eBay Lays Off 1,000 Employees, CEO Says Headcount & Expenses Outpaced Growth
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UPDATE 1-25-24
In-house authentication operations are key to CEO Jamie Iannone's strategy for eBay and integral to how the company has found themselves in the precarious position of having "headcount and expenses outpacing growth."
Take a deeper look at the impact these layoffs may have on authentication workers and how Iannone radically changed eBay from its previous asset-light business model with labor-centric acquisitions.
Liz Morton
UPDATE 1-24-24
As employees anxiously wait to learn their fates, eBay has officially filed an 8-K with the SEC revealing $90 million - $110 million cost of restructuring, most of which is expected to be related to severance payments and post-employment benefits.
The company assured investors that the resulting expense savings will be used to further strategic and operating initiatives, including previously stated ambitions to grow expenses more slowly than revenue in 2024, and that they still expect Q4 results to be in line with previous guidance.
On January 23, 2024, eBay Inc...announced a restructuring plan intended to reduce operating costs, improve operating efficiency and better align the Company’s talent with its strategic priorities to drive long-term sustainable growth.
In addition to this announcement, the Company confirmed that it expects that its financial results for the quarter and year ended December 31, 2023 will be at least consistent with or, in the case of some measures, slightly above, the higher end of the guidance for the quarter and year ended December 31, 2023 that was previously provided by the Company in its last earnings announcement in November 2023...
...On January 23, 2024, the Company announced the Plan, which includes a reduction of the Company’s current workforce by approximately 1,000 employee roles, or 9%. Decisions regarding the elimination of positions are subject to local law and consultation requirements in certain countries, as well as the Company’s business needs.
In connection with the Plan, the Company currently estimates that it will incur GAAP pre-tax charges in the range of $90 million to $110 million, substantially all of which are expected to be related to severance payments and post-employment benefits. The majority of these charges will be recognized as incurred during the fourth quarter of 2023, and the full amount of these charges is expected to result in future cash expenditures.
The actions associated with the employee restructuring under the Plan are expected to be substantially complete by the end of the second quarter of 2024, subject to local law and consultation requirements and the Company’s business needs. The Company expects that expense savings resulting from the Plan will be used to further eBay’s strategic and operating initiatives, including previously stated ambitions to grow expenses more slowly than revenue in 2024.
The role that M&A and increasing labor-centric operations as part of Iannone's strategic initiatives has played in these events has been curiously absent from much of the layoff discussion, almost as if many are completely unaware eBay owns and operates authentication warehouse facilities in multiple states.
eBay acquired Sneaker Con's authentication business in 2021, with facilities in Nevada and New York. They also own trading card marketplace TCGPlayer, located in New York, and have opened a facility for in-house luxury handbag authentication in New Jersey as well.
It was largely missed by media and analysts at the time, but at least one savvy scrutineer noted in-house authentication was a "significant step-change" for the company as it departed from the asset light, "just a venue" model that had previously protected it from unionization efforts which have targeted competitors like Amazon.
While eBay does not disclose headcount figures for these divisions, they're an important part of the story of how eBay got here and what impact these layoffs may have beyond the typical white collar tech jobs we would expect - especially with ongoing labor relations issues looming large as eBay continues to stall negotiating a contract with unionized workers at TCGPlayer.
Liz Morton
At least one reddit commenter claims their job at one of the authentication centers was impacted in today's layoffs.
Comment
by u/theitguyforever from discussion
in technology
Mercury News reports 391 of the impacted jobs are being cut from eBay headquarters in San Jose, nearby offices in San Francisco or other remote positions based in California.
gavalosbayareanewsgroup.com
San Jose-based eBay said it is cutting 391 jobs in the Bay Area, affecting workers at its San Jose headquarters campus and an office tower in San Francisco. The layoffs also include remote workers in California who report to one of the two affected Bay Area locations.
“eBay Inc. will conduct a mass layoff at the following campuses: 2025 Hamilton Avenue in San Jose and 300 Mission Street in San Francisco,” Angela Corridan, an eBay global employment legal official wrote in a WARN letter dated Jan. 23 that the tech company filed with the state Employment Development Department.
Here are the details of where layoffs are occurring in the Bay Area and how many workers are being affected:
— San Jose. At least 260 workers who are based at the company’s San Jose campus are losing their jobs.
— San Francisco. An estimated 20 workers will be cut.
— California remote workers. About 111 of these employees are losing their positions.
eBay has announced they are laying off 1,000 employees, constituting about 9% of their total workforce, as CEO Jamie Iannone says "overall headcount & expenses have outpaced the growth of our business."
That sounds like a problem he should have been discussing with Chief Growth Officer Julie Loeger and Chief People Officer Cornelius Boone long before this point in time, especially after cutting 500 jobs early last year.
Iannone also notes eBay will be scaling back their use of contract workers as well, though he does not give details about the scope of those cutbacks and what areas they may impact (such as customer service).
US employees have been ordered to work from home tomorrow so the notices can be delivered over Zoom rather than in person, though it's difficult to see how this decision fits with "treat[ing] everyone with respect and empathy."
We are on a path to building a stronger eBay for the future — one that is growing, and resilient in the face of any challenge. Over the past three years, we made fundamental changes in our experiences across categories and accelerated the pace of innovation at eBay. In areas where we’re investing, we are seeing consistent increases in customer satisfaction and a meaningful improvement in our growth relative to the market.
Our strategy is the right one, but there is more we can do to ensure our success. We need to better organize our teams for speed — allowing us to be more nimble, bring like-work together, and help us make decisions more quickly. Today, I am sharing news about changes we are implementing to better position eBay for long-term, sustainable growth.
The most significant and toughest of these decisions is to reduce our current workforce by approximately 1,000 roles or an estimated 9% of full-time employees. Additionally, we plan to scale back the number of contracts we have within our alternate workforce over the coming months. These are not actions we take lightly — and we recognize the impact they will have on all eBayers. We have to say goodbye to people who have made so many important contributions to the eBay community and culture, and this isn’t easy.
The Need for Change
Despite facing external pressures, like the challenging macroeconomic environment, we know we can be better with the factors we control. While we are making progress against our strategy, our overall headcount and expenses have outpaced the growth of our business. To address this, we're implementing organizational changes that align and consolidate certain teams to improve the end-to-end experience, and better meet the needs of our customers around the world.Next Steps
Shortly, we will begin notifying those employees whose roles have been eliminated and entering into a consultation process in areas where required. Leaders will communicate the news directly via Zoom, and your VP or eLT member will send an email once the notifications in their group have been completed.We request that all U.S. employees work from home on January 24th to provide some space and privacy for these conversations. We’re committed to treating everyone with respect and empathy through this transition and providing impacted employees with support and resources.
Looking Ahead
These changes are difficult, but I’m confident that by working together we will become stronger than ever. In the months ahead, you will see a more focused, agile, and responsive eBay — one that is better positioned to advance our purpose of creating economic opportunity for all.Thank you,
Jamie
Just a reminder - Iannone's total annual compensation was almost $17 Million in 2022, a pay ratio to employees of 124:1.
2022 Ratio Calculation
This year, the median employee’s annual total compensation was $136,754. Mr. Iannone’s annual total compensation, as reported in the 2022 Summary Compensation Table, was $16,950,325.Based on this information and the disclosures provided in this section, the ratio of the annual total compensation of Mr. Iannone to the median employee’s annual total compensation is 124:1.
Employees are discussing the news on Blind.com, with some offering condolences and attempting to bring humor to the grim situation.
RIP. May they go to the highest bidder.
It’s not layoff , it’s eBayOff
This news will likely not come as a surprise to Value Added Resource readers who've been keeping up with a significant drop in open job positions at the company over the last few months.
Liz Morton ~ Founder
The writing was on the wall with disappointing Q3 2023 earnings results and weak Q4 guidance, resulting in CFO Steve Priest expressing a newfound focus on "expense discipline."
Liz Morton
In addition to "difficult macroeconomic headwinds", eBay is also facing potential fines and possible shareholder lawsuits in the ongoing EPA lawsuit against them for failing to stop the sales of certain pesticides, chemicals and emissions-control cheat devices on the platform.
Liz Morton
eBay has also entered into a deferred prosecution agreement with the Department of Justice after being found criminally liable in connection to the 2019 cyberstalking of journalists Ina and David Steiner of EcommerceBytes.
The deal hit the company with the maximum fine of $3 Million dollars and will require enhanced compliance monitoring for 3 years, including a specific focus on Mergers and Acquisitions due diligence, disclosure and risk management.
Liz Morton
The company also faces ongoing labor relations problems as they stall negotiating a contract with eBay's first US union at subsidiary TCGPlayer, acquired in 2022 for $295 Million.
Liz Morton
The acquisition and subsequent labor battle raised many questions and concerns about due diligence and disclosure, as well as possible broader implications for eBay's other labor-centric authentication operations, leading to the very abrupt exit of Chief Accounting Officer Brian Doerger in 2023.
Liz Morton
Other questionable acquisitions and investments include NFT marketplace KnownOrigin (for an undisclosed sum), millions in funding via eBay Ventures down the drain when luxury fashion resale outlet Cudoni went out of business, and joining a consortium to take a 25% stake in Funko Pop, paying ~$21 a share for stock that now trades ~$7.30/share.
Liz Morton
Not to mention, why is eBay spending money to open new offices in Australia if expenses and headcount are outpacing growth?
Liz Morton
And for all of the "magical" talk, eBay is severely behind the curve in deploying truly innovative AI solutions for the marketplace.
Liz Morton
Given chronic leadership missteps and misexecution and near daily, ongoing, business impacting technical problems that continue to plague the platform, perhaps the Board needs to look to the C-suite when considering making changes to better position eBay for long-term, sustainable growth.
Liz Morton
