There is a popular saying that things go bad before getting better. The layoffs in the tech industry are dizzying, but I can bet that we have not seen the last of it. Barely two weeks into 2024 and several companies have already announced layoffs. The latest company to join the long line of layoffs is Discord.
An internal memo obtained by Alex Heath of The Verge highlighted the reason for the layoff and detailed how the company plans to support the departing employees including severance packages. Discord is a popular app among gamers who use it to form communities of shared interests.
According to the internal memo, 170 staff or 17% of the company’s workforce will be affected. Discord CEO Jason Citron said the decision was an attempt to “sharpen our focus and improve the way we work together to bring more agility to our organization”.
Although Discord doesn’t appear to be in a dire financial strait, the company is yet to be profitable since it was founded in 2015 by Jason Citron and Stanislav Vishnevskiy. The platform witnessed a surge in user count during the pandemic, but that enthusiasm has dropped in recent years.
Due to the surge in users during the pandemic, Discord went on a hiring spree—similar to many other tech companies. Citron admitted this saying the company grew its headcount too fast.
Jason Citron, Discord CEO (Photo credit Kimberly White via Getty Images for TechCrunch)
“We grew quickly and expanded our workforce even faster, increasing by 5x since 2020,” wrote Citron. “As a result, we took on more projects and became less efficient in how we operated.”
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Since the end of the global COVID-19 pandemic, many tech companies have found themselves with more employees than they need. With the decline in spending following the end of the pandemic and rising inflation, many tech companies have resorted to layoffs to cut down their expenses.
Discord CEO’s internal memo to employees
In 2023, there were over 10,000 job losses in the video game industry. Although the hiring spree during the pandemic is blamed for the layoffs, part of the reason is also tied to the increased adoption of AI in the industry.
Discord has attracted around $1 billion in funding. On its balance sheet, the company has over $700 million in cash and has set the goal of becoming profitable this year. Since turning down a $12 billion acquisition offer from Microsoft in 2021, Discord has mulled the idea of going public. However, sources familiar with the matter said the company is still far from doing so. Below is the full internal memo sent to the employees by the company’s CEO.
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Hi @everyone,
I want to follow up on what we just covered at our all-company meeting and share some context.
Today we are making the unfortunate and difficult decision to reduce the size of Discord’s workforce by 17%. This means we are saying goodbye to 170 of our talented colleagues. This is a decision we did not take lightly, but it is one that we have conviction in to better serve our users, our business and our mission over the long term.
Where we are and how we got here
Our company has changed and grown significantly over the past few years. We should all be really proud of what we’ve been able to accomplish together to serve the millions of people who turn to Discord every day to spend time with their friends.
At the same time, we have to face some hard truths. We grew quickly and expanded our workforce even faster, increasing by 5x since 2020. As a result, we took on more projects and became less efficient in how we operated.
Today, we are increasingly clear on the need to sharpen our focus and improve the way we work together to bring more agility to our organization. This is what largely drove the decision to reduce the size of our workforce. While difficult, I am confident this will put us in the best position to continue building a strong and profitable business that delivers amazing products for our users and supports our mission for years to come.
What happens next
I’m sure all of you are anxious to know what this means for each of you.
– By 10:30 a.m. PT, everyone will receive an email. In your email, you will learn whether or not your employment has been impacted by this reduction-in-force
– Leadership will hold a meeting with departing team members at 11:00 a.m. PT to discuss next steps
– For all remaining employees, we will come back together this afternoon at 1:00 p.m. PT to talk about what’s next
How we’re taking care of our colleagues
It is incredibly important to me that we support departing team members through this difficult time and provide them with a sizable runway as they transition into future employment. To that end, we are offering them:
– Five months of salary (plus an additional week for every full year at Discord)
– Five months of benefit continuation
– Three months of outplacement services
– Equity vesting of awards scheduled to vest on Feb. 1, 2024
– Continued access to Modern Health through the end of 2024, and more
I’ll end by sharing deep appreciation and gratitude for those leaving us. Discord is better because of your contributions and the passion you brought to delivering for our users, our company, and each other. Thank you for everything.
It’s incredibly difficult to say goodbye to respected peers, many of whom have become friends. I’m hopeful that working on and with our product has reinforced that these bonds can be sustained and even strengthened beyond the “walls” of any one place.
Take care of yourselves and let’s look out for each other through this particularly challenging time.
Jason
