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Cloud security unicorn cuts 20% of staff after raising $1.3b
Time to play blame bingo: Markets? Profits? Too much growth? Russia? Space aliens?
Cloud security company Lacework has laid off 20 percent of its employees, just months after two record-breaking funding rounds pushed its valuation to $8.3 billion.
A spokesperson wouldn't confirm the total number of employees affected, though told The Register that the "widely speculated number on Twitter is a significant overestimate."
The company, as of March, counted more than 1,000 employees, which would push the jobs lost above 200. And the widely reported number on Twitter is about 300 employees. The biz, based in Silicon Valley, was founded in 2015.
The layoffs come amid crashing markets that have prompted job cuts and hiring freezes across the entire tech industry.
We're told the Lacework co-CEOs notified employees via email about the bad news earlier this week, and on Wednesday the firm posted the letter on its website.
"Today, we made the very difficult decision to say goodbye to some of our colleagues, as part of a restructuring and modification to the company plan, co-CEOs David Hatfield and and Jay Parikh wrote.
The pair cite the "seismic shift" in the public and private markets in recent months, and noted their "responsibility to control how we operate our business and make changes as needed to best position the company for continued and long-term success."
"We have adjusted our plan to increase our cash runway through to profitability and significantly strengthened our balance sheet so we can be more opportunistic around investment opportunities and weather uncertainty in the macro environment," the email continued. "We remain 100 percent committed to continued best-in-class growth and leading the industry with our innovation."
This comes as yet another cautionary tale about skyrocketing valuations, especially among security startups, which have set all kinds of funding and M&A records [PDF] in recent years as increasingly costly and destructive cyberattacks have massively inflated security vendors' worth — at least on paper.
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Last November, when Lacework announced it had raised $1.3 billion in funding on an $8.3 billion valuation, it set a new record for cybersecurity venture capital, breaking the company's earlier record-setting round from January 2021 when it raised $525 million.
Also in November, the company boasted a "more than 3x year-over-year revenue growth, a 3.5x year-over-year increase in new customers, and more than 3x year-over-year employee growth worldwide."
At the time, Lacework CFO Mike Staiger said, "Certainly the amount of the financing, $1.3 billion, is unprecedented in the security space, and so we're excited to have had such a large bet placed on us in this space ... It enables us to chart a very aggressive course as we invest in a range of areas in the company."
This investment would include adding more employees, and expanding the company's global reach, he added.
In hindsight, it seems the growth happened too quickly. And Lacework likely won't be the last security firm to lose its sky-high valuation, while axing jobs, as the fake money disappears. ®