Yatti Soni | Bengaluru, June 14 |
‘This decision was taken to ensure that the company stays healthy during this economic downturn’
Bengaluru, June 14
Global crypto exchange Coinbase has laid off 18 per cent of its team, a move that has impacted 8 per cent employees at its India office.
Globally, 1,100 employees have been laid off across support organisations, including marketing and recruiting roles. Some cuts were also made in Product, Engineering, and Design (PED), where the company believes it lost some efficiency over the years. As of May 2022, Coinbase had approximately 400 employees in India.
Commenting on India impact, a Coinbase spokesperson told BusinessLine: “Having endured four major crypto winters, we have learned that long-term resiliency comes from prudently managing costs while increasing focus and efficiency through down periods. Despite these challenges, India remains a key market for Coinbase.”
Coinbase’s India Site Head, Pankaj Gupta, had also relocated to the US last month, citing personal reasons. Coinbase hired a lot of people for India operations prior to its launch, but post the launch and rollback of UPI deposits, the company’s India operations have come to a stop.
This development comes at a time when the crypto market is undergoing a major downturn. Talking about the reasons for this move, CEO and co-founder, Brian Armstrong, wrote in a blog post that this decision was taken to ensure that the company stays healthy during this economic downturn.
“Our team has grown very quickly [four-fold in the past 18 months], and our employee costs are too high to effectively manage this uncertain market. We have now exceeded the limit of how many new employees we can integrate while growing our productivity. We believe the targeted resourcing changes we are making today will allow our organisation to become more efficient,” he added.
At the beginning of 2021, Coinbase had 1,250 employees. At that time, adoption of crypto products was exploding and new use cases enabled by crypto were getting traction every week. The company scaled massively to compete in a broad array of bets. “It’s challenging to grow at just the right pace given the scale of our growth (200 per cent y-o-y since the beginning of 2021). While we tried our best to get this just right, in this case it is now clear to me that we over-hired,” said Armstrong.
He also noted that the world appears to be entering a recession after a 10+ year economic boom. A recession could lead to another crypto winter, and in past crypto winters, trading revenue (Coinbase’s largest revenue source) has declined significantly. The company is now planning for the worst so that it can operate the business through any environment.
The affected employees are being offered a minimum of 14 weeks of severance, and an additional two weeks for every year of employment beyond one year. They are given four months of COBRA health insurance in the US, and 4 months of mental health support globally.
Coinbase is also offering laid off employees access to Talent Hub, where members of Coinbase’s team will work to connect these employees with open positions at other firms (including portfolio companies from Coinbase Ventures and other top crypto VC funds).
Updated statement from Coinbase
After the publication of this article, Coinbase updated its statement to say that India’s reduction in force is below 10 per cent.
“We continue to hire mission-critical roles in India. We have just hired Arnab Kumar as Director of India Market Expansion to build foundational partnerships and operations in the Country. Arnab started earlier this month reporting to Durgesh. India remains a strategic priority and we are committed to the region over the long-term,” said a company spokesperson in an updated statement.