Dropbox will cut staff for the second year in a row, CEO Drew Houston has announced, with an additional 528 layoffs - 20% of the workforce - expected in the coming months.
Taking full responsibility for the decision, Houston explained that the layoffs come during a transitional period in which Dropbox is looking to focus on products such as ‘Dash for Business,’ an AI tool.
“Our FSS business has matured, and we've been working to build our next phase of growth with products like Dash. However, navigating this transition while maintaining our current structure and investment levels is no longer sustainable,” Houston said.
He also targeted internal management issues, saying staff have complained about overly complex organizational structures at the firm slowing things down.
Houston said the firm is not delivering at the level its customers deserve, or in line with industry peers.
“So we're making more significant cuts in areas where we're over-invested or underperforming while designing a flatter, more efficient team structure overall,” he told staff.
Dropbox will support staff through the layoffs by giving all impacted 16 weeks of pay, with an additional week of pay for each year of completed tenure at Dropbox. Staff on the corporate bonus plan will receive a lump sum payment equivalent to their bonus target.
The announcement marks the second batch of layoffs in as many years for Dropbox, with the company having already cut 16% of its workforce in 2023, equivalent to around 500 staff at the time.
These layoffs were also justified by the firm due to the fact it was underperforming. At the time, the company also revealed it planned to focus heavily on AI-related products.
Houston also blamed a dearth of AI skills in the company, explaining that the firm’s stage of growth required a different mix of skill sets in AI and early-stage product development.
Layoffs continue to mount
Dropbox is just one tech company of many to announce layoffs this year.
While overhiring during the pandemic led to a surge in layoffs across 2023, this trend has continued throughout 2024 - albeit at a smaller scale.
The year opened with hundreds of job cuts at Google and Amazon, as well as at smaller tech companies like Duolingo. Nearly 11,000 staff were laid off globally at the start of 2024, according to some estimates.
More recently, Meta announced cuts to its WhatsApp, Instagram, and Reality Labs divisions, and Intel announced 15,000 layoffs in August on the back of poor returns on AI investments.
