Robinhood workers describe belt tightening forward of job cuts

  • Robinhood laid off 23% of its employees on Tuesday after an preliminary spherical of job cuts in April.
  • Former workers say they’ve seen latest indicators of belt tightening, together with plans to scale back workplace house.
  • In a quarterly earnings name, Robinhood executives mentioned the corporate wouldn’t be acquired however was contemplating acquisitions.

It has been a troublesome week for Robinhood.

On Tuesday, Robinhood was slapped with a $30 million high quality from the New York state monetary regulator. Later within the day, the corporate introduced plans to chop almost 1 / 4 of its roughly 3,500 workers and reported lackluster second-quarter outcomes. On Wednesday, a senior govt, product supervisor Aparna Chennapragada, introduced his departure from the corporate.

Whereas the second-round job cuts got here as a shock to some, following a 9% lower within the workforce simply 4 months prior, insiders say they’ve seen the indicators.

For Robinhood workers, the disappointing monetary numbers — month-to-month common customers fell by a 3rd from 2021, for instance — had been unsurprising. Nor the layoffs themselves, which had been the important thing subject of firm gossip since this spring. Certainly, over the previous few weeks, the startup had been sending out indicators warning of powerful instances forward — from emails from the supervisor about an impending reorganization to the sight of potential tenants from different corporations visiting Robinhood’s places of work.

Immediately, the morale of the remaining 2,600 workers is bleak. And questions in regards to the firm’s future, from each insiders and trade gamers, are hotter than ever. Insider spoke with 5 former Robinhood workers, all of whom requested to stay nameless to guard their future job alternatives. They described an organization, a yr after its public debut, dealing with a slowing market and on the lookout for each method to lower prices – and a workforce on scorching coals with no line of sight clear on when the downsizing would possibly finish.

“The corporate is hemorrhaging cash, and that is dangerous,” mentioned a former worker, sharing his opinion on the quarterly monetary figures launched by the corporate. “I consider within the mission itself, however folks cannot belief us from GameStop anymore,” they mentioned.

A Robinhood spokesperson declined to remark.

Layoffs

Axed Robinhood workers had been bowled over by the size of Tuesday’s job cuts, which affected 23% of the corporate’s workforce, or about 800 workers. The layoffs, that are anticipated to value Robinhood as much as $60 million in severance and bills, hit the advertising, operations and customer support divisions the toughest, with the closure of two places of work in Tempe, Arizona, and Charlotte, North Carolina.

In a blog post Saying the cuts, Robinhood CEO and co-founder Vlad Tenev wrote that the accountability for the drastic downsizing rests totally with him.

“As CEO, I’ve endorsed and brought accountability for our bold recruiting trajectory – it is on me,” Tenev wrote, calling the employees members “Robinhoodies” and “Hoodies.”

Based on former workers, Tenev introduced the layoffs throughout a quick five- to 10-minute Zoom name with the Robinhood group on Tuesday. He additionally introduced workplace closures in Tempe and Charlotte, then echoed the message from Robinhood’s public weblog that the startup grew its workforce too rapidly and was unprepared for additional weak spot within the financial system.

As soon as the Zoom name ended, workers waited anxiously to see if they’d be launched; Tenev mentioned employees can be notified by way of electronic mail and Slack instantly after the decision.

“All of us began exchanging contact particulars and telephone numbers,” mentioned a former worker. “After the announcement, all of us sat there refreshing our screens time and again to see if we had been those getting the notification. The entire firm froze for these quarter-hour ready to see what occurred to them. .”

Whereas Tenev’s weblog acknowledged that terminated Robinhood employees can be provided the choice to stick with the corporate till October, some former workers mentioned they misplaced entry to Robinhood techniques after the enchantment. Tuesday and that they had been not working for the corporate. It is an comprehensible transfer, they added, given the brokerage’s entry to delicate buyer data.

Declining morale

Robinhood’s morale has been declining because the firm laid off 9% of its workers in April, employees members mentioned.

“It was a ‘again to Earth’ second for us,” mentioned a not too long ago laid off worker. “For many individuals, we lived in a fantasy land.”

“Individuals simply weren’t the identical, morale was low in case you went into the workplace,” mentioned one of many fired workers. “I do know this time across the morale is actually going to drop. People who find themselves nonetheless there are like, ‘What are we imagined to do now?'”

The worker added that within the weeks main as much as Tuesday’s mass layoffs, he had heard from his direct supervisor a few attainable reorganization of his group. It was an incentive, in line with this particular person, to start out making use of for different jobs.

One other warning signal got here within the weeks main as much as the layoffs when former workers noticed representatives from different corporations visiting the Charlotte workplace, that Robinhood had opened in 2021, to doubtlessly take over house, they mentioned.

“I considered certainly one of two issues: both they do away with the Charlotte workplace or they only transfer us right into a smaller workplace house,” mentioned a former Charlotte worker who labored in customer support. “There was no communication about it, like ‘Hey, folks would possibly come and see within the workplace, don’t be concerned. They had been strolling across the workplace, taking water from our snack bar, it was simply very bizarre.”

Different former Robinhood staffers mentioned the corporate had knowledgeable them in latest weeks that it deliberate to scale back its footprint within the constructing from two tales to at least one, which additionally they discovered regarding.

In Arizona, in the meantime, a former worker primarily based there who left the corporate in latest months instructed Insider that Robinhood had sought to scale back its footprint. at a WeWork in downtown Tempe, which opened in 2020.

With the corporate’s return to work being regularly pushed again and solely a handful of individuals coming into the workplace, “having a whole ground in what was an costly constructing, they had been most likely bleeding cash,” the previous worker mentioned primarily based in Arizona. The worker estimated that round 200 Robinhood employees had been doubtless primarily based within the Tempe workplace.

Uncertainty to return

In his weblog on Tuesday, Tenev mentioned “additional deterioration within the macro atmosphere” because the April layoffs had left the brokerage in a weaker place than he had estimated.

However the financial system hasn’t proven many indicators of fixing and, as Chief Monetary Officer Jason Warnick identified throughout the firm’s second-quarter earnings name: “The primary half of the yr has been in regards to the worst we have seen in about 50 years, laborious to know precisely when it is going to backside out and switch round.”

“We noticed Vlad discuss the way it was a product of the macro atmosphere. Rising rates of interest, all that, nevertheless it actually hasn’t modified a lot from April to now,” mentioned the previous Charlotte-based worker. “The corporate did not really feel in a greater place than it was earlier than, so it was inevitable from that perspective,” they mentioned of the layoffs.

On Wednesday, Chennapragada, the corporate’s chief product officer, introduced the LinkedIn and Twitter that she would step down however stay as an adviser to Tenev. Chennapragada, a former Google govt, joined Robinhood over a yr in the past in April 2021.

“The world has modified. As Robinhood adjusts to this new context, it is time for me to maneuver on,” she wrote in her submit.

In the meantime, Tenev was curiously optimistic about Robinhood’s earnings name on Wednesday. When requested if the corporate is prepared for acquisition – one other rumor circulating from Sam Bankman-Fried of crypto change FTX took a 7.6% stake within the fintech funding agency – Tenev mentioned no, however that Robinhood itself was seeking to make extra acquisitions.

In April, weeks earlier than the 9% workforce discount, Robinhood introduced the acquisition of crypto-asset agency Ziglu. Robinhood has about $6 billion in money on its stability sheet and the corporate has a $2.5 billion finances for acquisitions, Warnick mentioned on the earnings name.

Robinhood’s inventory peaked at greater than $80 per share days after its IPO final summer season. The inventory has since fallen greater than 80% to round $10. Following the most recent layoff announcement, Robinhood’s inventory jumped 15% on Wednesday morning, then rose sharply once more on Thursday morning.

Are you an worker or former worker of Robinhood? Contact our journalists: Asia Martin, Carter Johnsonand Bianca Chan.

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