Stella Alexandrova was one of the 1000 employees who got laid off from Shopify in late July. However, instead of being demotivated, she created an opportunity for herself out of this adverse situation. “I was shocked. I was so confused because I could not have seen this coming,” said Alexandrova in an interview with businessinsider.in. She was growth lead at Shopify Canada for three years at the time of layoff.
Alexandrova said that thought there were layoffs happening at other big tech companies, she “felt pretty secure” and believed that her job wouldn’t be impacted. Contrary to her belief, one morning in July she received an email from Shopify informing about the staff reduction.
“I can’t control the layoff — it is what happened and the business had to do those cuts,” she said but “I can’t control the outcome but I can control my reaction,” she added.
The Idea And Formulation
Alexandrova, who herself is an avid traveller, started her travel app Mave. The app aims to help people plan their trips without much scrolling. The idea was born when Alexandrova saw a sharp rise in Do It Yourself travel sites while planning a trip during early 2022. Rise in DIY travel websites simply means that people are now visiting multiple websites and spending hours to organise a single trip. As a result, she came up with Mave within a week after the layoff.
When Alexandrova shared her plans on LinkedIn to launch Mave, her post went viral and garnered much support. Still, Alexandrova was worried about the risks involved in starting a business.
She was given five months of severance pay after being slashed from Shopify, effectively “paying for me to be able to start my own thing,” Alexandrova said. She used the severance as a runway.
“This is five months that I don’t have to worry about an income to pay for my rent. It gave me peace of mind that I don’t have to think about my bills and it’s a runway that most people wouldn’t get at the start of their business.”
Alexandrova has now 11 employees working for Mave. She says that the waitlist for her app has increased to 16,000 people. Alexandrova is also planning to fundraise for her startup.
Starting A Business During Downturn
Entrepreneurship booms during recessions as we know that some of the giant tech firms such as Uber, Microsoft and Airbnb emerged during this period. Paul Asel, a venture capitalist at NGP Capital believes that downturn is a good time to start your own venture.
“When hiring is hot and salaries are high,” it is good to get a high salary job in a big company but when the economy is weak, “the opportunity cost of leaving your job and starting a company is much lower.” Potential entrepreneurs can make use of this to pursue their ideas as “capital requirements have gone down” and your venture can grow at a better and moderate pace.
According to him, “one of the biggest mistakes that any entrepreneur makes is they try to grow their business too fast, too early”. Downturn gives entrepreneurs more time to work on their products so that they can meet the standards and customer satisifaction, thus increasing the success rate. Though it feels tough to establish a startup during recession as it is harder to get funds for the business but “long-term likelihood of success is actually higher,” he said. “It’s just more painful in the beginning, but that pain turns into success at a higher rate for those who can get through those first couple of hurdles,” he added.
Shopify Layoff
On July 26, 2022, Shopify slashed around 1000 employees across the globe. CEO Tobi Lütke explained his decision in a memo stating that it was a result of the miscalculated bet that pandemic-fueled demand for e-commerce would increase. The affected employees received 16 weeks of severance pay besides one extra week for every year the employee has been associated with the company.
Unfortunately, the bet didn’t pay off and revenue growth decreased. “Ultimately, placing this bet was my call to make and I got this wrong. Now, we have to adjust. As a consequence, we have to say goodbye to some of you today and I’m deeply sorry for that,” Lutke stated.
Building companies comes with high highs and low lows. Today I had to share some sad news with Shopify. https://t.co/gNO37lWYpg
— tobi lutke (@tobi) July 26, 2022
As per a report published by theglobeandmail.co, Shopify ousted 70 employees in August. The company asked them to keep the home office furniture. However, in order to receive all the compensation, employees were asked to sign non-disclosure agreements.
Shopify layoff affected 10 percent of its workforce, but some were lucky enough to land multiple job opportunities within few days. Germany-based Caroline Dohrmann, who worked as a content manager for Shopify was flooded with job offers soon after she was laid off. Within two days, her LinkedIn inbox had 25 job offers.
“I have 25 job offers in my inbox. By next Wednesday, I have a total of 7 interviews. In one week. Unbelievable. The support and engagement I’ve experienced from the people on LinkedIn over the past few days is incredible and I haven’t experienced this on any other platform,” Dohrmann wrote in a LinkedIn post.
Like Dohrmann, Ana Llorente Pérez, was also landed 10 job offers after the layoff. The former Senior Content Manager at Shopify Spain wrote on LinkedIn, “I’ve already been contacted by amazing companies and I’ll be having 10 chats only this week! (Not to brag, but to thank, once again, for all the noise and interest). It’s incredible to realize how valued and loved I truly am.”
The Mass Tech Layoffs
Tech firms like Meta, Twitter, Snap, Microsoft and Amazon have slashed thousands of roles this year. Meta, the parent company of Facebook terminated 11,000 employees, around 13 percent of the workforce on November 9. CEO Mark Zuckerberg took responsibility of the same in a long post and blamed Covid-19-induced acceleration that didn’t result as expected.
Amazon also plans to lay off 10,000 employees but gradually. A per reports, the company has also asked some employees to voluntarily resign before November 29. Amazon CEO Andy Jassy said that the layoff will extend into next year as well. Microblogging site Twitter also laid off 3,700 people on November 4 soon after the new CEO Elon Musk took over. Reportedly, 4400 of 5,500 contractual employees were also removed.
