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Building for the long run

Building for the long run

CEO Johannes Landgraf sent the following note earlier today to all Gitpod employees.

Today I have some tough news to share. I decided to reduce the size of the Gitpod team by 28%, saying goodbye to 21 Gitpodders. This is the most difficult decision I’ve made to-date and it impacts the lives and families of colleagues and friends we care about. It hurts, and I apologize for hiring too aggressively for the macroeconomic environment we are in today.

We want to treat Gitpodders leaving with respect and make the process as caring as possible. I want to openly share the reasons that led to the decision:

  • During the market upswing of 2021 and early 2022, we built up the organization counting on a continued period of low interest rates and cheap capital. We increased operating costs too quickly and over-hired for the market environment we face today.
  • With the strategic decision on Nov-22 to replace our self hosted product with an enterprise cloud offering, we turned away from immediate cash flow and have optimized for development velocity and eventually faster growth rates. This left us with a larger team than we needed for the phase we are now in.

At that point I had all the data to make today’s call. Instead, the Nov-22 announcement of our $25m Series A tripling our company valuation lulled me into a false sense of security. I avoided fully embracing the new market reality we find ourselves in. I apologize for this and corrected that mistake today.

Our world has now flipped. I agree with Howard Marks when he writes about a macroeconomic sea change. Inflation and rising interest rates have led to cash becoming expensive and efficiency paramount. Gitpod now operates under the premise that this will not change within the next 3 years. We will use the fresh capital we raised to scale from a venture-backed company to one that is capital-efficient, with profitability and independence within reach. A company focused on sustainable growth that serves our customers for the long run.

However difficult, I am convinced this is the right decision.

To those leaving

We are deeply grateful for your lasting impact on our culture, product and company. We want you to have confidence in your superpowers – knowing that you will bring them to your next job.

Here are some ways we want to support you:

  • Severance. We are paying 5 weeks’ salary for anyone under 2 years and at least 10 weeks of salary for anyone over 2 years (this may vary by tenure-related local regulations).
  • Equity. We are shortening the vesting period by three months for everyone, and if you’ve had more than 2 years of tenure, we are shortening it by 6. We are also increasing the exercise window of all grants from 90 days to 10 years.
  • Equipment. You can keep all Gitpod-owned home office equipment including your laptop.
  • Stipend. Everyone will still have access to a $500 stipend to use in line with our existing education, physical and mental health benefits. You know what’s best for you.
  • Career support. You can opt-in to our talent and recruiting partners offer for resume and LinkedIn profile review, interview training and introductions to available job opportunities.

This transition is not easy and my hope is that you remember just how valuable you are and find a place where you can thrive. And if you put the dedication that you put into Gitpod into yourself, I am certain you will.

To those staying

Any layoff necessitates space and time to process. This week all of us - including leadership and myself - are free to dedicate our time and energy to supporting our leaving teammates. Not from obligation or guilt, but from a place of gratitude and care.

For Gitpodders who want to be supported below are some ways you may choose to do:

  • Reach out and ask how you can be there for them - it might be different from what you assume
  • Offer access to your own networks and share a public message listing former Gitpodders you want to personally recommend on LinkedIn (make sure they opt-in)
  • Write a recommendation on individual LinkedIn profiles
  • Offer time for reference calls throughout their job search
  • Write one or two sentences about what you are grateful for about the other person. We will collate and share with those leaving

Next week we’ll recalibrate, connect, and then move forward with a clear mind. We have ambitious goals and there is a lot to do in 2023. This week, however, is not the right time to talk about that. Let’s live up to our core values and show gratitude to our leaving friends and colleagues with whom we loved working.

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