One of Austin's fastest-growing startups in recent years is laying off an undisclosed number of employees after adjusting its projections for coming months, adding to a growing tide of layoffs across the nation.
ZenBusiness Inc. founder and CEO Ross Buhrdorf told employees the software company is making a round of layoffs and that he takes ownership for the company's ambitious growth track, as well as for its future in an increasingly rocky market, according to a memo obtained by Austin Inno.
"Simply put, we have too many people for the size of business we are," he wrote in the memo. "We hired for the company we dreamed of being in 2024, not the one we need to be in 2023."
The memo noted that ZenBusiness — which makes tools to help people with business formation and managing back office operations — fell short of goals this year and is adjusting its projections for the future.
"It was a mistake of market optimism, caught up in the euphoria of our extraordinary growth and success — but it was a mistake nonetheless," he wrote.
A ZenBusiness representative declined to disclose the number of layoffs and sent a statement saying the company "doesn’t comment on personnel matters."
"We’re fully committed to our mission to help entrepreneurs launch and run successful businesses, and are proud of the difference we’re making everyday," the statement continued.
In the memo, Buhrdorf said that the company is putting together packages for laid off employees that it believes are fair, including professional transitional services to help them find new jobs.
The layoffs are an abrupt change of pace for ZenBusiness. The startup, founded in 2017, raised a $200 million series C funding round at a $1.7 billion valuation about a year ago. At the time, the remote-first company had more than 250 employees, including about 160 that were based in Austin. It had planned to keep hiring as fast as possible, although its current headcount was not clear.
That massive funding round followed a few years of extensive growth. Though it did not share revenue figures, last year the company noted its platform had grown more than 400% since March 2020, and it had helped 200,000-plus people with business formations.
But markets both global and local have changed significantly in recent months, forcing the company to reconsider its future path.
"I could take you through a long list of bullet points explaining all of the things that are impacting our business right now," Buhrdorf wrote in the memo. "Some are beyond our control, like a looming recession with tightening investors, and some are of our own making."
ZenBusiness joins a growing crowd of startups making significant cuts as they foresee a difficult 2023, including in Austin Khoros, Rev.com and Homeward. Big tech companies have been announcing layoffs as well, including Meta, Stripe, Salesforce and Lyft.
Altogether, some 766 startups have laid off roughly 118,000 employees in 2022, according to Layoffs.FYI, which has been tracking tech and startup layoffs since the pandemic began.
Several people in Austin took to LinkedIn to talk about their experiences at ZenBusiness and begin searching for new opportunities.
"It sounds cheesy to say, but I got the chance to work with some really remarkable, talented, and kindhearted people," one impacted employee wrote. "I could go on about how great my job was, and how much I loved working there. I was offered some amazing opportunities, and the support I needed to grow. Which is something not many people can say. I’m heartbroken, and unsure about what to do. For now I’m going to take my dog for a walk, and give myself some extra care. Then I’m going to start looking for my next adventure. If you know anyone hiring I am open for new opportunities, and I know some very talented people looking too."
