Dropbox lays off 20% of employees and joins Big Tech's flattening trend. Read CEO Drew Houston's memo.

• Dropbox is laying disconnected 528 employees, astir 20% of its workforce, and making nan institution flatter.
• CEO Drew Houston said nan cuts are owed to softening demand, macro headwinds, and "excess layers of management."
• He said nan changes will fortify Dropbox's halfway merchandise and accelerate nan maturation of caller ones.

Dropbox is nan latest awesome institution to slash its staff and flatten its organizational structure.

In an email sent to labor connected Wednesday, CEO and cofounder Drew Houston announced that nan unreality retention institution is laying disconnected 528 labor — astir 20% of its workforce.

"As CEO, I return afloat work for this determination and nan circumstances that led to it, and I'm genuinely sorry to those impacted by this change," Houston wrote.

These cuts travel arsenic nan institution is undergoing a "transitional period" arsenic it focuses efforts connected its maturing File Sync and Share (FSS) business and products for illustration Dash, Dropbox's AI-powered activity assistant.

"However, navigating this modulation while maintaining our existent building and finance levels is nary longer sustainable," Houston wrote.

The Dropbox chief cited "softening request and macro headwinds" successful nan company's halfway business.

"But outer factors are only portion of nan story," he added. "We've heard from galore of you that our organizational building has go overly complex, pinch excess layers of guidance slowing america down."

Houston said that nan layoffs are targeting "over-invested aliases underperforming" areas.

Dropbox is nan latest illustration of a tech elephantine thinning retired its guidance ranks to create a flatter organizational building pinch nan extremity of moving faster. Amazon precocious announced a akin move earlier this year, pinch CEO Andy Jassy saying he wanted senior activity teams "to summation nan ratio of individual contributors to managers by astatine slightest 15% by nan extremity of Q1 2025." Mark Zuckerberg instituted head cuts and accrued nan mean number of nonstop reports for Meta managers aft complaining astir "managers managing managers."

Dropbox's layoffs travel much than a twelvemonth aft nan company's decision to trim astir 16% of its workforce, aliases 500 employees, successful April 2023. Houston's memo to labor astatine nan clip besides attributed those layoffs to headwinds and freeing up finance bandwidth for much AI-powered products.

Starting Wednesday, impacted workers will beryllium eligible for 16 weeks of pay, pinch an further week of salary for each completed twelvemonth of tenure. They will besides spot their Q4 equity vest and entree to free occupation placement and coaching services. Impacted labor tin besides support their work-issued devices.

Dropbox did not instantly respond to a petition for further remark from Business Insider.

Read nan afloat memo below

Hi everyone,

I'm penning to fto you each cognize that aft observant consideration, we've decided to trim our world workforce by astir 20% aliases 528 Dropboxers.

As CEO, I return afloat work for this determination and nan circumstances that led to it, and I'm genuinely sorry to those impacted by this change.

Why we're making this decision

As we've shared complete nan past year, we're successful a transitional play arsenic a company. Our FSS business has matured, and we've been moving to build our adjacent shape of maturation pinch products for illustration Dash. However, navigating this modulation while maintaining our existent building and finance levels is nary longer sustainable.

We proceed to spot softening request and macro headwinds successful our halfway business. But outer factors are only portion of nan story. We've heard from galore of you that our organizational building has go overly complex, pinch excess layers of guidance slowing america down.

And while I'm proud of nan advancement we've made successful nan past mates years, successful immoderate parts of nan business, we're still not delivering astatine nan level our customers merit aliases performing successful statement pinch manufacture peers. So we're making much important cuts successful areas wherever we're over-invested aliases underperforming while designing a flatter, much businesslike squad building overall.

The opportunity ahead

The changes we're making today, while difficult, travel astatine a pivotal infinitesimal erstwhile nan marketplace is accelerating precisely wherever we've placed our biggest bets. It's been tremendously rewarding complete nan past fewer weeks to spot customers and prospects ray up erstwhile utilizing Dash for Business for nan first time, overmuch for illustration group did erstwhile we first launched Dropbox.

And this clip we're starting from a position of strength. Millions of customers spot america arsenic nan location for their astir important files, making nan leap to organizing each their unreality contented a earthy evolution.

But we're not operating connected our ain schedule. This marketplace is moving accelerated and investors are pouring hundreds of millions of dollars into this space. This some validates nan opportunity we've been pursuing and underscores nan request for moreover much urgency, moreover much fierce investment, and decisive action.

The steps we're taking coming are basal to some fortify our halfway merchandise and accelerate nan maturation of our caller products. We'll stock much astir our 2025 strategy successful nan days ahead.

Taking attraction of impacted employees

To those leaving Dropbox, we're committed to supporting you done this transition. You'll beryllium eligible to person nan pursuing benefits and support:

Severance, equity, and modulation payment

• All impacted labor will beryllium eligible for sixteen weeks of pay, starting today, pinch 1 further week of salary for each completed twelvemonth of tenure astatine Dropbox. Internationally, severance packages will alteration depending connected location practices and statutory requirements.
• All impacted labor will person their Q4 equity vest.
• Those connected nan Corporate Bonus scheme will beryllium eligible to person a pro-rated lump sum modulation costs balanced to their 2024 prize target based connected institution capacity forecasts and aligned pinch their level.
• We will salary retired eligible remaining existent and approved upcoming paid leaves, including aesculapian aliases family leaves.
• We will support impacted visa holders by providing further clip to modulation and entree to 1:1 migration consultation.

Healthcare and benefits

• US labor will beryllium eligible for up to six months of COBRA.
• Canada-based labor will beryllium eligible for a one-month healthcare extension.
• All labor will proceed to person entree to Modern Health to support their intelligence well-being.

Devices

• Impacted labor will beryllium eligible to support institution devices (phones, tablets, laptops, and peripherals) for individual use.

Job placement

• Job placement services and profession coaching will beryllium disposable astatine nary cost.

Next steps

We'll beryllium sharing much specifications connected high-level changes later coming and will big company-wide Town Halls later this week to reply questions and talk our plans successful much detail.

I cognize this is incredibly difficult and unwelcome news. To everyone leaving Dropbox, I'm profoundly grateful for everything you've done for our institution and our customers.

Drew