DoorDash to Lay Off 1,250 Employees in Cost Cutting Measures

DoorDash to Lay Off 1,250 Employees in Cost Cutting Measures

UTC by Bhushan Akolkar · 3 min read
DoorDash to Lay Off 1,250 Employees in Cost Cutting Measures
Photo: DoorDash / Facebook

DoorDash CEO acknowledged that they were not rigorous in managing team growth. The company has also announced severance benefits to all the departing employees.

On Wednesday, November 30, the food delivery platform DoorDash announced its plans to lay off 1,250 employees to rein in its operational costs. The development comes amid concerns about a global economic slowdown.

With this, DoorDash joined other American multinational companies in laying off employees. The current macro scenario of rising inflation and rising interest rates has put pressure on the company’s operations.

In a message on Wednesday, company CEO Tony Xu said that the pandemic had presented some unprecedented opportunities to serve consumers and merchants. To catch up with growth, DoorDash decided to step up hiring back then.

As of December 2021, DoorDash had a total of 8,600 employees worldwide. In an apology note on Wednesday, November 30, In an apology note to employees, the DoorDash CEO wrote:

“This is the most difficult change to DoorDash that I’ve had to announce in our almost 10-year history. If you are among those impacted, I am truly sorry and I apologize to have some of you wake up to this news as opposed to reading it during more normal hours”.

However, all those people who have been impacted because of this decision shall get 17 weeks of compensation along with their February 2023 stock vest. They shall also get all healthcare benefits up to March 31, 2023.

For those on H1B visas in the US, DoorDash will offer them a termination date of March 1, 2023. Thus, those willing to stay and work in the US will get some cushion. Besides, DoorDash added: “We will create an opt-in directory for companies to reach you and offer to recruiting support to help you find your next job”.

DoorDash CEO Acknowledges Mistakes

DoorDash CEO Tony Xu said that as the pandemic presented opportunities for growth, the company went on a rigorous hiring spree. However, they failed to follow a rigorous hiring process. Xu has taken complete responsibility for this adding:

“We sped up our hiring to catch up with our growth and started many new businesses in response to feedback from our audiences.  Most of our investments are paying off, and while we’ve always been disciplined in how we have managed our business and operational metrics, we were not as rigorous as we should have been in managing our team growth. That’s on me. As a result, operating expenses grew quickly”.

However, he adds that DoorDash’s business is more resilient than other e-commerce companies in the market. But the company is still not immune to external challenges. Xu is also very optimistic regarding the future of DoorDash.

“The runway ahead is massive and we’ve built tremendous momentum. If we can achieve our mission to grow and empower local economies around the world, not only will we prosper as a business but I also believe much good will be achieved as we create a world where millions of merchants can thrive, bringing out the best of our neighborhoods’ ethos and personalities,” he added.

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