Wealthsimple has laid off approximately 13 percent of its staff today, BetaKit has learned.
The layoffs follow nearly a week after it was revealed that Wealthsimple had enacted a hiring freeze amid changing market conditions.
Multiple sources who spoke to BetaKit have confirmed that layoffs have already started taking place. Those sources also confirmed that in a message sent to employees today it was indicated that employees would receive an email today about whether or not they would be let go.
The Canadian Press is reporting that CEO Mike Katchen sent a letter to staff today saying that 159 of the 1,262 employees at Wealthsimple will depart the company as part of these layoffs.
CEO Mike Katchen attributed the staff cuts to “changes to market conditions.”
Wealthsimple has since published Katchen’s letter on Medium, and in response to request for comment a spokesperson for Wealthsimple directed BetaKit to the letter. They also noted, “At this time our core focus is on taking care of our employees who will be leaving us today.”
According to the letter, Wealthsimple is working to support those laid-off individuals with “generous” severance packages based on how long they’ve been with the company; extended health and dental coverage; and job search support, including guaranteed interviews for anyone interested in working with Wealthsimple investors IGM and Canada Life.
Wealthsimple is also allowing laid-off employees to keep their laptops and company-provided home office equipment, and offering “accelerated vesting on equity for employees who have not reached their cliff.”
Katchen attributed the staff cuts to “changes to market conditions.” He added that Wealthsimple now plans “to be laser focused on our core businesses, like investing and banking, and the products that will power financial innovation, like crypto. And that we’re going to reduce our investment in other areas like peer-to-peer payments, tax, and merchant services. We’ll also be restructuring teams that were expanded for conditions that have changed, including Recruiting, Marketing, Client Success, and Research.”
The letter noted that employees not laid off may see changes to their roles or focus areas as part of that renewed focus. When asked by BetaKit if the restructured teams comprised the layoffs, a Wealthsimple spokesperson declined to comment, pointing back to the letter. Sources noted to BetaKit that developers at the company were impacted, and tweets regarding the layoffs point to members of the marketing team as well.
Wealthsimple’s commitment to crypto as a core business is interesting given the crypto market crash currently taking place. Bitcoin hit its lowest level since December 2020 earlier this week, dropping 70 percent from its all-time high (other cryptocurrencies such as Ethereum have followed suit). The steep downturn has lead to Coinbase, one of the world’s largest trading platforms, to lay off 18 percent of its staff yesterday – more than 1,000 employees. That news came one day after crypto lender Celsius – backed by Canada’s second largest pension fund, CDPQ – announced it was pausing all withdrawals, swaps, and transfers between accounts. The Wall Street Journal has also reported that the lending firm has since hired restructuring attorneys to “advise on possible solutions for its mounting financial problems.”
“If you’ve been with us over the past two years, you know it’s been a time of immense volatility,” Katchen’s letter to Wealthsimple employees reads. “Just about anyone who made predictions about how the pandemic would affect the economy was wrong about one thing or another. The markets crashed. Then they soared. Our business grew at an unprecedented rate, and we have been aggressively building to meet the needs of a wave of new clients since then.”
Of course volatility works both ways, and we’re seeing the other side of it now as the pandemic market conditions unwind.”
Wealthsimple was relatively slow to move into the cryptocurrency space, launching its crypto trading app in July 2020. Since then, the company has greatly expanded its support for crypto, going so far as to release commercials positioning crypto skeptics as anti-progress. While Wealthsimple actively warns its customers of crypto’s volatility, its embrace of the nacent technology has led some to question whether the company has put profits before values.
In a January Canadian Club event, Katchen balanced his excitement for the technology with a message of responsible investing.
“The underlying technology of blockchain and all of the things and use cases we’re seeing being enabled by that … is incredible,” Katchen said. “And the smartest people in technology and the smartest engineers are flocking to build applications in this space, which is generally the thing that we see at the cusp of any major technology revolution.”
“So there is something to this technology that is just wildly exciting. There’s also a heck of lot of speculation going on,” Katchen continued. “I maintain personally no particular point of view on the longterm value of any cryptocurrency. I think I hold equal parts that Bitcoin could become a reserve … but also it could not be anything of value, ever. Only time will tell.”
