- Snap is cutting about 20% of employees after going on a hiring spree during the pandemic.
- New projects like the Pixy drone and crypto are being shuttered, along with apps it acquired.
- Remaining employees joined a companywide call on Thursday to hear more about the reorganization.
Snap CEO Evan Spiegel told stunned employees on Thursday that he thought a major reorganization of the company presented an opportunity.
Losing about 20% of their colleagues this week in a mass layoff means Snap has a chance to “prove the haters wrong,” Spiegel said on a Thursday call with workers, according to two people with knowledge of the meeting. The sentiment did not land well among workers who feel morale at the company is already “extremely down,” these people said.
“Kind creative and smart is the motto at Snapchat,” a worker who was affected by the layoffs on Wednesday said. “Looks like that went out of the window right away when things started going bad.” The people who spoke with Insider asked not to be identified discussing sensitive matters.
Spiegel also “diverted blame” for Snap’s massive hiring spree of the last 18 months, when he grew headcount by thousands of people, according to one person with knowledge of the call. The CEO mentioned that he had earlier asked managers in charge of hiring to rein in headcount when doing annual planning and had approved fewer hires than managers requested.
A Snap spokesperson declined to comment beyond noting the total number of layoffs is “approximately” 20% of Snap’s employees.
One positive thing to come out of the call for the Snap employees who are left is that they will be getting a “top up” on their total compensation, the value of which has been dragged down as the value of Snap’s stock has plunged nearly 80 % in the past year. The exact amount of the additional compensation will be determined by the company and be handed out starting in October. Talk of additional RSUs being handed out began earlier this summer, as Snap’s stock hit historic lows.
During Thursday’s call, Spiegel mostly read prepared remarks that reiterated a letter he sent to staff on Wednesday. He also took preselected questions from employees. The meeting provided little comfort for workers who say the depth of the layoffs came as a “shock” and an “abrupt” change of course for the company.
Snap announced the drastic set of cutbacks this week, after telling workers in another meeting at the start of August that there would be a reorganization. While the overall reduction in headcount is said to be between 20% and 25%, some departments are being hit much harder, two former workers said, with some being reduced by up to 50%. On top of the layoffs, Snap is shuttering multiple projects and products, including hardware bets like its mini Pixy drone, its crypto payments department and even entire apps it acquired, like Zenly.
The changes are an effort to cut costs and generate cash flow during a tough time for the digital advertising market. Snap is narrowing its focus on a reorganized ad business, growing its main user base, and developing augmented reality, an area it’s been working on for several years already.
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Contact Tom Dotan at email@example.com or on Twitter at @cityofthetown.