Canada’s technology sector has grown rapidly in recent years as local startups and foreign giants have hired hundreds of thousands of well-educated and talented workers. But this expansion has recently slowed to a creep, as high inflation, rising interest rates and falling cryptocurrencies have taken much of the sector’s optimism.
Chris Albinson, chief executive of the Waterloo-based Communitech incubator, says the withdrawal in the United States is more pronounced because there is more to what he calls “heading to the moon” with dubious foundations that suddenly prove incapable of adapt to the new reality.
Canadian technology companies are doing relatively well now because they are generally much better owners of capital, he says, but that doesn’t mean there is no concern.
“There are some founders who were 18 when the last recession happened,” he told CBC News. “There will be stress on the system, but I think in the end they will come out of it much stronger.”
Estimates of technology giants such as Meta, Amazon, Apple and Netflix have accumulated in recent weeks, and where there has once been a fierce war for talent, many technology giants have applied hiring freezes and even layoffs.
The American streaming giant Netflix announced on Thursday that it is cutting another 300 jobs, for the second time in so many months that it has announced cuts of this size.
Crowdsourced website layoffs.fyi has documented more than 20,000 job cuts in technology in the last two months alone, mostly in and around major U.S. technology centers such as Seattle and San Francisco.
While layoffs in Canada are less dramatic, they do happen.
Canadian financial technology unicorn Wealthsimple fired 13% of its staff last week, citing “unprecedented” levels of volatility, explaining the cuts to about 160 positions. “Many of our customers are experiencing a period of market uncertainty that they have never experienced before,” CEO and founder Michael Kutchen told staff when announcing the news.
A ray of hope
Jacqueline O was among those released from the Toronto-based business. She suspects something could happen when she notices that the company is starting to spend less on its marketing department earlier this year. “When that happens … it’s natural for the team to think, well, what will happen to my work if we don’t spend any money on marketing?”
This was her first time fired, and although she said it was unpleasant, she was enjoying her free time to think about what her next move in her career might be. She is happy with the technology sector, she said, but knows there are more job cuts ahead, so she will be picky about who to sign her next contract with.
“I think this is just the beginning, I think the industry will have to keep cutting fat to stay afloat,” she told CBC News. “I think there will be ups and downs, but winter is here to stay.”
Jacqueline Au was one of dozens of people who were fired from fintech company Wealthsimple earlier this year, and she believes more layoffs in the technology sector are coming. (Jacqueline O)
Vancouver-based Thinkific fired about 20 percent of its staff in April, and Sumeru Chatterjee was one of about 100 people who left. Originally from India, Chatterjee came to the United States to study at university and work in various technical jobs for about a decade before jumping to come to Canada in 2020.
“Last year, the general mood in the industry … was that we need to grow, we need to expand our market quickly, which leads to hiring a lot of people,” he told CBC News. “So the layoff was something of a dramatic turn of events.”
He says the technology sector has grown so fast over the last decade, largely by burning venture capital money to gain market share without having to worry about things like profits. “Normal business metrics, such as profitability and cash flow, were … almost unhappy, and I think a lot of people are waking up again to the fact that if you want to run a business, you have to have some basics like profitable business and customers. who pay you. “
“To survive so you can thrive”
The mood from the stage of the Collision Conference in Toronto, where tens of thousands of technology enthusiasts from more than 100 countries gathered in person to discuss all things digital, was relentlessly positive this week. But there was a whisper of bursting bubbles in the corridors.
Sumeru Chatterjee recently lost his job at a Vancouver-based technology company and has since turned his attention to helping other technology workers connect with each other. (Dylan Hodgin / CBC)
“Right now, anyone who innovates and / or invests in technology or start-ups is trying to figure out exactly what’s going on right now,” said Dina Shakir, a partner at Silicon Valley-based venture capital firm Lux Capital. “We are a topic of conversation at every partnership and every lunch and coffee.”
While she rejects the idea that the technology sector is back in the bubble, she adds that one thing that is clearly bursting is the expectation of endless growth at the expense of profitability – which is a good thing, she said.
“We advise … our companies to think long-term to make sure they have enough capital reserves to withstand this storm,” she said. “Surviving so you can thrive is an important way of thinking to think about.”
Survival is key in the cryptocurrency space, which was shaken when a $ 12 billion trading platform known as Celsius froze withdrawals earlier this month. This has affected large companies such as Crypto.com and Coinbase. Although they increased during the pandemic, they are now laying off thousands of workers in the United States and Canada and canceling job offers.
Dina Shakir is a venture capital partner of Lux, which invests in technology companies. (CBC)
Many crypto companies had to attend the Collision in person, but Paddy Cosgrave, the conference’s founder and CEO, said many of them withdrew at the last minute. Celsius CEO Alex Maszynski was one of those who had to attend, but did not.
“I can understand why [he] he had to retire, “Cosgrave said.” I think he’s having a big battle to resolve this situation. “
Whatever dark cloud hovered over the crypto space, Cosgrave said it did not affect the total attendance, which exceeded 35,000 – a zeal that makes perfect sense to him.
WATCH | Cryptocurrencies are in free fall:
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“When things get uncertain, everyone is looking for answers,” he said. “And there have certainly been a lot of big questions over the last few weeks about what exactly is going on in technology, and crypto in particular.”
While the cuts could be in the short term, Cosgrave says the future of technology in Canada and abroad still looks bright.
“What happens when you cut a lot of smart software engineers? A lot of them go and start new companies, and some of those companies are already here,” he said.
WATCH | The technology sector affected by redundancies, redundancies:
Uncertainty hits big technology with downturns and layoffs
After years of steady growth, global technology stocks and cryptocurrency prices are declining, leading to layoffs and a freeze on employment in remarkable companies.
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