“With a heavy heart, today we laid off 37 people,” ShapeShift CEO Erik Voorhees posted. “We’ve published a blog on this, also discussing some of our missteps and lessons as a company.” The popular cryptocurrecy-to-cryptocurrency exchanging platform begins the year having to adapt in an extended bear market.
ShapeShift Lays Off 37 Employees
In “Overcoming ShapeShift’s Crypto Winter and the Path Ahead” Voorhees confirmed on the company’s Medium page. “Today, we let 37 employees go, reducing the size of our team by a third. It’s a deep and painful reduction, mirrored across many crypto companies in this latest bear market cycle.”
Though the company grew 3,000% in the heady days of 2017, and the incredible bull run that year bestowed upon nearly everyone who touched the market, crypto has since entered what many are experiencing for the first time: an extended downturn or bear market.
Truth be told, the entire cryptocurrency ecosystem has only known a worldwide bull market for its first 10 years. The space itself has seen better and worse days, of course, but the combination of perhaps world economies also starting to slow with digital assets in continual fall … is proving a disastrous combination.
Greatest and Worst Financial Decision
As a successful CEO, Voorhees is unusually candid in explaining the company’s mistakes and flaws in its business model. “As a company, our greatest and worst financial decision is the same: to embrace substantial exposure to crypto assets,” he explained. “Much of our balance sheet is comprised of them. We accept the volatility, we accept the risk. And our proclivity to attach our own fate to that of the crypto market is not altered by the recent pain.”
He’s also quite empathetic, as taking to a long blog post to detail his decision making is not something most executives would do. It’s laced with understanding let-go employees’ confusion, sadness, and anger.
“As a company, we’ve made a thousand mistakes. The most thematic has been a lack of focus,” Voorhees continued. What began as a simple platform rather quickly grew into related and exciting areas. However, “regardless of any particular project’s marketability, they were pulling our attention in too many directions. They cost financial resources. They required legal review. And then further review, and then additional review after that,” he insisted.
Legal, Customer, Financial Issues
The 2017 bull run only served to hide potentially looming problems. He also acknowledges how the company grew too fast. “By the time we learned how to manage a 10-person team, we were 30. By the time we learned how to manage 30, we were 80. Then 100. Then 125. Our understanding of how to organize people grew, but not as fast as the people,” Voorhees revealed.
ShapeShift’s legal issues also mounted. As the company succeeded, they further gained attention from regulators. Describing ShapeShift’s operations as existing in a new and muddied niche of finance, they began to get less comfortable. “So we started exploring every nuance of complex financial services regulation. As we stepped into this mire, immense legal bills and risk assessment forced resources to be diverted away from important parts of the company.”
Compounding matters were consequences from a market downturn and the tacit embrace of know-our-customer practices. This appears to have thinned ShapeShift use by some of its most previously loyal users. If all that wasn’t enough, “Our balance sheet returned to Earth as asset prices were falling. We were partially hedged, and while we were not naive to the risks, by the early December drop, it dictated material course correction,” Voorhees lamented.
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