California technology company Dropbox, known for its file hosting service, recently announced a reduction of approximately 20% of its global workforce (or 528 employees) due to decreased demand and underperformance.
Headquartered in San Francisco, the company made this decision known to all employees through an email sent by its CEO Drew Houston on October 30th.
“We continue to see weakening demand for our core business and macro headwinds,” Houston wrote, stating that external factors are only part of the issue. The company will be cutting back on businesses that are “over-invested” or underperforming.
Houston took full responsibility for the layoffs in the email and mentioned that the company is in the process of building a “flatter, more efficient” organizational structure. He mentioned that some of the company’s services have not met the level of service customers expect or haven’t been keeping up with competitors.
He noted the need to shift resources towards certain Dropbox products, including Dash, which offers AI search functionality. “The market is changing rapidly, with many investors pouring hundreds of millions of dollars into this space.”
The company is reducing employees from its management layer known internally as “Dropboxers.” Houston addressed the employees, stating, “We’ve heard feedback from many people that our organizational structure has become too complex, with too many layers of management slowing down our operations.”
In the second quarter of 2024, the company’s revenue increased to $634.5 million, and in April 2023, 500 employees were laid off. Dropbox’s stock price has declined nearly 3% since the beginning of the year, dropping 21% from its peak in February.
Not only Dropbox but other California tech companies have also recently announced layoffs. According to reports from the Associated Press, Meta announced in October that it laid off some employees, including those from WhatsApp and Instagram, to better align its resources with its goals. However, the company did not disclose the exact number of employees affected.
Additionally, freelance platform Upwork in the Bay Area announced on October 24th that it was reducing its workforce by 21%, and the San Francisco-based cryptocurrency exchange Kraken also announced a 15% reduction in employees on October 30th.