Edtech’s brightest are struggling to pass
Startups Weekly is a nuanced look at this week’s startup news by Equity co-host Senior Reporter. Natasha Mascarenhas. Subscribe here to receive this information in your inbox
According to an email obtained by TechCrunch, Outschool laid off a quarter (or 43) of its staff earlier this week. The layoffs were confirmed by Outschool, which was last valued at $3B.
Even more direct was the e-mail that was sent to staff. The e-mail to staff was even more direct. Email sent to staff. “The anticipation of a recession, higher interest rate and a greater need to show have had a dramatic impact on the funding environment. [return on investment] Investors
Employees will recall Nathoo’s conversation in July when Outschool was going through its first round, which resulted in 18% of staff being laid off. The comments of the entrepreneur highlight how some of edtech’s most bold and well-capitalized companies are in trouble. Outschool’s second round of layoffs follows a 12-month-long Series B, C, and D funding and a valuation increase of $1 billion to $3B in a shorter time.
Outschool’s co-founder and head for product Nick Grandy has also been laid off. Nathoo stated in an e-mail that while I knew that growth would slow down once learners could return to school full-time, I didn’t expect that our growth would slow so dramatically. “This is on me, and I am deeply sorry.”
Venture-backed businesses, including BloomTech, have been hit hard by edtech layoffs in the last quarter 2022. VedantuTeachmint and Reforge, Coursera and Unacademy, Byju’s. Udacity, Brainly. Executive shifts include Quizlet CEO stepping downDegreed CEO steps aside The founder’s return, and Invact Metaversity’s founder left after a dispute with his cofounder.
Class, an edtech startup that is on the verge of becoming a unicorn Zoom launched just 10 months ago School alternative also conducted layoffs in this year. The company has raised $146 million in venture funding, including a SoftBank Vision Fund I check. Michael Chasen, the founder and CEO, did not respond to a request to comment.
BloomTech Coding Bootcamp, formerly known under Lambda School Last week, half of the staff were laid offThis is the third round of layoffs that BloomTech has experienced since the pandemic. BloomTech was not on a fast fundraising spree during the pandemic, unlike Class and Outschool. The reasoning behind layoffs is a bit more complicated. CEO Austen Allred explained the decision by saying “we had to reduce costs to become financially profitable.”
Now we know that the startups that enjoyed the greatest pandemic-era boom are now facing difficult questions about how they will navigate a downturn. However, edtech was a sector that soared to a completely different level in 2020 and 2021 as remote learning became more popular. Investor appetite grew as demand grew. Venture capital rounds allowed companies to expand their vision of the total market. However, the same tranches may have caused an overspending or overhiring spree.
Unlike crypto, which had a similar bull market and is now facing a winter, edtech’s explosion focused on unique human and non-techie requirements. Outschool is now focusing on the tutoring side of its platform to combat learning loss resulting from COVID-19.
It is safe to say that the sector is moving from a disruptive mode to a maintenance mode.
Let’s stop our edtech digging, and let’s move on to the other happenings this week in tech. You can find me at Twitter, Substack And InstagramYou can find more of my writing and work at. We’ll be discussing Airtable, Plaid, and all your darn AI avatars in the remainder of this newsletter.
Plaid and Airtable
After this section, we’ll stop talking layoffs. But this week, there were two cuts that really surprised me. Plaid laid off 20% staff and, well, so did Airtable. This follows a string of layoffs in fintech, including Opendoor, Stripe, and Chime.
Here are the reasons why this is so important: Both startups were hiring, and both were touted as places for laid-off talent as recently as two week ago. There is so much uncertainty out there for job seekers, especially laid-off ones, about where they can “trust” for their next gig.
I wonder why these late-stage companies waited so much to make layoffs or if they really believed they would be able to weather this downturn with high costs. What was it that made them pull the plug? Airtable’s layoff appears to be particularly extensive — Its chief product officer, chief people officer, and chief revenue officer have also parted ways As the company pivots to be more focused on the enterprise side, we are there for it.
- Did you get laid off? I am currently writing a story about the future of tech talent and would love to chat with you (off-the-record is fine). ). Tweet me @DMme Send me a Signal at (925) 271 0912.
- Chipper Cash, an African fintech unicorn, lays off 12.5% of its staff
- FTX lowered Chipper Cash’s $2B value to $1.25B
All your AI avatars
My new flex is that my avatar is not an AI avatar. I’m just a little insecure about this fact. Jokes aside, you’ve probably seen some very creative algorithmically generated portraits of your friends (and enemies) on tech Twitter in the past few weeks.
These magic avatars are made by a company called Lensa AI It has been a surprise that the app store has seen a rise in popularity. It’s pretty cool. Yes, I’m tempted. But it’s not necessary to pour all over your new tweet pictures. Questions about its use Its impact on artists.
Here are some reasons why this is so important My colleague Taylor Hatmaker:
While the tech world has been celebrating the advances in AI image and text generators this past year, and artists have sat idly by the proceedings, your average Instagram user hasn’t had a philosophical conversation or fed DALLE absurdist prompts. This also means that most people don’t understand the ethical implications of AI tools like Stable Diffusion, which are free and readily available. They’re poised for huge changes in entire industries if they allow them to.
I urge you to read Hatmaker’s piece to understand Lensa’s red flags Particularly if you care about artists getting credit and paid for their work.
- Unstable Diffusion is a group that monetizes AI porn generators.
- UPDATED : Lensa AI can be tricked into creating NSFW images.
- Lensa AI maker Prisma Labs says it is working to prevent the accidental generation of nudes
- ChatGPT by OpenAI demonstrates why implementation is so important for generative AI
[Insert good news here]
We are officially at the time in the year when I am desperately looking for good news to highlight. Here’s what made this week so much fun.
- This Equity Crew attempt to Recapping 2022 It was a hot mess in all of the right ways.
- Wait, guys. The Big Brunch was delicious. You must watch, even if it’s not for the heartwarming stories of the chefs, for the satisfaction in watching everyone in the room continually defer to Sohla El-Waylly.
- TC’s Dominic-Madori DavisKnown as one of my favorite people, According to our research, women are rising up in VC firms.
- One of my favorite places on campus is Reopening after the pandemic It was close.
- All Too Well: The Short Film (Behind-the scenes)
- Babies being cute!
A few notes
- We are grateful to all of you who attended TC Sessions: Space. We will be bringing you recaps if you missed the flight!
- Talking about events We want to meet your startup during CES This year! The team is already collecting the startups they want to cover — fill out this form This form So we can get an early look at your innovation.
- A general shout out to my colleague Mary Ann AzevedoThank you for bringing your full heart and energy to work every day.
- VCs: This survey will allow you to share your most exciting 2023 predictions.
- Please, no pitches
- We are grateful to Equity listeners Today and every day.
TechCrunch – Seen
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I’m a journalist who specializes in investigative reporting and writing. I have written for the New York Times and other publications.