Kickstarter, the popular website for crowdfunding projects, is discussing "potential layoffs" with its employees' union after experiencing a huge decline in live projects on the site.
In an internal memo to employees, CEO Aziz Hasan stated that the new projects on Kickstarter have dropped by 35 per cent year-over-year, and there are no signs of recovery amid on-going coronavirus crisis.
"I'd like to update you on the conversations we've all been having about how to keep Kickstarter well-positioned as we navigate what's quickly become the worst economic downturn in a lifetime," Hasan said, according to the Verge.
"We've been looking at a number of possible scenarios," he added.
According to Hasan, Kickstarter made $1.27 million in after-tax profit in 2019, but that money has already been reinvested back into the business, and therefore the firm is now looking to a major cost-cutting exercise.
Measures being taken include reducing compensation for many senior executives and the board of directors, not automatically filling posts when a worker leaves (to trim headcount), and cutting non-headcount budgets wherever possible.
Still, redundancies look to be imminent, and the company has started discussions about "potential layoffs" with representatives of the Office and Professional Employees International Union (OPEIU).
Kickstarter currently has a workforce of nearly 140 employees, of which 60 per cent are union members. In February this year, the company employees successfully voted to unionise, making them the first at a major tech firm to do so. Workers including engineers, designers, analysts, coordinators and customer support specialists are represented OPEIU.
Kickstarter is making efforts to encourage project creators to continue posting new ventures on the website during the pandemic. Recently, it launched a new programme seeking small-scale projects that can be worked on from home.
Despite those efforts, many challenges remain for the firm to face in days to come. A major issue will be finding backers for projects amid weak economic situation.
"The uncertainty of this moment is stressful and I recognise you're each shouldering some part of that," Hasan said.
"Many creators are also experiencing uncertainty and stress, so we're going to make sure Kickstarter is here for them not just the next few months, but also the years ahead."
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