Fast forward two months and prices have yet to turn around, and the prolonged downturn seems to have finally hit ShapeShift. According to a blog post by Vorhees, the digital asset exchange laid off 37 employees on Tuesday, reducing the size of its team by a third.
With a heavy heart, today we laid off 37 people. We’ve published a blog on this, also discussing some of our missteps and lessons as a company. “Overcoming ShapeShift’s Crypto Winter and the Path Ahead” by @ShapeShift_io https://t.co/1eNT54eyPp #bitcoin
— Erik Voorhees (@ErikVoorhees) January 8, 2019
In the announcement, Voorhees revealed that the root cause of the problem lies in the fact that digital currencies comprise a large portion of the company’s assets.
“As a company, our greatest and worst financial decision is the same: to embrace substantial exposure to crypto assets,” Voorhees said. “Much of our balance sheet is comprised of them. We accept the volatility, we accept the risk. And our proclivity to attach our own fate to that of the crypto market is not altered by the recent pain.”
It seems that the hubris of the 2017 bull market played a significant role in the company’s inability to identify internal issues related to its operations.
“Yet, despite these missteps, the profound and intense bull market of 2017 hid the lessons from our view. Everything was going well. Hundred percent growth every month has a way of obfuscating reality,” Voorhees noted, adding that the company had notable structural, legal, financial and customer issues that ultimately culminated in the staff reduction.
ShapeShift’s downsizing is certainly not out of the ordinary at the current stage of the market cycle, as many other notable blockchain projects and crypto companies have been forced to downsize their staffs.
In November, Steemit, Inc., the company behind the open-source steemit.com, laid off 70% of its staff. More recently, Status (SNT) cut 25% of its staff of around 100 people and ConsenSys, the Ethereum development studio founded by Joseph Lubin, let go of 13% of its 1,200-person staff.
Much like these other startups, ShapeShift is now planning to change up its strategy in 2019, with a renewed focus on pushing financial sovereignty as a pillar of the 21st-century.
Disclaimer: This article’s author has cryptocurrency holdings that can be tracked here. This article is for informational purposes only and should not be taken as investment advice. Always conduct your own due diligence before making investments.