INSUBCONTINENT EXCLUSIVE:
Layoffs have struck the startup world swiftly, hurting hospitality and travel startups, as well as recruitment and scooter companies
New data shows that some of those layoffs, brought on by COVID-19, might be disproportionately impacting satellite campuses.
By nature,
satellite offices are secondary to a startup headquarters
Opening smaller offices is a strategic move when a company gets a fresh round of funding or wants to expand to a new market
We&ve seen satellite offices pop up in cities like Portland, Phoenix or Austin, which has satellite offices for Apple, Facebook and Oracle,
for example.
While most layoffs are coming from companies whose headquarters are located in the main entrepreneurial hubs of the Bay area
and New York, the actual staff members are located in the satellite cities, according to data from Layoffs.fyi, a tracker created by former
Y Combinator grad Roger Lee.
EasyPost in San Francisco laid off 75 employees, nearly all in Salt Lake City and Louisville
U.K.-based Challenger bank Monzo laid off 165 customer support employees recently in Las Vegas.
Toast, based in Boston, laid off 1,300
employees, or 50% of its entire staff
Per Layoffs.fyi data, 12% of those layoffs were in Omaha, and another 10% were in Chicago.
KeepTruckin, based in San Francisco and last
valued at $1.25 billion, laid off around 350 employees, and 33% of those employees were located in Nashville or Chicago.
These numbers are
only a fraction of the total layoffs across the country, as Layoffs.fyi data set only includes publicly disclosed actions and tips
But even if the data is just serving as an anecdotal snapshot, it an important one to note.
What the data means
Once the economy does
recover to a new normal, it unclear whether HQ cities or satellite cities will be in a better position to bounce back
We caught up with some investors in Boston, a top startup hub that has recently faced its own flurry of layoffs, to hear their
thoughts.
According to Lily Lyman, a partner at Boston-based venture capital firm Underscore, satellite offices are often where a company
might locate the sales, customer success and business development staff
Logistically, those roles are the most vulnerable as consumer activity slows
For a lot of businesses, there are no sales and deals to be done right now.
&[These roles are getting] disproportionately affected in
[reduction of forces] as companies expect a slowdown on the commercial side,& Lyman said
&While a logical decision to extend the cash runway, it does come with the risk that this withdrawal can damage relationships with customers
that may be hard to recover.&
Not everyone sees cuts hitting satellite offices the hardest
Michael Skok, another partner at Underscore, said that &in some cases, we&ve seen that satellite offices are established in emerging markets
which come with cost savings, so these offices may actually be more protected in these times.& In other words, if you&re cutting costs, San
Francisco employee expenses might be higher than Denver employee expenses by sheer nature of the former having exorbitantly high living
Revolution Ventures, which invests in startups in emerging tech scenes, said it has not heard about satellite office layoffs from its
portfolio as of recently.
And finally, to put it crassly, layoffs in a non-HQ city might quell some of the negative signaling that founders
and venture capitalists are trying so hard to avoid (well, most of them at least)
Slimming down operations is becoming a proactive response, not a reactive strategy as the pandemic continues to evolve.
Today data reminds
us that layoffs are rarely an isolated occurrence, and staff cuts appear to be landing harder on less robust tech ecosystems.
