Kickstarter CEO Aziz Hasan announced that the crowdfunding company is likely going to lay off employees.
The number of projects on the site has dropped by about 35 percent, with little hope to recover any time soon.
To offset the decline in revenue, the management is exploring “significant cost-cutting” options such as reducing senior leaders’ salaries, including Hasan’s own, and cutting the budget “wherever we can.”
That said, the company will still have to go to some of the employees.
Coincidentally, as noted by The Verge, Kickstarter is the first major technology company to have unionized, with sixty percent of Kickstarter’s 140 employees are union members.
Below is the full text of the internal memo from Hasan:
I’d like to update you on the conversations we’ve all been having about how to keep Kickstarter well-positioned as we navigate what’s quickly become the worst economic downturn in a lifetime. As I shared a couple weeks ago, and again during last week’s All Hands, we’ve been looking at a number of possible scenarios. After great consideration, ongoing monitoring and modeling of our outlook, and consultation with our board of directors, here’s where we stand.
As you know, although projects on the site continue to garner plenty of support from backers, we’ve seen many fewer projects launch on the platform over the last several weeks. The live project count is about 35% below what it was at this time last year with no clear sign of rebound. As a result, our pledge volume and revenue are tracking sharply down as well. Setting the business up for the future will require significant cost-cutting. Kickstarter is a small business of 140 people with modest operating margins, and all of the approximately $1.27 million in after-tax profit we earned last year has already been reinvested back into the business during the first four months of this year. With that in mind, we’ve undertaken a number of measures, including reducing compensation for a number of senior leaders at the company, including myself and the board of directors; instituting a hiring cap and policy to not automatically fill positions when people leave in order to limit headcount costs; and working to trim non-headcount budgets wherever we can.
The truth is, these measures aren’t enough for us to continue to serve creators during this crisis and beyond. We must look more broadly at ways to restructure the business, including potential layoffs across teams and at all levels of staff. Earlier today I reached out to OPEIU to share more about where we are, and to uphold our responsibility to negotiate next steps that involve members of the union. We expect to continue our discussions with the union over the next few days. In the meantime, please feel free to use our normal process and submit any questions you have for me here. The OPEIU reps are of course available to answer any questions members of the bargaining unit may have as well.
The uncertainty of this moment is stressful and I recognize you’re each shouldering some part of that. We’re going to navigate this thoughtfully and transparently to allay that as best we can. Kickstarter has an essential role to play for independent creators right now as a source of financial support. And the art, creativity, and innovation that they bring to life is essential to a healthy society — particularly during times like these. Many creators are also experiencing uncertainty and stress, so we’re going to make sure Kickstarter is here for them not just the next few months, but also the years ahead.