ConsenSys Is Not Actually Laying Off Half of Its Workforce

[PRIBO247]

A report on Thursday that blockchain venture studio
ConsenSys was kicking underperforming projects to the
curb and preparing to axe half of its workforce may
have been overblown. The report raised alarm and sowed
consternation among ConsenSys employees, many of whom
were aware of the restructuring but had received no indication
it would be so severe.

Now a source at the company with knowledge of the situation
says the article’s most dramatic claim—couched as the
speculation of an unnamed insider—is untrue. The idea that 50
to 60 percent of ConsenSys employees might be laid off “is
entirely not correct,” he says. But he confirmed that some
project teams—he pegged the number at about seven—have
indeed been presented with a stark choice about their future,
one which may leave little opportunity to remain part of
ConsenSys.

The downsizing is an abrupt reversal for ConsenSys, the
many-limbed concern building a new internet on the Ethereum
blockchain. The company’s growth over the past 18 months
mirrored the stratospheric rise in the value of ether, which
reached a high of nearly $1,400 in January, and in the net
worth of CEO Joseph Lubin, an Ethereum cofounder, who has
funded most of the conglomerate’s approximately 50 projects
out of his own crypto riches. Throughout the 2017 crypto boom
and beyond, ConsenSys seemed to defy ordinary business
logic, incubating dozens of projects and growing its workforce
to 1,200 employees.

But as ether fell to a recent low just above $80 and consumers
proved slow to adopt the sort of decentralized apps, or dapps,
which ConsenSys was making its stock in trade, reality set in.
The company’s burn rate, which Forbes estimated at more
than $100 million a year, made layoffs unavoidable.
For some critics in the blockchain industry, ConsenSys has
become a byword for putting crypto-utopianism ahead of
responsible management. “It was never a business,” says one
longtime industry insider. “It was just a bunch of kids at
summer camp.”

The idea that 50 to 60 percent of ConsenSys employees might
be laid off "is entirely not correct."
A shift began at the end of November, when CEO Joseph Lubin
sent a company-wide letter to ConsenSys employees laying
out his vision for the next phase of the company. That phase
would be marked by cost-cutting and an emphasis on
efficiency and profitability, he wrote. He exhorted his staff to
return to “the lean and gritty startup mindset that made us who
we are.” Soon after, ConsenSys announced that 13 percent of
its staff was being let go.
As ConsenSys Labs, the arm
 of the company that incubates
startups, retools to become more like a traditional venture
investor, the projects it has nurtured—many of which are far
from being profitable—will be held to stricter performance
standards than in the past. Some will be spun out entirely. The
founders of the projects will be allowed to choose their own
fates.

According to the source, projects that are unlikely to generate
revenue in the near future have a few options. They can elect to
remain under the ConsenSys umbrella and work toward being
profitable on a short timetable, pivoting or combining with
other teams if necessary; they can spin out and keep
developing on their own, perhaps with one final cash infusion
from ConsenSys; or they can take a severance package and
shut down.

“As part of the evaluation promised with our transition to
ConsenSys 2.0, our Labs team is engaging in ongoing
conversations with every project, and in some instances, has
provided options for them to determine their path forward,” a
ConsenSys spokesman said in an emailed statement. “Next
steps differ, with spokes having autonomy to decide about
their own staffing.”

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