The administrative blows to tech companies continue, regardless of size or impact. The cloud storage company Dropbox and the audio community Clubhousehave recently carried out massive staff layoffs.
The CEO of DropboxDrew Houston, announced that the company will lay off 500 employees, representing 16% of its workforce. On the other hand, the founders of ClubhousePaul Davison and Rohen Set, reported in a memo that they will lay off more than half of their staff, a relative number since the official number of collaborators is not available.
These layoffs add to a difficult week for San Francisco companies, including those outside the technology sector: Gap Inc. announced it will eliminate 1,800 jobs and First Republic Bank plans to lay off 20% to 25% of its workforce, which equals about 1,800 people. Experts have indicated that the bank is at risk of collapse.
Dropbox’s CEO said that “our next stage of growth requires a different mix of skills, especially in artificial intelligence and early-stage product development. We’ve been attracting talent in these areas over the past few years and will need even more.” Houston mentioned the rise of artificial intelligence as one of the main reasons to restructure Dropbox and capitalize on the sector.
Dropbox has slashed its office space due to remote work and posted a $175.2 million loss in February related to the downturn in the Bay Area real estate market. The company has sought to sublease most of its Mission Bay headquarters, but demand has been weaker than expected.
San Francisco’s unemployment rate, a lagging indicator, rose to 3% in March, up slightly from 2.9% in February and up one percentage point from 2% in December.
Clubhouse soared in popularity during the pandemic as people yearned to socialize safely. Celebrities like Oprah Winfrey and tech moguls like Elon Musk and Mark Zuckerberg made appearances and millions of users signed up.
“But as the world has opened up after COVID, it has become harder for many people to find their friends in Clubhouse and fit long conversations into their daily lives. To find its role in the world, the product needs to evolve. This requires a period of change, Davison and Set said.
The Clubhouse founders explained that the current size of the company was hindering communication and coordination, and that there was a need to reduce the team to a product-focused one. In addition, they noted that remote work, one of the trends that helped make Clubhouse popular in the first place, had also become an obstacle.