- Dropbox is laying off 528 employees, about 20% of its workforce, and is making the company leaner.
- CEO Drew Houston said the cuts were due to softening demand, macro headwinds and excess management.
- He said the changes will strengthen Dropbox’s core products and accelerate the growth of new ones.
It’s Dropbox the last major company to lay off its staff and smooth its organizational structure.
In email In an email to employees Wednesday, its CEO and co-founder Drew Houston announced that the cloud storage company is laying off 528 employees, roughly 20% of its workforce.
“As CEO, I take full responsibility for this decision and the circumstances that led to it, and I am truly sorry for those affected by this change,” Houston wrote.
These cuts come as the company goes through what it called a “transition period.” It is focusing its efforts on the mature file-syncing and sharing business and products such as Dash, Dropbox’s AI-powered work assistant.
“However, navigating this transition while maintaining our current structure and level of investment is no longer sustainable,” Houston wrote.
It Head of Dropbox cited “demand softening and macro headwinds” in the company’s core business.
“But external factors are only part of the story,” he added. “We’ve heard from many of you that our organizational structure has become too complex, with excess layers of management slowing us down.”
Houston said the layoffs are targeting “underperforming or underperforming” areas.
Dropbox is the latest example of a tech giant thinning out its leadership ranks to create a more streamlined organizational structure in order to move faster. Amazon announced such a move Earlier this year, CEO Andy Jassy said he wanted senior management teams to “increase the ratio of individual investors to managers by at least 15% by the end of the first quarter of 2025.” Mark Zuckerberg made manager cuts and increased the average number of direct reports for Meta managers after complaining.managers who manage managers“.
The cuts at Dropbox come after more than a year company decision Cut about 16% of its workforce, or 500 employees, in April 2023. Houston’s memo to employees at the time also attributed those cuts to headwinds and freeing up bandwidth to invest in more AI-powered products.
As of Wednesday, the affected workers will be eligible for 16 weeks of pay, with one additional week for each completed year of service, the memo said. They will also see their fourth quarter equity and can access free job placement and coaching services, it added. Affected employees may also keep their work-issued devices.
Dropbox did not immediately respond to a request for further comment.
Read the full memo below
Hi everyone, I’m writing to let you all know that after careful consideration, we’ve decided to reduce our global workforce by approximately 20%, or 528 Dropboxers. As CEO, I take full responsibility for this decision and the circumstances that led to it, and I am truly sorry for those affected by this change. Why are we making this decision?
As we’ve shared over the past year, we’re in transition as a company. Our FSS business has matured and we are working to build our next phase of growth with products like Dash. However, navigating this transition while maintaining our current structure and level of investment is no longer sustainable. We continue to see softening demand and macro headwinds in our core business. But external factors are only part of the story. We’ve heard from many of you that our organizational structure has become too complex, with excess layers of management slowing us down. And while I’m proud of the progress we’ve made over the past few years, in some areas of the business we’re still not delivering the level our customers deserve or performing in line with our industry peers. So we’re making more significant cuts in areas where we’re overinvesting or underperforming, while overall designing a smoother and more efficient team structure. The opportunity ahead
The changes we’re making today, while difficult, come at a pivotal moment when the market is accelerating right where we’ve made our biggest bets. Over the past few weeks, it’s been tremendously rewarding to see customers and prospects light up when using Dash for Business for the first time, just like people did when we first launched Dropbox. And this time we start with positions of strength. Millions of customers trust us as the home of their most important files, making the leap to organizing all their cloud content a natural evolution. But we don’t operate on our own schedule. This market is moving fast and investors are pouring hundreds of millions of dollars into this space. This both confirms the opportunity we have been pursuing and underscores the need for greater urgency, even more aggressive investment and decisive action. The steps we are taking today are necessary to both strengthen our core products and accelerate the growth of our new products. We’ll be sharing more about our 2025 strategy in the coming days. Care for affected employees
For those leaving Dropbox, we’re committed to supporting you during this transition. You are entitled to the following benefits and support: Severance, equity and transition payment
- All affected employees will be entitled to sixteen weeks of pay starting today, with one additional week for each completed year of service with Dropbox. Internationally, release packages will vary depending on regional practices and statutory requirements.
- All affected employees will receive their 4th quarter equity.
- Participants in the Corporate Bonus Plan are eligible to receive a prorated lump sum transition payment equal to their 2024 bonus goal based on Company performance projections and aligned to their level.
- We will pay applicable remaining current and approved future paid leave, including medical or family leave.
- We will support visa-affected individuals by providing additional time for transition and access to 1:1 immigration advice.
Health and benefits
- US employees are eligible for up to six months of COBRA.
- Employees residing in Canada will be eligible for a one-month health care extension.
- All employees will continue to use Modern Health to support their mental wellbeing.
Devices:
- Affected employees will be authorized to keep company devices (phones, tablets, laptops and peripherals) for personal use.
Job placement
- Job placement services and career coaching will be available free of charge.
Next steps
We’ll be sharing more details on the high-level changes later today, and later this week we’ll be hosting company-wide town halls to answer questions and discuss our plans in more detail. I know this is incredibly difficult and unwelcome news. To everyone leaving Dropbox, I am deeply grateful for all you have done for our company and our customers. Drew: