Your guide to Bitcoin, Ethereum and Web 3.0
The crypto and tech job markets are in a strange place right now – but not in the same way.
If you listen to Federal Reserve Chairman Jerome Powell, you’d think the job market was booming across the board. In a interview at the Economic Club of Washington, DC earlier this month, he said, “The labor market is exceptionally strong.”
At a glance, US federal data appears to support this. The Labor Department said total wage employment, not including agricultural workers, is increasing 517,000 in January. Overall, the unemployment rate held steady at 3.4%, continuing its slow decline since October 2022. Hospitality, public employment, health care, and construction are among the industries seeing job growth.
But the numbers and headlines from the crypto and tech industry paint a completely different picture. In January alone, crypto layoffs already affected 2,806 employees, according to CoinGecko data. That’s a big number considering that 6,820 crypto workers lost their jobs in all of 2022. Put another way, in just one month, crypto layoffs in 2023 reached 41% of total layoffs in 2022.
Huobi, Crypto.com, Coin basetwins, Genesisand Wyre is among the crypto companies that made big cuts last month, with Magical Eden, PolygonChainalysis and Bittrex lay off employees in February.
“Quiet” dismissals on the rise
But Denise Carlinmanager of people at Web3 startup MPCH Labs, told Decrypt in an interview that there are also some “quiet layoffs” happening right now.
“People try to quiet layoffs,” Carlin said of crypto firms, explaining that she has knowledge of two firms that laid off significant percentages of employees — one said goodbye to over 20% of its employees — without much press.
Dan Eskowfounder and talent partner at Web3 recruiting firm Up Top Talent, said he’s also seen incidents of crypto firms making “quiet” layoffs.
“Yes – GSR immediately comes to mind,” Eskow shared Decryptwith reference to DeFi regular GSR Markets.
Termination-triggering events
Many crypto terminations in the past year have occurred directly after unique, industry-shaking events, such as Terra LUNA crash May 2022 and FTX bankruptcy submission of November 2022.
But January’s layoffs don’t exactly have a clear, unequivocal causal event. So what gives?
Image: Coingecko
The continued tightening of the job market in the crypto space is a result of continued industry concerns, including Genesis’s bankruptcyGemini closes its Tjen program mid fight with DCG, Kraken ends its effort offer and session regulatory pressure in the US, Crypto is also affected by the same macroeconomic conditions threatens large technology companies.
While Google’s Web3 Team was special not affected by CEO Sundar Pichai’s decision in January to lay off 12,000 workers, all software engineering team and Google’s startup incubator team at Area 120 was among those laid off by the technology giant.
According to a termination tracks compiled by Airtable software engineer Steven Zhang and ex-Airtable engineer Chris Talley, influenced much of Google’s layoffs of mid-level software engineers. Interestingly, that’s the experience level that crypto often hires for.
“In crypto, we definitely tend to skew towards mid-level,” Carlin said, explaining that this is often because junior talent takes too long to train and senior talent is rarely on the market.
Image: warntracker.com
Crypto vs. Big Tech
As crypto and traditional tech industries deal with ongoing waves of layoffs, are Web2 talents trying to make the leap to Web3?
“We’re seeing a lot of engineers coming out of the FAANG layoffs who are definitely interested in these roles,” Eskow said, referring to laid-off Meta, Amazon and Google employees applying for crypto jobs. “But the reality is that it’s not a good time to make a pivot from web2 to web3. The crypto-native developers are going to be prioritized.”
Because crypto requires specialized skills and coding languages that aren’t practiced in trad tech roles, Eskow believes developers who already have crypto industry experience will take precedence — especially if they also have connections in Web3.
“Comparing employment in crypto to employment in traditional tech is not apples to apples,” Eskow said, adding that the crypto job market is a very small community where one’s network carries enormous weight.
Eskow speculated that the reason some laid-off tech workers want to explore crypto is in part because many crypto firms are smaller.
“I think after experiencing layoffs at big tech companies, they’re worried about joining another big company, so [they] look to the crypto startups for a change of environment,” Eskow said Decryptwho confirmed that he has received referrals and outreach from recent ex-Google veterans eager to get into crypto.
But Carlin believes it is a good time to go from Web2 to Web3. She argues that talent has a chance of being hired despite the competition because the Web3 talent pool is relatively “very junior”.
“The Web3 job market differs from the larger technology area in that the talent pool is very junior. More people are moving into the Web3 space every year,” Carlin said, adding that acquiring the most experienced talent is difficult.
This is where bounty hunters come in. Web3 recruitment has relied on the practice of “headhunting” in boom times.
“There’s a much greater reliance on headhunting in Web3 compared to traditional big tech that’s just going to be flooded with experienced applicants like with all these layoffs,” Carlin said.
Effects of artificial intelligence
But now that the crypto market has cooled, hungry venture capitalists looking for the next big thing in tech may be looking elsewhere — to artificial intelligence (AI).
Clarence Thomasco-founder of crypto recruitment firm FinBlock Staffing, told Decrypt that he has seen candidates lose out on job offers because venture capital originally pledged to a crypto firm went to an AI firm instead.
“We recently had a client we worked with – they were actually promised about 5 million in funding for a crypto wallet. They needed a product manager. And we actually found them a unicorn for what they needed,” explained Thomas. “In the end, they didn’t get the funding that they were promised. That funding actually went to the AI space.”
“We’ve seen a lot of artificial intelligence take investment capital away from crypto and blockchain, and that’s very much driving the hiring right now,” Thomas said.
Who is hiring
Eskow has seen an ongoing demand for Web3 talent in the DeFi space. Other recruiting specialists like Thomas have had to shy away from crypto hiring in part as he’s seen demand dwindle in the bear market. In an effort to diversify, FinBlock has branched out into recruiting for the 5G communications industry.
But Thomas said cryptocurious hedge funds are still hiring through the downturn.
“We’ve seen a huge increase recently for those hiring specifically for sales roles,” Thomas said. “Especially since the New Year, in January and now February, that’s where we’ve seen the highest demand.”
The future of crypto work
The crypto job market is still uncertain for 2023.
“It’s still seen as very volatile and high risk for new talent,” Carlin said Decrypt. She believes that the number of employees in crypto companies has returned to what it was two to three years ago – but now the industry also has to contend with massive problems with public trust.
“The Boom Is Over,” Georgetown Associate Professor Jim Angelwho teaches bachelor and MBA courses on market structure, global financial regulation and fintech, told Decrypt by e-mail. “Companies that have expanded will continue to lose workers.”
Professor Angel sees a tale of two crypto labor markets. One consists of traditional tech and financial firms – like a Google or a Mastercard – trying to stay compliant with regulators while dipping their toes in crypto waters. The others are what Angel calls “wildcat firms,” which are less concerned with regulation and instead push ahead with crypto-technology and innovation at any cost.
“There are many similarities with tradfi and technology firms, but [crypto companies] tend to be looser and more fluid given the dynamic state of the industry, Angel said. “In this way, they’re similar to startups where you have people willing to work for low wages in the hopes of hitting it big when the company booms. If the company runs into trouble, they jump to the next promising venture.”
Jeffrey Pfeffer is a professor of organizational behavior at Stanford’s Graduate School of Business (GSB), the university where two of the school’s most prominent law professors have stopped teaching and now supports and houses his son, formerly FTX CEO Sam Bankman-Friedwho is under house arrest until the trial in October.
Pfeffer believes that some of the tech industry’s layoffs may be due to “copycat behavior.”
“Petting in the tech industry is basically an example of social contagion, where companies imitate what others are doing. If you look for reasons why companies lay off, the reason is that everyone else is doing it,” Pfeffer said in a GSB news post in December. The professor acknowledged that some companies may have overhired, but argues that is not the real reason layoffs are happening because large companies like Meta are still generating revenue.
But Pfeffer has a different view when it comes to crypto.
“Crypto has another problem – it’s an industry based on steam, hope and BS for the most part,” Pfeffer said Decrypt by e-mail. “That’s why it’s hard to know if it will actually survive.”
In contrast, Angel has a more optimistic view.
“The crypto job market will follow crypto in general,” Angel said Decrypt. “The flaky stuff that adds no value will disappear along with these jobs. The productive sites will grow and mature with a steady need for crypto-savvy employees with technology, HR, accounting, marketing, customer service and compliance skills just like others financial firms.”
