eliminate a number of positions across our Devices and Books businesses, and also announced a voluntary reduction offer for some employees in our People, Experience, and Technology (PXT) organization. I also shared that we weren’t done with our annual planning process and that I expected there would be more role reductions in early 2023.
“Today, I wanted to share the outcome of these further reviews, which is the difficult decision to eliminate additional roles. Between the reductions we made in November and the ones we’re sharing today, we plan to eliminate just over 18,000 roles. Several teams are impacted; however, the majority of role eliminations are in our Amazon Stores and PXT organizations. These changes will help us pursue our long-term opportunities with a stronger cost structure.”
Layoffs at Stitch Fix
Stitch Fix joined the other two companies on Friday with not only 1,700 positions set to be let go, but with company CEO Elizabeth Spaulding leaving as a result. While the majority of cuts will be in the Bay Area, other will be taken elsewhere, including the elimination of an entire distribution center in Salt Lake City. While the cuts aren’t the first they have made due to declining sales, including firing 162 in a 2021 layoff and 330 last year in another round, they are the largest to date for the company.
“Today, I’m writing to share two significant changes. Firstly, I’m sharing the difficult news that we will be reducing the size of the Stitch Fix team by about 20% of salaried positions,” said Stitch Fix Founder and current interim CEO Katrina Lake on Friday. “In addition, we are closing our Salt Lake City distribution center, where our team is also impacted. We will be losing many talented team members from across the company and I am truly sorry. Everyone will get an email soon letting you know what this means for you.”
“Second, I also wanted to share that Elizabeth and the Board of Directors have made the difficult decision that Elizabeth will be stepping down as CEO to make room for a new leader. Effective today, I will be stepping in as interim CEO and leading the search process for our next CEO.”
With other tech companies expected to make cuts with the new year and new quarters approaching, largely due to post-COVID stabilization, tech experts have warned that the Bay Area and Silicon Valley will be radically changed economically when the dust finally settles.
“Whenever there has been a major tech downturn before, and people said that was it for Silicon Valley, companies pivoted and new technology took it’s place,” Julie Ochs, a San Jose-based headhunter and hiring specialist, told the Globe on Friday. “The last really big ones were the dot-com bust and the effects of the Great Recession. Stronger web-based services, growing demand, a growing use of social media, a start-up boom – we always see a few things crop up and rebuild. We still have a ton of venture capitalists out here. Sand Hill Road, where a lot of them are, is still full. Start ups still come and stay here. A lot of crypto-related companies have gone elsewhere, but they’re in a rough patch right now too. So, in a sense, we’ve seen this before.”
“The big question is though, that with all these layoffs, and offices here being more and more vacant, what the new landscape will look like. We’re looking at leaner companies with not quite the Bay Area-centricity as we’ve seen before. It’s probably what Hollywood s the the move industry now in some regard. They all started there, was hugely important, and all companies still have a presence there today, but most moved elsewhere around LA after awhile. That’s looking like the tech future in San Francisco, but instead of companies moving around more in the area, it will be more around the country to places like Austin and Miami, and even more so, to remote working situations. Companies are facing a new reality right now, and these layoffs are sadly a part of the shift.”
More tech layoffs are expected at other companies soon.
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Since most of the employees being laid off are not minimum wage and probably pay a hefty share of their income in state and federal taxes, I wonder how this is going to affect Sacramento’s budget. I wonder if CA budgeted for less revenue from layoffs and reduced IPOs. They were already forecasting a deficit but never saw a spending opportunity they didn’t jump on.
Unfortunately, the state budget is written by people who majored in political science because the math required for real science is “too hard”. I’m guessing the next few years will be budget crisis years to beat all others.
The dumpster fire is starting to burn hotter….
Get ready folks, because Newsom and his World Economic Forum handlers are hell-bent on crashing the economy via bad energy policies that have caused inflationary pressures that we haven’t seen in two generations….
It’s a shame that SF Mayor London Breed and City Council members can’t be laid off considering the mess that their Democrat policies have made of the city?