Robinhood employees describe belt tightening ahead of job cuts
- Robinhood laid off 23% of its staff on Tuesday after an initial round of job cuts in April.
- Former employees say they have seen recent signs of belt tightening, including plans to reduce office space.
- In a quarterly earnings call, Robinhood executives said the company would not be acquired but was considering acquisitions.
It’s been a tough week for Robinhood.
On Tuesday, Robinhood was slapped with a $30 million fine from the New York state financial regulator. Later in the day, the company announced plans to cut nearly a quarter of its approximately 3,500 employees and reported lackluster second-quarter results. On Wednesday, a senior executive, product manager Aparna Chennapragada, announced his departure from the company.
While the second-round job cuts came as a shock to some, following a 9% cut in the workforce just four months prior, insiders say they’ve seen the signs.
For Robinhood employees, the disappointing financial numbers — monthly average users fell by a third from 2021, for example — were unsurprising. Nor the layoffs themselves, which had been the key topic of company gossip since this spring. Indeed, over the past few weeks, the startup had been sending out signals warning of tough times ahead — from emails from managers about an impending reorganization to the sight of potential tenants from other companies visiting Robinhood’s offices.
Today, the morale of the remaining 2,600 employees is bleak. And questions about the company’s future, from both insiders and industry players, are hotter than ever. Insider spoke with five former Robinhood employees, all of whom asked to remain anonymous to protect their future job opportunities. They described a company, a year after its public debut, facing a slowing market and looking for every way to cut costs – and a workforce on hot coals with no line of sight clear on when the downsizing might end.
“The company is hemorrhaging money, and that’s bad,” said a former employee, sharing his opinion on the quarterly financial figures released by the company. “I believe in the mission itself, but people can’t trust us from GameStop anymore,” they said.
A Robinhood spokesperson declined to comment.
Axed Robinhood employees were taken aback by the scale of Tuesday’s job cuts, which affected 23% of the company’s workforce, or about 800 employees. The layoffs, which are expected to cost Robinhood up to $60 million in severance and expenses, have hit the marketing, operations and customer service divisions the hardest, with the closure of two offices in Tempe, Arizona, and Charlotte, North Carolina.
In a blog post announcing the cuts, Robinhood CEO and co-founder Vlad Tenev wrote that the blame for the drastic downsizing rests entirely with him.
“As CEO, I have endorsed and taken responsibility for our ambitious recruiting trajectory – it’s on me,” Tenev wrote, calling the staff members “Robinhoodies” and “Hoodies.”
According to former employees, Tenev announced the layoffs during a brief five- to 10-minute Zoom call with the Robinhood team on Tuesday. He also announced office closures in Tempe and Charlotte, then echoed the message from Robinhood’s public blog that the startup grew its workforce too quickly and was unprepared for further weakness in the economy.
Once the Zoom call ended, employees waited anxiously to see if they would be released; Tenev said staff would be notified via email and Slack immediately after the call.
“We all started exchanging contact details and phone numbers,” said a former employee. “After the announcement, we all sat there refreshing our screens over and over again to see if we were the ones getting the notification. The whole company froze for those 15 minutes waiting to see what happened to them. .”
While Tenev’s blog indicated that terminated Robinhood staff would be offered the option to stay with the company until October, some former employees said they lost access to Robinhood systems after the appeal. Tuesday and that they were no longer working for the company. It’s an understandable move, they added, given the brokerage’s access to sensitive customer information.
Robinhood’s morale has been declining since the company laid off 9% of its employees in April, staff members said.
“It was a ‘back to Earth’ moment for us,” said a recently laid off employee. “For many people, we lived in a fantasy land.”
“People just weren’t the same, morale was low if you went into the office,” said one of the fired employees. “I know this time around the morale is really going to drop. People who are still there are like, ‘What are we supposed to do now?'”
The employee added that in the weeks leading up to Tuesday’s mass layoffs, he had heard from his direct supervisor about a possible reorganization of his team. It was an incentive, according to this person, to start applying for other jobs.
Another warning sign emerged in the weeks leading up to the layoffs when former employees saw representatives from other companies visiting the Charlotte office, which Robinhood opened in 2021, to potentially take over the space, they said.
“I thought of one of two things: either they get rid of the Charlotte office or they just move us into a smaller office space,” said a former Charlotte employee who worked in customer service. “There was no communication about it, like ‘Hey, people might come and see in the office, don’t worry. They were walking around the office, taking water from our snack bar, it was just very weird.”
Other former Robinhood staff members said the company had informed them in recent weeks that it planned to reduce its footprint in the building from two stories to one, which they also found concerning.
In Arizona, meanwhile, a former employee based there who left the company in recent months told Insider that Robinhood had sought to reduce its footprint at a WeWork in downtown Tempe, which had opened. in 2020.
With the company’s return to work being continually pushed back and only a handful of people entering the office, “having an entire floor in what was an expensive building, they were probably bleeding money,” the former employee said based in Arizona. The employee estimated that around 200 Robinhood staff were likely based in the Tempe office.
Uncertainty to come
In his blog on Tuesday, Tenev said “further deterioration in the macro environment” since the April layoffs had left the brokerage in a weaker position than he had estimated.
But the economy hasn’t shown many signs of changing and, as Chief Financial Officer Jason Warnick pointed out during the company’s second-quarter earnings call: “The first half of the year has been about the worst we’ve seen in about 50 years, hard to know exactly when it’s going to bottom out and turn around.”
“We saw Vlad talk about how it was a product of the macro environment. Rising interest rates, all that, but it hasn’t really changed much from April to now,” said the former Charlotte-based employee. “The company didn’t feel in a better position than it was before, so it was inevitable from that point of view,” they said of the layoffs.
On Wednesday, Chennapragada, the company’s chief product officer, announced on LinkedIn and Twitter that she would step down but remain an adviser to Tenev. Chennapragada, a former Google executive, joined Robinhood over a year ago in April 2021.
“The world has changed. As Robinhood adjusts to this new context, it’s time for me to move on,” she wrote in her post.
Meanwhile, Tenev was curiously optimistic about Robinhood’s earnings call on Wednesday. When asked if the company was ready for acquisition — another rumor circulating since crypto exchange FTX’s Sam Bankman-Fried took a 7.6% stake in the invested fintech company — Tenev replied no, but that Robinhood itself was looking to make more acquisitions.
In April, weeks before the 9% workforce reduction, Robinhood announced the acquisition of crypto-asset firm Ziglu. Robinhood has about $6 billion in cash on its balance sheet and the company has a $2.5 billion budget for acquisitions, Warnick said on the earnings call.
Robinhood’s stock peaked at more than $80 per share days after its IPO last summer. The stock has since fallen more than 80% to around $10. Following the latest layoff announcement, Robinhood’s stock jumped 15% on Wednesday morning, then rose sharply again on Thursday morning.
Are you an employee or former employee of Robinhood? Contact our journalists: It’s Martin, Carter Johnsonand Bianca Chan.