ShapeShift, the company founded by first-wave bitcoin entrepreneur Erik Voorhees, has announced the layoffs of 37 employees, about a third of the company’s headcount. It joins a growing list of crypo startups battered by the broad market downturn and regulatory pressure and forced to reduce headcount, including ConsenSys, Bitmain, SpankChain, and Steemit.
ShapeShift may have been particularly hard hit by increasing regulatory scrutiny. The company’s core product once allowed users to instantly, easily, and anonymously convert between cryptocurrencies. But in September, the company announced it was implementing new identity requirements, a decision Voorhees said was made “under duress” and was “due to our need to navigate the current regulatory environment.” In yesterday’s announcement, Voorhees confirmed that implementing these controls led to the loss of “valuable” partners that used the service.
But in his lengthy, introspective announcement, Voorhees doesn’t take the easy route of simply blaming the market downturn, or even regulators, for the company’s struggles. Instead, falling on his sword like a disgraced 16th century samurai, he catalogs the many mistakes that he thinks he and his leadership team have made. Above all, he cites “a lack of focus” that led the company to start new projects too rapidly, and neglect their core product.
“The magic of ShapeShift was real and apparent, and yet it wasn’t sufficiently nurtured,” Voorhees wrote. “I can lay this mistake at nobody’s feet but my own.”
Voorhees further details the challenges of growing rapidly from 10 staffers to more than 100, leading to problems with “people, and structure, and communication.” Though Voorhees is a serial entrepreneur who has previously held a variety of leadership positions, he hadn’t helmed a company as large as ShapeShift.
Of course, external factors were also undeniable: Voorhees also cites added pressure from falling crypto-asset prices, and the “immense” resources the company has had to devote to navigating laws.
Though light on specifics, Voorhees concludes with hints at a “new ShapeShift” that has been under development through 2018. Voorhees writes that the goal of the revamp is to make it easier for individuals to manage their own crypto-finances, and ultimately help make “financial sovereignty…a pillar of 21st-century civilization.” Voorhees describes this as a “rebirth” for the company, and says it will launch “in the near future.”