Sam Bankman-Fried doesn’t do much by the book.
While executives don the classic suit at conferences, albeit more often tieless than not nowadays, Bankman-Fried wears shorts and tee-shirts. While the 30-year-old has amassed a fortune measured in the billions, he plans to give most of it away under the principles of effective altruism. Hell, while most chief executives sleep in a bed, Bankman-Fried likes to catch Zs on a bean-bag chair near his desk.
And so, when Bankman-Fried met with venture capitalists in 2021, the FTX CEO eschewed any advice of quickly expanding the crypto exchange’s workforce, which prospective investors believed should be around 2,000 people—not 200. “We told them additional employees added too quickly were net negative, and they could take it or leave it,” Bankman-Fried tweeted Tuesday, adding that FTX’s employee count is now closer to 300. “[W]hen it comes to hypergrowth, you can’t replace ‘growing revenue’ with ‘growing expenses.'”
Bankman-Fried was, of course, the outlier.
Over the course of the past few years as crypto trading volumes spiked, venture capitalists blitzed companies with fast and furious term sheets. And hiring exploded, with crypto companies of every size—from the largest exchanges to the most obscure decentralized finance protocols—courting executives, workers, and new college graduates away from Wall Street and Big Tech with fat paychecks and the promise of creating a new financial system.
The market’s shine is quickly coming off, though. With fears of a recession taking hold in the U.S., investors have begun fretting about the once high-flying but more speculative assets in their portfolios. Technology stocks have plunged, the IPO pipeline has essentially dried up, and crypto has crumbled, with the market’s overall value falling well below $1 trillion for the first time since early 2021.
Companies operating in the space that used the crypto boom to justify aggressive hiring plans, as a result, have been left to reckon with a newly expanded workforce at a time of growing unease—leading many like Coinbase to have to conduct layoffs.
“It’s challenging to grow at just the right pace given the scale of our growth,” Coinbase CEO Brian Armstrong wrote in a blog post Tuesday, announcing that the company was laying off 18% of its employees. “While we tried our best to get this just right, in this case it is now clear to me that we over-hired.”
For the last year, Coinbase has undergone a dramatic expansion within its ranks.
The company began 2021 with about 1,250 employees, but today, even after cutting about 1,100 jobs, Coinbase says it has around 5,000 workers on the payroll. The expansion came as Coinbase set its sights on becoming far more than just America’s largest crypto exchange, with Web3—the blockchain-built version of the Internet that many in Silicon Valley see as the next iteration of online life—marking its latest frontier. But Coinbase has pulled way back on those ambitions in 2022, a year that it had originally set out to triple its headcount during, as the crypto winter has set in.
Granted, Coinbase is not alone. In the first two weeks of June, alone, BlockFi, Gemini, and Crypto.com all announced cuts of their own, as the outlook for the macroeconomic environment has soured. The broader technology industry is facing similar pressures as well, with everyone from Compass to Stitch Fix having conducted layoffs, too. Data from Layoffs.fyi, indeed, show that there have been 8,901 employees newly laid off in June, adding to the 16,985 whose jobs were cut in May—marking the two worst months for tech company layoffs since spring 2020 when the initial wave of COVID-19 cases took hold in the U.S.
But a handful of companies seem poised to weather—and even capitalize on—the carnage. On Wednesday, Kraken, for instance, said it plans to hire 500 people through the end of 2022 while unveiling a “cultural overhaul.” Binance, the world’s largest crypto exchange, currently has more than 2,000 open roles it’s looking to fill.
As for FTX? It has plans to “maybe” get to 400 employees “in the next year,” tweeted Bankman-Fried, who started his career at Jane Street, the speedy Wall Street trading shop known for having a management structure that doesn’t even include a chief executive officer. Staying lean has its benefits: as the FTX CEO wrote in a Twitter thread June 6, “sometimes, the more you hire, the less you get done.” For instance, a group of employees working on a single project may be less likely to complete a discrete task, or the company may struggle to onboard new workers in a way that actually gets them to understand the job and culture, Bankman-Fried tweeted. At FTX, though, Bankman-Fried wrote that because it hasn’t taken an aggressive stance on hiring, leading to higher expenses and the possibility of diluting employees’ work, the company is able to keep adding to its team—however slowly that may be. It’s a playbook that has worked well for it already, after all: In January, FTX was valued at $32 billion, and is “strongly profitable,” according to its CEO.
“Sometimes, when others Zig, you Zag,” Bankman-Fried tweeted.
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