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Kickstarter plans layoffs after new projects on the site drop off by 35 percent

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Talks are starting with the union

Photo by Amelia Holowaty Krales / The Verge

Kickstarter announced in an internal memo today that it’s likely going to lay off employees. CEO Aziz Hasan writes that the crowdfunding company has already seen a significant drop in crowdfunding projects being listed on the site, which is how Kickstarter makes its money. Projects are down by about 35 percent, the memo states, with “no clear sign of rebound.”

Conversations are now starting with Kickstarter’s union organizers about “potential layoffs.” Sixty percent of Kickstarter’s 140 employees are unit members, and they successfully voted to unionize in February this year, making them the first major technology company to do so.

Hasan writes that the company brought in $1.27 million in after-tax profit last year, and that money has already been reinvested back into the business. He’s now looking for more “significant cost-cutting,” including reducing senior leaders’ salaries, including his own, not automatically back hiring open roles, and cutting the budget “wherever we can.” Still, layoffs are likely imminent.

“We must look more broadly at ways to restructure the business, including potential layoffs across teams and at all levels of staff,” the memo states. Hasan says Kickstarter is in talks with the Office and Professional Employees International Union (OPEIU), which represents Kickstarter’s union. The OPEIU says it has begun discussions with Kickstarter management, but it’s still too early in the process to comment further.

Kickstarter has tried to encourage creators to keep posting projects during the pandemic. It launched a program that solicits small-scale projects that they can work on from home. At the same time, it started moderating COVID-19 projects to weed out any that pushed misinformation or phony solutions, while still promoting other projects that use the pandemic for good, like social-distancing achievement stickers.

You can read the complete memo below:

Hi everybody,

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.

Thank you,