Web3 developer Protocol Labs’ CEO explains 21% job cuts due to crypto-winter
For the greater good of the company we laid people off
Web3 storage and application developer Protocol Labs laid off 21 percent of its headcount, 89 people, in February. The job cuts were announced at an all-hands meeting at the time and in a company blog by founder and CEO Juan Benet titled: “Focusing our strategy to weather crypto winter.”
Benet has since expanded on the issue in a video interview with Forbes, noting, around the 30 minute mark, that the business “had to reduce our burn to have a much lower runway. … We have to plan for a longer term and we have to be able to absorb shocks.”
The so-called “crypto winter” relates to the series of bankruptcies in the crypto space, such as FTX, triggered by interconnected companies and some bad loans, which is ongoing.
Protocol Labs cut its costs but Benet says it needed to go further: “Although we worked extremely hard to avoid this, we’ve made the difficult decision to reduce our workforce by 89 roles … We’ve had to focus our headcount against the most impactful and business critical efforts.”
It’s prudent, he said, to not assume the general or macro situation, with factors like the Ukraine war, high inflation and high interest rates, will end anytime soon. Protocol Labs’s runway was now in good shape, he claimed.
Protocol Labs (PL) developed the Filecoin decentralized storage network, with internal ecosystem financing and payments based on its filecoin cryptocurrency token (fil). It raised $52 million from investors such as Sequoia Capital, Andreessen Horowitz and Union Square Ventures in 2017 plus $205.8 million from its filecoin initial coin offering (ICO). The Filecoin storage network was launched in 2020 and now stores about 15 exabytes of data.
Benet claimed in the Forbes video: “It is the one of the fastest growing storage networks on the planet and amassed over 15 exabytes of storage in in about a year. I don’t know that any other large-scale network grew that quickly.”
Forbes video with Protocol Labs founder and CEO Juan Benet on the left and host Forbes senior editor Michael Del Castillo on the right
He said in his blog: “As you know, this has been an extremely challenging economic downturn, world-wide and especially in crypto. High inflation leading to high interest rates, low investment, and tougher markets have rocked companies and industries globally. The macro winter worsened crypto winter, making it more extreme and potentially longer than our industry expected.”
Benet’s evangelistic fervor is undimmed as he closes his blog by saying: “PL exists to drive breakthroughs in computing to push humanity forward. We are a network of optimistic teams, organizations, and people, who believe the largest problems ailing humanity can and must be solved …. We already empower tens of millions of people world-wide with more resilient networks, and we’re on a path to reach billions. We have been tremendously successful and fortunate over the years. Sometimes we face tough setbacks, but we forge ahead because our work matters.”