SoundHound, a speech and music recognition company, laid off nearly half of its remaining staff earlier this month, less than a year after the company went public on the NASDAQ.
The development was reported by tech news outlet Gizmodo on Friday (January 13), citing three employees who were axed and an email from the company’s CEO, Keyvan Mohajer.
In the said email, Mohajer wrote: “When we set course in early 2021 to become publicly listed, high-tech companies like SoundHound were the darlings of the investor community.”
“Companies who could achieve high growth, despite high costs, were seen as engines of a future economy. However, as a result of changing economic conditions, including high interest rates, rising inflation, and fears of recession, companies with our profile became much less desirable.”
SoundHound went public in New York in April 2022 after closing a $2.1 billion merger with special purpose acquisition company (SPAC) Archimedes Tech SPAC Partners.
Founded in 2005 by a group of Stanford graduates, SoundHound has since expanded its offerings from its legacy SoundHound app that rivals Shazam into providing a voice AI developer platform called Houndify and an advanced voice search and assistant app called Hound.
However, the company was no exception to the macroeconomic headwinds that many tech firms are facing. And in November 2022, the company confirmed that it was laying off 10% of its staff due to “challenging market conditions.”
“We don’t take this lightly, but in the face of challenging market conditions, we must channel our investments into the areas that continue to drive growth and allow us to best serve our customers,” a SoundHound spokesperson said in a statement to TechCrunch at the time.
The 10% reduction translated to around 45 people of the company’s 450 headcount.
Now, SoundHound is moving to ax half of its remaining staff despite concerns by investors that SoundHound “does not have the heart to let go of its people,” Mohajer said in the letter cited by Gizmodo.
Shares of the company rallied 10% on the NASDAQ on Friday before the Gizmodo article was published after market hours on that day.
Meanwhile, staff told Gizmodo that axed employees have been offered what one described as “pitiful” severance that doesn’t include healthcare.
The severance package would only be given if SoundHound can raise more money, three former employees reportedly said.
“Im actually quite shocked by the way the layoffs were handled… I was expecting a 17-year-old company, which is now a public company, to at least provide bare minimum severance,” one of the axed employees was quoted by Gizmodo as saying.
The company continued to book losses in the third quarter of 2022. Its net loss ballooned to $28.9 million from $23.8 million, although its revenue nearly tripled to $11.2 million from $4 million in the year-ago period.
At the time, SoundHound Chief Financial Officer Nitesh Sharan said the company is “thoughtfully channeling investments to the areas that matter most, while accelerating our path to profitability.”
The layoffs at SoundHound come amid a string of job reductions in the tech industry in recent months.
Tracking site Layoffs.fyi noted that 101 tech firms have implemented layoffs so far this year, with a total of 25,436 employees laid off.
On average, that translates to around 1,500 laid-off employees every day since the start of the year.
Tech giant Amazon recently said that it will eliminate “just over 18,000 roles,” larger than the previously announced 10,000 job cuts.
Facebook parent Meta is also letting go of around 13% of its workforce and is extending its hiring freeze through the first quarter of 2023, while TikTok parent ByteDance reported to have started laying off some of its staff in the US and Europe in late 2022.
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