It’s usually at least mildly newsworthy when a large or particularly hot company cuts a chunk of its workforce, as UiPath did this week when it cut about 400 jobs from its total of about 3,200. But the timing and optics of this particular round of cuts from this particular company was jarring, especially with the WeWork debacle still fresh on people’s minds.
UiPath is a unicorn, and the sturdy robotic process automation (RPA)-powered steed has been galloping fast. The company added ProcessGold and StepShot to its stable earlier this month, after a $568 million funding round earlier this year pushed its total funding to over a billion dollars and a $7 billion valuation. It would seem that UiPath has cash to spend, and its recent Las Vegas event, which reportedly cost an estimated $8 million, reinforced the image that the company’s coffers overflow.
And then came the job cuts. The timing and price tag of the event makes for poor optics (even though $8 million wouldn’t pay 400 people for more than a few months), but on its face it’s also rather alarming that a company freshly flush with gobs of cash would need to make cuts of any kind, let alone to a chunk of its workforce.
Shouldn’t the opposite be happening? Shouldn’t UiPath be on a breathless hiring spree right now?
A blog post from UiPath CEO and founder Daniel Dines arguably made things worse. The audience for Dines’ post is clearly investors, and he spins the layoffs as a net positive. He confusingly pats UiPath on the back for increasing its workforce by 60% over the last 10 months, when it has just dumped around 400 of those people, and he wraps up a quick bullet list of good news for the company by saying “… we will still end 2019 with almost 50% more employees than when we started the year.” It’s a mite tone deaf for the average reader.
On top of that, there’s some in-the-wind concern about cash burn at the company, per an unnamed source cited by Information Age.
And on top of that, the optics of a job-eliminating automation company eliminating its own jobs makes people feel panicky. What if it’s not a unicorn at all, but an ouroboros, a snake eating its own tail? And what if that’s indicative of a larger problem in the RPA market?
Deep breaths. Deep breaths. A good bit of the sturm und drang around these layoffs really does appear to come down to optics and timing (most likely).
(And it is a little unfair to paint companies like UiPath, Blue Prism, and Automation Anywhere as “job-eliminating,” because although automation will of course displace jobs, it will ostensibly replace them with new ones — but that’s a topic for another day.)
In an interview with VentureBeat, UiPath CMO Bobby Patrick reiterated some of the general themes of Dines’ blog post — that these cuts are about getting more efficient as a company as it pushes toward profitability and a potential IPO. UiPath is at the end of its manic push for growth, growth, growth. It’s in 30+ countries now, he said, and the company is focusing on becoming more effective, instead of just … bigger.
“The company is truly healthy,” he assured us. “We’re only going down to 2,860 employees. That’s still amazing growth,” he said, echoing Dines. “I think the story is that we’re going to go into next year focused not only on growth, but on productivity and efficiency.”
That’s a certain amount of spin, but Patrick also said that UiPath has 90 open job postings — which would make up for about 23% of the lost jobs — and that some are in different areas, like on the tech side rather than sales. He also said that the job cuts were not directly to do with recent acquisitions and confirmed that none of the jobs was lost due to UiPath’s own automation tools. (We had to ask.)
More to the point, Patrick said that UiPath’s annual recurring revenue (ARR) is now at $300 million, up from $25 million two years ago.
None of the above speaks to the potential cash burn inside UiPath, nor does it salve the wounds of the hundreds of now-former UiPath employees. But it’s not unreasonable to believe UiPath when it says these job cuts are in service to the unicorn’s second act — more about developing long-term sustainability than rampant growth. If that’s the case, the cuts could be considered shrewd, regardless of the iffy optics.