Dapper Labs has laid off around 22 percent of its staff, BetaKit has learned.
The company confirmed the layoffs to BetaKit, noting they were part of a broader refocus of strategy and reorganization of teams.
The move makes Dapper Labs the second large Vancouver tech company this week to make staff cuts as the economy continues to have effects: Hootsuite also recently laid off five percent of its staff in its second round of layoffs since August.
“Our company grew incredibly fast … introducing operational challenges which prevented us from being as aligned, nimble and community-driven as we need to be.”
– Roham Gharegozlou,
Dapper Labs CEO
Today’s layoffs at Dapper Labs follow various posts on social media throughout this year that claimed the company had been quietly letting go of staff. At time of publication, Dapper Labs had not yet responded to requests for comment regarding additional layoffs made by the company earlier in the year.
The 22 percent reduction represents approximately 134 people, according to Dapper Labs’ LinkedIn profile, which shows 613 employees at the company.
Dapper Labs’ layoffs follow the pattern of many tech companies, Canada and elsewhere, that raised massive funding rounds in recent years, saw sizeable growth, scaled up quickly, and are now feeling the effects of the macroeconomic environment.
In addition to the general economic headwinds, Dapper Labs is also dealing with a NFT market crash. As Quartz writes, the once booming NFT market has fallen across “nearly every trackable metric,” including in areas of art and gaming where Dapper Labs plays. As Quartz reports, trading volume for NFTs across all sectors has plunged about 90 percent since last year.
The meteoric rise of NFTs in recent years was mirrored by Dapper Labs itself. Initially known as the Vancouver blockchain startup behind CryptoKitties, Dapper Labs has become globally renowned for its blockchain games and NFTs, like NBA Top Shot.
“We know web3 and crypto is the future across a multitude of industries –– with 1000x potential from here in terms of mainstream adoption and impact ––– but today’s macroeconomic environment means we aren’t in full control of the timing,” wrote Dapper Labs founder and CEO Roham Gharegozlou in a letter that was sent to staff today about the layoffs.
He added: “These reductions are the last thing we want to do, but they are necessary for the long-term health of our business and communities.”
In addition to staff cuts, Dapper Labs is also modifying its product strategy. Gharegozlou called it a strategy built around a more sustainable cost structure.
“Across Dapper Labs, we are doubling down on what will move the needle and get the whole industry to its next inflection point –– and pulling back on everything that doesn’t fit that focus,” he said. “While we are ourselves taking big swings to 10x the market size, we also need to become a focused, streamlined organization that lets us get to profitability, control our own destiny, and sustainably build toward achieving our mission, no matter the economic conditions over the next few years.”
The CEO did not share details of what that strategy will look like, but the company is set to share details with employees in its all-hands meeting on Thursday.
Gharegozlou has remained publicly bullish on the prospects of Web3 and NFTs. Earlier this year at Collision, the CEO noted that the current crypto crash was already the second the company had faced during its five-year lifespan.
“For me, nothing has changed,” Gharegozlou said at the time. “This technology shift isn’t about a new corner of the internet, it’s about remaking” everything, he added, calling it “the single biggest economic opportunity of my lifetime.”
In the last year, Dapper Labs raised multiple large rounds of funding, including a $250 million USD round last September and $305 million USD last March. It attracted the attention of notable venture firms, including those of Andreessen Horowitz and Google, as well as celebrity and athlete angel investors like NBA and NFL stars Kyle Lowry, Kevin Durant, DK Metcalf, and Stefon Diggs. The company has also launched a $725 million ecosystem fund designated to drive innovation and growth across the Flow blockchain ecosystem.
Dapper Labs’ total funding to date sits north of $600 million USD. With financing came growth: the company has staffed up from 100 people to more than 600 within the two-year period.
“We are builders with a mission that is more important than ever,” said Gharegozlou. “Putting a web3 wallet in every pocket is how we empower the next billion communities and the creators who serve them to control their own digital worlds.”
“Our full-stack product strategy is how we do things the market can’t: we start from the user and work our way back to whatever technology is needed to enable a great experience. The refocusing of our organization will let us achieve every milestone sustainably: web3-native, mobile-first, and community-driven.”