Shopify to reduce workforce by 20%, sells logistics business to Flexport for 13% equity
Shopify revealed today that it’s laying off 20% of its workforce, impacting more than 2,000 people, and is selling its logistics business to Flexport for roughly 13% in stock.
The news comes some 10 months after Shopify announced that it was reducing 10% of its workforce — roughly 1,000 people — and follows a trend that has seen many big technology companies engage in several rounds of redundancies in response to economic headwinds.
It’s difficult to know exactly how many people are impacted by this latest round of layoffs. According to Shopify’s own website it has more than 11,600 employees, however it only recently updated this figure from 10,000 employees, which doesn’t make a great deal of sense if it laid off 1,000 employees last year. At any rate, going by Shopify’s self-stated numbers, today’s news likely impacts in the region of 2,300 workers.
Shopify says that those impacted will receive a minimum of 16 weeks severance pay, plus an additional week for every year served at Shopify. They will also receive medical benefits for that same duration.
Flexport is a 10-year-old freight and logistics platform that has raised more than $2 billion in funding from big-name investors including Andreessen Horowitz and SoftBank. Shopify itself invested as part of Flexport’s Series E round last February, and a few months later Shopify also acquired logistics startup Deliverr for more than $2 billion. It’s clear that Shopify was investing heavily in the logistics side of its business, so to sell all that off for a 13% equity interest in Flexport seems like a major writedown.
Indeed, Flexport was most recently valued at around $8 billion, meaning that Shopify’s fresh stake would be worth a little more than $1 billion, though that doesn’t include the stake Shopify bought during Flexport’s Series E round 15 months ago.