It is absolutely understandable that entrepreneurs resort to layoffs in emergencies. As painful as it is for those affected, it is often the only way out to save the company’s continued existence and the remaining jobs. However, there are exceptions.
No respect is due to the companies and their managers who just threw money out of the window during their boom over the past two years. Specifically, Crypto.com and Coinbase wear this shoe. So this week it was announced that Crypto.com 260 and Coinbase nearly 1,100 employees laid off. The crypto lending service BlockFi is also laying off 170 employees. More examples of crypto unicorns making layoffs are likely to follow.
Some of these crypto service providers closed record-breaking sponsorship deals just a few months ago. Virtually every Formula 1 racing team has a crypto sponsor. The exchange Bybit, for example, has a three-year sponsor deal secured with the Red Bull racing team for $150 million. Crypto.com, in turn, is one of the main sponsors of FIFA and Coinbase and Co. secured the most expensive advertising space at the exceptional Superbowl event. True to the motto: What does the world cost?
Like hooligans in the club
A few weeks ago, a good dozen of these crypto unicorns behaved like hooligans running through the club with expensive champagne bottles. Buying hundreds of millions of dollars in grossly overpriced advertising space just to show everyone in the world how great you are is not a marketing feat.
It is this way of dealing with money that makes the current redundancies appear as far from the ideal of the honorable businessman as possible. Wouldn’t it have been better to invest the funds in product development or in secure company reserves? Aren’t there other marketing opportunities that require a little more effort and brains, but less money? Certainly!
Because there are enough companies and crypto start-ups that prove day in and day out that they can secure their jobs to the last, even in difficult market phases.
Image damage for the crypto sector
Despite the pessimistic outlook, hundreds of jobs could have been saved for the next few months if better management had been done in advance. But the child fell into the well. Crypto critics should be happy. It is evidence of a bloated sector that just does not yet have the maturity that is often claimed.
One can only hope that crypto corporate leaders will be more responsible with the capital in the future, especially if it is not earned themselves but comes from investors. This would be more than fair, especially for the many smaller crypto start-ups that are not guilty of anything and are now also facing hard times.