Chicago startup Cameo announced its second round of layoffs in 2022 this week, and it is hardly the only tech company, large or small, dealing with layoffs as the year comes to an end.
Cameo's announcement comes in a year when more than 118,000 tech workers have been laid off, according to Layoffs.fyi, a site that tracks public reports of tech layoffs.
Major jobs cuts have also been announced by Twitter, Salesforce, Stripe, Redfin, Lyft and Opendoor just this month — including Meta announcing on the same day as Cameo 11,000 job cuts, or around 13% of its staff, and it decision to extend its hiring freeze through Q1 of next year.
Other Chicago tech companies and startups that have experienced layoffs this fall include Provi, Built In, ActiveCampaign and FoxTrot.
Still, some think recent layoffs could bring opportunity for Chicago’s startup community.
“What we're seeing is that most of the companies we work with are actually incredibly bullish on hiring technical people,” said Brad Henderson, CEO of P33, to Chicago Inno. “The general sentiment of the employers we work with is that they’ve struggled so much since the start of the pandemic to battle with the Facebooks of the world, who just became so aggressive in hiring people everywhere they could find them.”
P33, a local group that aims to boost Chicago’s tech sector, works with 52 companies in Chicago from Allstate and Grainger to emerging startups such as M1, Henderson said, providing him a clear window into what’s happening on the ground.
He thinks that the recent string of layoffs could open a door for companies with cashflow and a long-term value propositions to double down on hiring and win more of the hiring battles on campuses like the University of Illinois.
In general, Henderson has found that while some companies are cutting back on external spend and travel, they can’t afford to not be aggressive right now when it comes to hiring.
“Maybe it’s a chance to win some folks from the Amazons and Googles and Facebooks of the world who are pulling back right now,” he said.
No time to panic in Chicago
Ryan Jeffery, senior managing director at Gener8tor Sustainability, a Midwest accelerator program that focuses on sustainability and climate-tech startups, agreed with this sentiment and added that there’s no reason to panic in Chicago.
“I think we’re seeing a tightening of the market at later-stage companies that have probably grown too quickly and valuations that at one point made sense but were probably overinflated,” he said. “I think the market, from our perspective, has just become more rational.”
On top of that, Jeffery said he feels Midwest valuations were typically more reasonable compared to the coasts.
“I think what you’re seeing in the space overall with layoffs … you can point to just about every big tech company these days that is laying off — it's growing too fast and didn’t fit the valuation that they raised, so we’re still bullish,” he said.
However, Jeffery also admitted that recent fundraising declines will lead to the “tightening of the belt” for some Chicago startups.
Henderson also said Chicago was well-equipped to handle the downturn.
“Chicago’s economy is very different from that of other big cities,” he said. “The largest [market share] of any sector is 12%. It’s incredibly diverse. So generally what you see in Chicago is our highs aren’t as high and our lows aren’t as low.”
