Robinhood Fires A Quarter Of Employees Via Slack; Reports Dismal Earnings One Day Early

The company, which we have long said should not exist as a standalone entity (and certainly not as a publicly-traded company), and should instead be rolled into Citadel, of which it remains an integral part by merely redirecting retail client flow to the world’s biggest hedge fund-cum-HFT to be used and abused at Ken Griffin’s whim, just took one more step toward its inevitable collapse when it reported after the close that it will lay off a quarter (or 23% to be exact) of its employees. The latest mass layoff follows a prior termination of 9% of Robinhood’s workforce which was “focusing on greater cost discipline throughout the organization. This did not go far enough” according to (soon to be former) CEO Vlad Tenev, who also admitted that “since that time, we have seen additional deterioration of the macro environment, with inflation at 40-year highs accompanied by a broad crypto market crash. This has further reduced customer trading activity and assets under custody.”

It gets better: reading down the letter we get to this harrowing part where we learn that employees are about to be fired by slack!

Everyone will receive an email and a Slack message with your status – with resources and support if you are leaving. We’re sending everyone a message immediately after this meeting so you don’t have to wait for clarity. Departing Robinhoodies will be offered the opportunity to remain employed with Robinhood through October 1, 2022 and receive their regular pay and benefits (including equity vesting). They will also be offered cash severance, payment of COBRA medical, dental and vision insurance premiums and job search assistance (including an opt in Robinhood Alumni Talent Directory).

Each impacted Hoodie will be able to schedule time with our people team to discuss their specific situation live. We know that this news is tough for all Robinhoodies, and we are also offering wellness support to those who would like it.

To those who remain, I know that our new organizational structure and the departure of our colleagues will be another challenge to adapt to. In the short seven years since Robinhood launched to the world, we have adapted to challenges and forced the financial industry to adapt to us. We’ve overcome many obstacles and have emerged from each a stronger and more resilient company. This will be no different.

One almost feel sorry for the poor, misguided souls who put their trust in Vlad the Impaler (who one year from now will be counting his IPO millions in some non-extradition island in the Pacific).

Vlad (the Impaler)

The news of the mass layoffs comes as the company, which has been a melting ice cube pretty much since going public, and whose its misguided attempt to bet its growth on cryptos has also blown up spectacularly, unexpectedly reported Q2 earnings one day early that were – no surprise – yet another disaster, missing on the top line and also on MAUs:

  • Net revenue $318 million, missing estimate $321.2 million
    • Transaction-based revenue $202 million, missing estimate $213.7 million
    • Crypto revenue $58 million, beating estimate $55.4 million
  • Monthly active users 14.0 million, -12% q/q, missing estimate 15.5 million
  • Loss per share 34c; Net loss $295 million, -25% q/q
  • Net cumulative funded accounts 22.9 million, estimate 22.9 million
  • Assets under custody $64.2 billion

All of that however pales in comparison to just two charts:

And this:

The memo from CEO Vlad Tenev to what is left of the company’s workforce is below. At this rate, the next such email will be a termination announcement to every one else who remains at Robinhood and will be sent around the time the company files Chapter 7.

Dear Robinhoodies

As part of a broader company reorganization into a General Manager (GM) structure, I just announced that we are reducing our headcount by approximately 23%. While employees from all functions will be impacted, the changes are particularly concentrated in our operations, marketing, and program management functions.

I want to acknowledge how unsettling these types of changes are. We often talk about our mission to democratize finance for all, and one of the most cherished aspects of Robinhood is the teamwork and camaraderie involved in working towards our mission — together. I feel incredibly privileged and fortunate to have the opportunity to build with all of you.

Let me explain how we arrived at this decision. Earlier this year, I announced that we would be letting go of 9% of our workforce and focusing on greater cost discipline throughout the organization. This did not go far enough.

Since that time, we have seen additional deterioration of the macro environment, with inflation at 40-year highs accompanied by a broad crypto market crash. This has further reduced customer trading activity and assets under custody.

Last year, we staffed many of our operations functions under the assumption that the heightened retail engagement we had been seeing with the stock and crypto markets in the COVID era would persist into 2022. In this new environment, we are operating with more staffing than appropriate. As CEO, I approved and took responsibility for our ambitious staffing trajectory – this is on me.

In addition, our mandate to drive greater cost discipline and accountability has made it clear that we need to change our organizational structure. We will be moving to a General Manager (GM) structure, where GMs will assume broad responsibility for our individual businesses. This change will flatten hierarchies, reduce cross-functional dependencies, and remove redundant roles and positions. There is a lot to go through here, and we will discuss our new structure in more depth at this Thursday’s All-Hands.

Our business realities don’t make this conversation any less difficult or the decisions any less painful. I share this to be as transparent as I can with all of you who work every day to deliver on our mission. We will be parting ways with many incredibly talented people today in an extremely challenging macro environment, and I want to reduce the burden of this difficult transition as much as possible.

Everyone will receive an email and a Slack message with your status – with resources and support if you are leaving. We’re sending everyone a message immediately after this meeting so you don’t have to wait for clarity. Departing Robinhoodies will be offered the opportunity to remain employed with Robinhood through October 1, 2022 and receive their regular pay and benefits (including equity vesting). They will also be offered cash severance, payment of COBRA medical, dental and vision insurance premiums and job search assistance (including an opt in Robinhood Alumni Talent Directory).

Each impacted Hoodie will be able to schedule time with our people team to discuss their specific situation live. We know that this news is tough for all Robinhoodies, and we are also offering wellness support to those who would like it.

To those who remain, I know that our new organizational structure and the departure of our colleagues will be another challenge to adapt to. In the short seven years since Robinhood launched to the world, we have adapted to challenges and forced the financial industry to adapt to us. We’ve overcome many obstacles and have emerged from each a stronger and more resilient company. This will be no different.

As always, see you this Thursday at All-Hands.

 7 total views,  1 views today