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Wefox CEO ‘disgusted’ by mass tech layoffs: ‘It’s the people’

by SuperiorInvest

Wefox CEO Julian Teicke.

Wefox

HELSINKI, Finland — The head of European digital insurance startup Wefox offered a damning response to tech companies laying off workers en masse.

I like Target, Amazon and Twitter have laid off tens of thousands of workers in response to pressure from investors who want them to cut costs to weather the global economic downturn.

Among them was the Swedish fintech company Klarna first significant employers in technology will cut jobs this year and lay off 10% of its workforce in May. Several companies have followed suit, from Big Tech to venture-backed startups like Stripe.

Julian Teicke, CEO of Wefox, told CNBC that he is “disgusted” by what he sees as a disregard for their employees by some of his peers.

“I’m a little sick of sayings like ‘never miss a good crisis’ [or] “We have to cut the fat,” Teicke said in an interview on the sidelines of Slush, a startup conference in Helsinki, Finland.

Venture capitalists were advising startups in their portfolios to reduce costs and freeze hiring as economists warn impending recession.

After a disruptive 2021 filled with IPOs and major funding rounds, some of Europe’s most valuable startups have laid off significant numbers of staff and drastically scaled back their expansion plans.

At Slush’s kickoff Thursday, Sequoia Capital partner Doug Leone told founders and investors that they should seize the opportunities presented by challenges in the broader economy.

Amazon's CEO says layoffs will continue into 2023

Prognosis a prolonged recession worse than the crisis of 2008 or 2000, Leone said that some companies will emerge stronger than others.

“You have a great opportunity ahead of you if you play your cards right,” he said. “You have a chance to overtake 10 cars. Don’t waste a good recession.”

Sebastian Siemiatkowski, Klarna’s chief executive, said in some eyebrow-raising comments that his firm was “lucky” to cut jobs when it did. Siemiatkowski said roughly 90% of the laid-off people have since found new jobs.

“If we were to do it today, it probably wouldn’t be, unfortunately,” Siemiatkowski said in an interview with CNBC.

Without naming names, Teicke criticized the tech industry for its approach to mass layoffs.

“These are people who may have left other jobs to join your business. These are people who may have moved to other places because of you. These are people who may have ended romantic relationships.”

Teicke said managers have a responsibility to protect their employees.

“I believe CEOs need to do everything they can to protect their employees,” he said. “I haven’t seen that in the tech industry. And I’m disgusted by it.”

“It’s the people,” he added.

Wefox is a Berlin, Germany-based company that connects users looking for insurance with brokers and partner insurers through an online platform. The company was valued by investors at $4.5 billion in a July funding round.

Wefox says its business is “crisis-proof”. But fellow insurtechs have had to make cuts recently, including Lemonade, which in July laid off 20% of its workforce at Metromile, the auto insurance company it acquired.

When asked if his own firm would have to make layoffs in response to changing investor sentiment, Teicke said his firm was “cautious” about the macroeconomic environment but had no plans for mass layoffs.

“I don’t believe in mass layoffs,” Teicke said. “We will focus on performance, but not mass layoffs.” Wefox is “very close” to profitability next year, he added.

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