Bolt begins layoffs amid ‘structural changes’
Bolt, the fast-growing electronic payments company that was valued at $11 billion earlier this year but recently imposed a hiring freeze as the broader market fluctuates, began laying off employees on Wednesday.
In a letter to employees also posted on Bolt’s website, chief executive Mago Korovila attributed the layoffs to “structural changes” amid “significant challenges”, but did not provide further details.
“The leadership team and I have made the decision to secure our financial position, extend our runway, and reach profitability with the funds we have already raised,” Mr. Corovilla wrote.
The San Francisco-based company, which builds software to simplify the payment process for merchants and shoppers, has already been facing challenges, including a lawsuit filed by one of its largest clients late last year.
This month, a New York Times investigation found that the company and one of its co-founders, Ryan Breslow, had inflated metrics and overestimated Bolt’s technology capabilities in pursuit of ever-higher ratings. In April, Bolt announced a three-month hiring freeze.
Bolt, who had about 900 employees, according to her LinkedIn profile, and recently acquired a cryptocurrency company, is not alone in her struggles.
Since the start of the year, about 100 startups have left employees amid deteriorating prospects for young companies, according to Layoffs.fyi, a crowdsourcing site that tracks layoffs at tech startups. In recent weeks, venture capital funding has dried up, as investors across the board — swayed by the prospect of worsening inflation, higher interest rates and geopolitical uncertainty — have become more cautious. This has forced dozens of start-ups, which rely heavily on project financing to build their businesses, to cut costs.
Wednesday’s layoffs spelled out a turbulent period for Bolt. The company, which rose in value to $11 billion in January from $250 million just over three years ago, has been sued by Authentic Brands Group, a large holding company that owns and licenses brands such as Brooks Brothers and Forever 21. In the lawsuit that Bolt failed to achieve the technological capabilities he had promised. In his request to dismiss the lawsuit, Bolt disputed the elements of those allegations.
In his memo, Mr. Korovilla did not tell employees how many colleagues were laid off or which departments were laid off. But when workers were told they no longer had jobs, and with their access revoked, the number of employees in the company’s main Slack channel continued to decline throughout the day, according to two former employees and a current employee.
By midday, the number had dropped to about 660 employees, they said.
Bolt declined to comment beyond Mr. Korovilla’s letter.