Wattpad is cutting its staff by 15 percent.
Wattpad announced the news to its employees today in an email that was shared with BetaKit. In the email, interim Wattpad president KB Nam cited the “changing economic environment” as the reason for the layoffs.
“As you all know, the global economic reality over the past year has fundamentally changed – and like other businesses, we are not immune,” said Nam. “Despite our best efforts over the past several months to limit the impact of the changing economic environment, today, we’ve made the difficult but necessary decision to reduce our workforce.”
The cuts are affecting 42 of Wattpad’s 267-person team. The company did not specify whether the layoffs were company-wide or focused on certain departments and roles.
The decision to make layoffs follows Wattpad scaling up its operations in recent years. In the email, Nam noted that Wattpad hired nearly 100 new employees in the past two years since the company was bought by Naver for $754 million CAD.
Even before its acquisition, Toronto-based Wattpad had been expanding and hiring in places like Halifax, where it had planned to open a second headquarters prior to COVID-19.
“The reality is the conditions that have historically enabled us to make bold moves have changed, and we are operating in a very different environment today,” wrote Nam in the email. “After nearly doubling the size of our teams, it’s now clear that we need to recalibrate based on our current business needs and realities.”
Nam took over as interim president of Wattpad after Jeanne Lam departed at the end of last year. Nam was an appointment from Naver-owned Webtoon where he was head of strategy and research. Based in Toronto, Nam reports to Ken Kim, CEO of Webtoon Americas. At the time of Lam’s departure, Wattpad did not share its plans for a permanent president replacement.
Wattpad was founded in 2006 by Lau and Ivan Yuen, the latter of whom remains with the company as chief innovation officer. Wattpad’s website and app allow users to read and publish original written work such as articles, fanfiction, and poems, among others. It claims to have a community of more than 94 million people, including five million writers. Around 1,500 stories that were created on Wattpad have been published as books or adapted for TV and film.
Wattpad’s 15 percent workforce reduction follows the trend of tech companies continuing to tighten their belts with layoffs. With a potential recession looming and a switch-up in the investor landscape, layoffs have continued apace at large and small companies alike.
Most recently, it was reported that Meta is set to make a second round of cuts that will affect thousands of its employees. Atlassian also recently let go of 500 people or five percent of its workforce.
While the economic downturn and limited access to capital loom large for tech companies, sector-specific factors haved also played a part in recent staff cuts. One example being some FinTech startups dealing with the faltering crypto market. In Wattpad’s case, Hollywood is also going through a right-sizing, much like the tech industry.
With its studio and publishing houses, Wattpad plays in the media and entertainment industry to make money from the intellectual property published on its platform. That industry has also seen massive layoffs and restructuring following what has been called content overspending amid a streaming craze where legacy organizations tried to compete with the Netflixs of the world.