Cybersecurity companies have laid off hundreds of employees in recent months amid concerns that an economic downturn will delay funding rounds and pressure the amounts investors are willing to invest.
Since the middle of the year, cyberservices and technology providers across the industry have laid off staff, sometimes in multiple rounds of workforce reductions. The layoffs spanned departments such as sales, marketing, research and development, and engineering functions.
Cybersecurity is viewed by some as relatively isolated from economic downturns, as hacks continue to plague businesses of all sizes and billions of dollars are invested in early-stage companies. But cybersecurity companies often burn cash at high rates, analysts say.
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Cybereason Inc., a Boston-based startup that was planning an IPO in 2022, announced in June that it would lay off about 140 employees, or about 10% of its workforce. Then, in October, it made further cuts of around 17%. Cybereason declined to comment beyond its Oct. 26 blog post, which discussed the reorganization and additional cost cutting in areas like marketing.
In August, email security company Malwarebytes Inc. laid off about 125 employees, or about 14% of its global workforce, a spokesman confirmed. Marcin Kleczynski, the company’s chief executive officer, described the cuts in a statement as a reorganization of the company to focus on its fastest-growing areas, which include partnerships with managed service providers and software like its threat detection platform.
Application security provider Snyk Ltd., which announced $196.5 million in Series G funding Dec. 12, also cut 14% of its workforce. The startup is now valued at $7.4 billion — about 12% down from when it raised funds in September 2021. Snyk declined to comment beyond an Oct. 24 company blog post that discussed the cuts.
Other companies that have cut staff in recent months include cloud security provider F5 inc
and Aqua Security Software Ltd. F5 is cutting fewer than 100 jobs, or about 1% of its global workforce, a company spokesman said. Aqua declined to comment beyond a Dec. 5 memo to Chief Executive Dror Davidoff’s employees announcing layoffs affecting 10% of his employees.
Even internal security teams at big tech companies haven’t been spared — Patreon Inc., a crowdfunding platform, laid off about 17% of its workforce in September, including the five members of its security organization. A Patreon spokesperson said the change is “part of a longer-term strategy to continue to spread security responsibility across our entire engineering team and bring new areas of expertise internally to Patreon.”
Fears of a recession and the impact of corporate actions such as mergers and acquisitions have spooked companies in all sectors, many of which have decided on large-scale downsizing. Facebook parent Meta Platforms Inc. said in November it would lay off 11,000 employees.
Headcount is often the first area companies can make cuts to ensure they remain solvent until funding is secured, said Mark Sasson, co-founder and managing partner of cybersecurity-focused staffing firm Pinpoint Search Group.
Early-stage companies have become accustomed to readily available financing in recent years. But now they’re being told by their investors that their next few rounds could be delayed — and might not be as big as they had hoped.
“The extremism of the pandemic era created massive cash to muster and massive cash burn that they should have been more cautious about,” said Dave DeWalt, founder and chief executive officer of venture capital firm NightDragon LLC.
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The majority of cyber workers laid off to date are in non-technical roles, said Allie Mellen, an analyst at Forrester Research inc
“When they get fired, they get hired at one of the more financially stable companies that don’t actually have to participate in layoffs or actually try to hire through it,” she said.
Pinpoint receives multiple inquiries every day from cybersecurity professionals of all levels who have been or are likely to be fired, Mr. Sasson said.
sumo logic inc,
a publicly traded cloud-based data and analytics company, is one company that has used the turmoil as an opportunity to hire new talent. The company hired about 15 people in its security department over the past year from companies that have either laid off employees or closed, said George Gerchow, Sumo’s chief security officer.
“There were a lot of startups that no longer exist. It’s really helped companies that are more mature and more visible, like ours, to grab that talent,” he said.
Write to Belle Lin at [email protected] and James Rundle at [email protected]
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