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Wednesday, May 18, 2022

LAYOFFS—Layoff Toll Keeps Climbing at Troubled L.A. Dot-Coms

The number of dot-com layoffs has been staggering already high enough to populate a small city and Los Angeles has not been immune.

Nationwide, layoffs in the dot-com sector total 22,267. Last month alone, there were 5,677 job cuts in the dot-com sector, a new record for a single month and the fifth consecutive month of increases, according to Challenger, Gray & Christmas Inc.

Beginning in spring, investors turned their backs on most dot-coms, especially consumer-oriented sites.

“Many of these companies were banking that the world would change faster than it really did,” said Los Angeles Regional Technology Alliance chief operating officer Victor Hwang. “It’s easy on the Westside of L.A. to assume that the whole world is as technologically advanced as the Westide of L.A.”

L.A.-based Pop.com was perhaps the most dramatic closure in the nation because it was backed by famous power brokers, including Steven Spielberg and Paul Allen. Also, Pop.com crashed and burned before even launching its site. It laid off 80 employees in September.

One of the larger layoffs by an L.A. dot-com in the past few months was undertaken by Stamps.com, the Santa Monica-based online postage company. It announced Oct. 23 that it had laid off 240 of its 500 employees, confirming earlier reports that it was reducing its workforce to streamline operations.

In what seems to be a pattern before major layoff announcements, Stamps.com lost a key group of top executives in October, including its chief executive, chief financial officer and comptroller.

In a statement that echoes just about every other layoff announcement in the dot-com sector, Stamps.com Chairman Marvin Runyon said: “These moves will strengthen our ability to attain our profitability goals, while adding value to the company.”

Things could get worse before getting better in the dot-com sector. The Nasdaq has been down-trending most of the year, and few dot-coms have had much success raising capital in the private or public markets. The worst of the shakeout may arrive with the upcoming holiday season, which could make or break some Web commerce and content companies, like eToys Inc.

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