Wefox CEO Julian Teicke.
Helsinki, Finland — The head of European digital insurance startup Wefox has given a blistering response to tech companies who have been laying off workers en masse.
Proverbs metaAnd the Amazon Twitter has laid off tens of thousands of employees in response to pressure from investors, who want to see them cut costs to counter the global economic downturn.
Swedish financial technology company Klarna was among the first major tech employers to cut jobs this year, cutting 10% of its workforce in May. Many companies have followed suit, from those in Big Tech to venture-backed startups like Stripe.
Wefox CEO Julian Tickey told CNBC that he is “disgusted” by what he perceives as disregard for their employees by some of his peers.
“I’m a little disgusted by statements like, ‘You never miss a good crunch'” [or] “We have to get rid of the fat,” Tiki said in an interview on the sidelines of the Slush startup conference in Helsinki, Finland.
Venture capitalists have been advising startups in their portfolios to cut costs and freeze hiring while economists warn of an imminent recession.
After a 2021 filled with IPOs and massive funding rounds, some of Europe’s most valuable startups have laid off massive layoffs and drastically scaled back their expansion plans.
At the start of Slush Thursday, Doug Lyon, partner at Sequoia Capital, told founders and investors that they should seize the opportunities presented by challenges in the broader economy.
Lyon, who has predicted a prolonged recession worse than the crises of 2000 or 2008, said some companies will emerge stronger than others.
“You have a great chance ahead of you, if you play your cards right,” he said. “You have a chance to overtake 10 cars. Don’t waste a good slack.”
In some comments that raised eyebrows, Klarna CEO Sebastian Simiatkovsky said his company was “lucky” to cut jobs when it did. Nearly 90% of the people laid off have since found new jobs, Simyatkovsky said.
“If we had done that today, unfortunately that wouldn’t have been the case,” Siemiatkovsky told CNBC in an interview.
Without naming names, Tiki blasted the tech industry for its approach to mass layoffs.
“These are the people who may have left other jobs to join your business. These are the people who may have moved on because of you. These are the people who may have ended romantic relationships.”
Managers have a responsibility to protect their employees, Tiki said.
“I think CEOs should 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.”
“These are people,” he added.
Wefox is a Berlin, Germany-based company that connects users looking for insurance with partner brokers and insurance companies through an online platform. Investors valued the company at $4.5 billion in a funding round in July.
Wefox says its business is “crisis-proof”. But fellow insurers have had to make cuts recently, including Lemonade, which laid off 20% of the staff at Metromile, the auto insurer it acquired, in July.
Asked if his company would have to lay off workers in response to changing investor sentiment, Tiki said his company was “cautious” about the macroeconomic environment but had no plans for mass layoffs.
“I don’t believe in mass layoffs,” Tiki said. “We will focus on performance, but not mass layoffs.” He added that Wefox is “very close” to achieving profitability next year.