This Week in Edtech, 11/15: Layoffs Galore
What do Tech and Edtech Layoffs portend for the Post-COVID economy?
PRIDE BEFORE THE (FALL, 2022)
We find ourselves in a period of large layoffs from tech companies and Edtechs alike- as the “Open To Work” badges on Linkedin become the new Fall fashion, how should we make sense of this sad season of layoffs?
Edtech Layoffs
Within US Edtech, the last four companies I’ve worked at full time- Skillshare, 2U, Meta/(CZI) and Coursera, all announced serious workforce reductions this year; many of the most dedicated and talented folks I’ve ever had the chance to work with are finding themselves on the job market. Also… it’s not my fault, I swear (at least that’s what I keep telling myself). We’ve also seen major layoffs earlier this year from US Edtech stars like Dreambox Learning and Masterclass.
Indian Edtech has been hit particularly hard this year, with Edtech giants Byju’s, Unacademy, Practically, Vedantu, and Brainly’s India Team all seeing major layoffs.
Of course, everything’s bigger in China, and Edtech giants like TAL Education Group and New Oriental laid off tens of thousands of people this year in the wake of China’s massive education crackdown.ByteDance’s (read: TikTok’s) Edtech Division lost 60% of its employees. An excellent Class Central report in February cited that over 200K layoffs resulted from China’s Edtech crackdown, as well as a loss of $100B in China’s Education Market cap:
Big Tech Layoffs
What feels new this month is that the large scale layoffs are now coming fast and furious in the broader technology world- according to Layoffs.fyi: Meta laid off 11,000 workers, Amazon is planning on laying off 10,000, Uber 6,700, Peleton 2,800, Twitter 3,700, Carvana 2,500, Airbnb 1,900, Salesforce 1,000, Stripe 1,000, Lyft 700, you get the picture.
Depressed yet? What should we in Edtech make of this moment? I’m not an economist, but I would venture a couple of possible explanations for this odd and frankly, scary, moment:
1. Tech Optimism + Post-Pandemic Optimism = Too Much Optimism
The huge rise in some tech companies’ profiles during the pandemic- especially within Edtech- led many companies to over hire and overestimate the future.
When the entire world closed down and whole swaths of society went online, companies like Zoom, Stripe, Shopify, GoPuff and Instacart (and Outschool and Coursera) boomed and were hoping that the rise in business would last. Which… it isn’t.
For us in Edtech, it may be time to get serious about our predictions about the future; yes, there will be a rise in online learning compared to pre-pandemic times, and yes, that rise will continue over time, especially if online learning can provide world-class experiences and outcomes. That’s our challenge. But as we are still rising out of the trough of disillusionment, let’s be a bit more bearish (read: humble) about the likely speed of the change.
2. Certain Sectors Are Deeply Shaken Up By Current Events
Meanwhile, companies in specific sectors of technology have been wrestling with a strange new world where predictions are very hard to make.
Tourism, transportation and hospitality were hit hard by the pandemic and have had to adjust to a new reality- see layoffs at Booking.com (4000), Uber (6700), Lyft (670), Airbnb (1900), Yelp (1000), TripAdvisor (900) and Groupon (2800).
The change in interest rates and subsequent slowing in home buying has affected companies like Better.com (3000), Zillow (2000), Redfin (862) and Opendoor (550).
The cryptocurrency world has been in a series of major shocks, leading to layoffs at former Crypto stars like Crypto.com (2000) and Coinbase (1100) and Robinhood (713).
I posit that the pandemic-fueled closing of school systems around the world is the equivalent upending event for Edtech; this is why we’re seeing Indian edtech, for example, make a push for “offline” models as schools fully reopen. If it works, you might expect to see similar models in US and European Edtech.
3. Tech Workers are Super Expensive
What lurks below the surface here is the fact that technology workers in high-growth areas make excellent salaries and receive excellent, competitive benefits.
According to Indeed.com, the average annual salary of a software developer in California is $141824. Product Manager: $117440. Data scientist: $109197. Product Designer: $83722. Meanwhile, the Census tells us that median household income in California is $78,672 and the median per capita income is $38,576.
And of course, at top companies, salaries are significantly higher; a Meta software engineer makes $218,810 per year, per Glassdoor. And that doesn’t even include stock options… here’s the Levels.fyi engineering salary table for Coinbase:
In other words, laying off a single high level Coinbase engineer could be seen as the equivalent of laying off 21 average-income workers in any other industry (in terms of cost savings to the company).
Put another way, when Elon Musk rampaged through Twitter after troll-buying it and laid off 3,700 employees, including many executives, that one move is almost certainly saving the company $1 billion a year. For Twitter, which has an annual revenue of $5B, that’s a big move.
For companies like Google (annual revenue: $161 billion) and Apple (annual revenue: $394.3 billion), this is not a very exciting proposition; these are companies whose names you conspicuously don’t see in this article.
For Edtech, we should think carefully about our salaries; in an era in which thousands of incredible educators are coming out of the classroom to join our ranks (average teacher salary in California: $62,097, and in the US: $55,593), is there an opportunity to move away from the big-tech model? Should Edtech firms be competing directly with big tech for top engineering and design talent, or might we offer something that they can’t- namely, the moral satisfaction that comes with actually improving the world- as opposed to, say, selling cryptocurrency?
BIG FIVE HEADLINES
1. A16Z MOVING INTO EDTECH
Famed investor Andreesen Horowitz is doubling down on its investments in Edtech companies like Odyssey, Maven, and Prisms VR (Insider)
2. LAYOFFS IN BIG TECH… AND EDTECH
Major layoffs from big tech companies this week, like Meta (11,000), Lyft, Twitter (3,500), Chime, and more. Main story on this above.
3. INDIAN EDTECH IS MESSI
Byju’s Education for All unveils soccer superstar Lionel Messi as its spokesperson in combo with sponsoring the World Cup. Matt follows the money…
4. ACADEMIA REPLICATES ITSELF
Two interesting Nature reviews reveal that 80% of professors come from the same colleges and graduate students feel like they’re not getting prepared for anything outside of academia.
5. ROI IN HIGHER ED
The Hill provides a map to measuring ROI in Higher Ed, Aaron Rasmussn of Masterclass and Outlier wants to bring the ROI to Gen Z through online associate’s degrees, while an Emeritus survey reveals that at-work ‘upskilling’ has concrete benefits.
LISTEN
On the podcast, we have a number of episodes for your listening enjoyment:
Plus the Week in Edtech has interviews with Joe Connor of Odyssey and Mohammed Almadani of Classera.
READ
Edtech Unicorn Multiverse just put out a new report: Professional Apprenticeships: Defining a New Way to Train and Hire for Today’s Employers, all about the new world of apprenticeships!
Key findings include:
College is not worth the money: 50% of young adults believe a college degree isn’t worth the cost.
Young adults are hungry for real-world experience: 66% of degreed young adults believe that real workforce training is the most crucial element to preparing for a successful career. This same group listed “having a clear idea of what a job is like,” “real workforce training” and “quality time with industry professionals” as the top three elements missing from a college education.
There is a big need for alternative pathways to careers: 76% of those who did not enroll in college cite financial reasons. And one-third of those without a degree are unhappy with opportunities to work in their preferred field, calling for more alternative routes to train for today’s jobs.
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