DoorDash’s CEO Tony Xu announced 1,250 layoffs on Wednesday to save costs. DoorDash stepped up hiring to catch up with growth as the epidemic gave new potential to serve businesses and consumers. Xu claims the corporation didn’t manage team growth well, despite most investments paying off.
“Most of our efforts are paying off, but we weren’t as diligent as we should have been in managing team growth,” Xu wrote. “I’ll pay.” Operating expenses rose quickly.”
Xu said DoorDash’s operating expenses will continue to outpace sales growth given how quickly it recruits. He added that DoorDash’s company is more resilient than others.
Xu wrote, “I didn’t take this lightly.” We’re reducing non-headcount operating expenses, but that won’t close the deficit. This harsh reality led me to cut our crew size.”
Layoffs receive 13 weeks of pay and a four-week lump-sum severance. Xu’s memo indicates affected employees will get their stock vest in February 2023. Visa-sponsored workers have until March 1, 2023. Xu says they’ll have more time to find a new career.
DoorDash joins Meta, Amazon, Twitter, and Lyft in reducing staff. Tech businesses concede they grew expenses too quickly during the pandemic and have cut back on hiring.