How a US startup fired its entire workforce over a 2-minute call

A US-based startup has become the first company this year to lay off employees en masse. Proptech startup Frontdesk reportedly fired its entire 200-person workforce on Tuesday (2 January) on a virtual call.

Why did Frontdesk sack all of its employees? Let’s take a closer look.

Fired over Google Meet call

According to the American global online newspaper TechCrunch, Frontdesk, which was founded in 2017, laid off full-time, part-time workers and contractors on Tuesday afternoon during “a two-minute Google Meet call”.

The layoff comes just seven months after the proptech startup acquired smaller rival Zencity. Based in Wisconsin, Frontdesk managed over 1,000 furnished apartments across the US.

What’s behind Frontdesk’s mass layoffs?

Frontdesk CEO Jesse DePinto told employees on the call that the company would be filing for a state receivership, a bankruptcy alternative, sources told TechCrunch.

According to Crunchbase, Frontdesk raised about $26 million from investors, including JetBlue Ventures, Veritas Investments and Sand Hill Angels.

Sources told the US online newspaper that the startup tried to convince investors of its plan to pursue full building management. However, that did not work and the company could no longer run operations.

“The startup’s business model, which is leasing apartments at market rental rates and furnishing them for short-term rentals in more than 30 markets, has struggled largely due to the upfront costs involved, associated capital expenditures and variables in demand and rates,” TechCrunch reported citing a source.

ALSO READ: What is career cushioning? Can it protect you from layoffs in 2024?

When Salesforce sacked workers over a call

In January last year, Cloud-based software firm Salesforce announced it is laying off nearly 10 per cent of its workforce and closing some offices.

The company’s CEO Marc Benioff later admitted it was a “bad idea” to fire about 7000 employees in a two-hour meeting over a call.

“We were trying to explain the unexplainable. It’s hard to have a call like that with such a large group and have it be effective, and we paid a price,” The New York Times (NYT) quoted Benioff as saying.

“I wish I offered lifetime employment. But the reality is when you have a big company with 80,000 employees, there are going to be times you have to make a headcount adjustment. Our layoff packages are some of the most generous ever,” the CEO said.

In a letter to employees, he blamed the global macroeconomic conditions for the decision. Benioff said the company went overboard with hiring during the COVID-19 pandemic.

“I’ve been thinking a lot about how we came to this moment. As our revenue accelerated through the pandemic, we hired too many people leading into this economic downturn we’re now facing, and I take responsibility for that,” he reportedly said.

Last September, Bloomberg News reported citing CEO Benioff that Salesforce plans to hire 3,300 people across various departments. “Our job is to grow the company and to continue to achieve great margins. We know we have to hire thousands of people,” the CEO said.

Recent big layoffs

Tech layoffs reached over 240,000 in 2023, which was more than 50 per cent than the year before. The mass firing of the workforce was driven by Big Tech like Google, Amazon , Microsoft, Yahoo, Meta and Zoom.

In the last couple of years, tech companies around the world sacked more than 425,000 employees.

As per layoffs-fyi, a website that tracks layoffs across the world, the United States accounted for 70 per cent of the total global job cuts last year, followed by India where 16,400 people were given the pink slip.

Germany saw 13,000 thousand job cuts, followed by Sweden (11,100) and the United Kingdom – 9400.

While most of the layoffs occurred in the edtech sector (3610) in India in the first half of 2023, food (2765), finance (2141), retail (1772), consumer (1488) and healthcare (991) were also among the top sectors to witness job cuts.

With inputs from agencies