Layoffs, AI, and the future of startup work.
Data below shows layoffs across the ~60,000 or so US startups using Carta.
Let's run through some recent history:
2018-2019 was chill
April 2020 was decidedly not chill. Massive layoff spike as COVID anxiety ran rampant.
Late 2020 into 2021, things calmed down again. Actually better than that - layoffs were low and new offers were plentiful.
Interest rates rose for the first time in forever, March 2022. Uh oh.
Biggest-ever spike in layoffs across startups in January 2023. This was coming to terms with the new reality across startups (high interest rates, low funding, not fun).
Also ChatGPT launched in Nov 2022, just noting.
Since the peak, layoffs have trended lower over 2024 and 2025. Not quickly, no sharp decline. But the trend is steadily lower.
𝗪𝗵𝗮𝘁 𝗛𝗮𝗽𝗽𝗲𝗻𝘀 𝗡𝗼𝘄
A lot of people have predicted that AI will result in large waves of startup layoffs. I think this is a little vague. AI itself has not pushed layoffs upwards (clearly), although it may be playing a role on the margins.
The real change is in hiring. Startups are building with fewer people than they did 1, 2, or 3 years ago. The median seed-stage startup on Carta now employs 5 people, down from 10 or so in 2021. At Series A, the same drop was 26 --> 17.
Fewer hires --> harder job market --> more people staying in current jobs --> fewer open roles --> harder job market, and so on.
Others accept this reality but say that's okay as long as there is a Cambrian explosion of small companies employing 2-10 folks. Enough of those startups and boom, employment overall holds steady or grows...I'm skeptical.
One fact: probably harder to get hired at a startup now than it has been in a decade or so. Good luck out there 🙏
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