After laying off about 120 employees earlier in March, Snap Inc., the parent company of the popular photo-sharing platform Snapchat, is now laying off 100 employees, reported Bloomberg. The layoffs are from the advertising side. With the layoff reports doing the rounds, the Snap stock prices felt the jolt too, falling by o.3 percent after the news came out.
In March 2017, the company’s IPO on New York Stock Exchange was valued at almost $34 billion, making it the largest IPO on a US stock exchange since Alibaba in 2014 ($168 billion). Following this valuation, the Co-founder and CEO, Evan Spiegel became the third-highest paid CEO in history.
However, with the IPO and high valuation, the company has been continuously laying off its employees. In March Snap had laid off employees from engineering and earlier in January it also dropped 22 employees from the content department. The company made jobs cuts in 2017 too.
In a statement shared by Bloomberg from Imran Khan, Snap’s Chief Strategy Officer said, “Late last year we asked senior leaders across Snap to look closely at their teams to ensure they had the right resources and organizations to support their missions. Tighter integration and closer collaboration between our teams is a critical component of sustainably growing our business.''
A good context for the layoffs is the countrywide memo Evan had shared with his team. A copy of the memo was shared by Cheddar in January.
In the memo, Evan says, “Having a scalable business model isn’t enough. We also need to have an organization that scales internally. This means that we must become exponentially more productive as we add additional resources and team members.”
Though the company had reported good numbers and growth in the last quarter of 2017, it still faces a lot of competition from Instagram and Facebook despite all the flak Facebook is currently facing.
In February Snap had released its latest redesign which did not go well with the users and there was an online petition for the removal of the update. Evan refused to back down. This was followed by a Tweet by celebrity, Kylie Jenner about the update being “so sad” that companies shares plummeted by almost eight percent.
As Snap focuses on scale in the face of heavy and continued competition from the likes of Facebook, the layoffs show that the company is trying to keep its team lean and channelise its resources according to the needs and the goals of the company.