Mostly research: Tech Hiring Trends (August 2023 report)
Headcount as a leading indicator of future revenue (and ambitions)
The most important decisions a company makes are related to headcount.
In fact, +70% of all dollars spent at SaaS companies are on headcount. Therefore, hiring is a leading indicator of future topline growth (or contraction).
In other words, headcount tells you where the puck is going.
Here at Mostly metrics we track the headcount patterns of 334 technology companies on a monthly basis across 60 data points. 105 are currently publicly listed and 229 are currently privately held.
In this post we’ll cover the top signals coming out of our August 2023 headcount data. Like this…
Of the 348 companies we cover, only 6 grew their total headcount by 3% or more for 3 consecutive months (June, July, August).
TL;DR: What you’ll find in this report:
Digital Ocean and AirBnB grew headcount the most within our public company cohort, adding 4% month-over-month
Expensify and Alteryx decreased headcount the most with our Public company cohort, cutting staff by 3% month-over-month
Deel, Wiz and Cohere all increased headcount by at least 10% month-over-month, leaders within our Pre-IPO cohort
Hopin, which was acquired by RingCentral, made the deepest cuts within our Pre-IPO cohort
Cloudflare, BlackBaud, and Dropbox have the most open roles (on a relative basis) among our Public company cohort
Checkr is looking to grow it’s existing headcount more than 30% based on open roles
OpenAI’s headcount growth is actually accelerating after hitting 1,000 total employees.
And more…including select AI and HR industry trends, as well as GTM specific capacity patterns.
Among Public companies, Digital Ocean and AirBnB grew headcount the most, adding 4% month-over-month
Digital Ocean and Airbnb accelerated their total headcount on a relative basis the most amongst public companies in August.
Digital Ocean’s increase was driven by it’s acquisition of AI company Paperspace:
We acquired Paperspace for $111 million. We couldn't be more excited about this highly strategic and synergistic acquisition in the dynamic and explosively growing AI/ML market, whose impacted opportunities projected to be transformative to how the technology sector is driving the global economy. We are very focused on building an AI platform that enables developers and SMBs to leverage the power of these technologies to build and run applications while maintaining our differentiation of simplicity, in how we deliver these capabilities.
-Source: Q2 Earnings, Yancey Spruill - Chief Executive Officer
DataDog is scaling despite pushes for optimization from their customers:
In terms of hiring, I think we're still growing the company, and we're still investing. What we've done is we have moderated the rate of growth to align on the -- on what we've seen in the market. But we still consider we are very, very early in terms of the -- or our product journey. We still have a lot to build in observability. We have a lot to build in security. We have a lot to build and develop our workflows and developer experience. We have a lot to build in ITSM. There's many, many new use cases we're going after, including AI. And so we're not going to stop hiring and we're not going to stop innovating there.
The last thing I'll mention is that we've also been growing our go-to-market teams. And the reason for that is those investments in goto-market are yielding incremental growth on the new logo and new product side. As we said in the call, that part of the business has been working very well. and we're very satisfied with the output there. So we'll keep growing the team while being mindful of the margins we need to protect.
-Source: Q2 Earnings, Olivier Pomel, Co-Founder, CEO & Director
Among Public companies, Expensify and Alteryx decreased headcount the most, cutting staff by 3% month-over-month
More than 236,000 people have been laid off in the tech sector so far in 2023 across more than 1,000 tech companies, according to the Layoffs.fyi tracker (an increase of 9,000 people m/m, which is 2,000 less than the prior period change).
Expensify and Alteryx made sizeable cuts to their workforces in August. Other notable names include on24, Hashicorp and olo.
It’s important to note that Expensify already had less than 200 employees and generates more than $170,000,000 in revenue per year. So they are incredibly efficient.
The Alteryx decrease is linked to a RIF they announced in April of ~11% of the workforce:
“Today we announced a workforce reduction plan that is expected to impact approximately 11% of our employees, primarily in the sales and marketing and general and administrative organizations.
“We estimate that we will incur charges of approximately $11 million to $13 million in connection with this plan, consisting of cash expenditures for notice and severance payments, employee benefits, and job placement services.”
Hashicorp also made the move to decrease their workforce by 8% within the last few months, and we see it working it’s way through the data.
“We are responding to the current customer and economic environment with proactive actions to lower our ongoing costs,” McJannet said. “This was a difficult decision that we don’t take lightly, and I am deeply disappointed to lose many valued colleagues. I believe, however, that after these actions we are better positioned for our opportunity.”
Among Pre-IPO companies, Deel, Wiz and Cohere all increased headcount by at least 10% month-over-month
Deel and Remote are becoming staples for any company looking to expand their workforces abroad.