- Stella Alexandrova was one of 1,000 employees laid off by e-commerce giant Shopify in July.
- She saw the layoff and five months of termination as an opportunity to start a business.
- Venture capitalist Paul Asel says a recession is actually a good time to start a company.
Stella Alexandrova had been Canada’s growth lead at Shopify for three years when she received an email one morning in July informing her that she had been laid off.
“I was shocked,” Alexandrova said in an interview. “I was so confused that I couldn’t see this coming.”
Although layoffs were taking place at other big tech companies, she “felt completely safe,” and didn’t think her job would be affected.
Alexandrova was one of the 1,000 employees They were laid off from the e-commerce giant this summer. Shopify CEO Toby Lutke explained the cuts in a file notesaying he wrongly predicted that the pandemic-fueled demand for e-commerce would continue.
Lütke wrote: “In the end, placing that bet was my call to make and I got it wrong.” “Now, we have to adjust. As a result, we have to say goodbye to some of you today and I’m terribly sorry for that.”
Technology companies have cut thousands of turns This year try to cut costs and prepare for a recession. This month alone, Meta has announced plans to lay off 11,000 employees, Twitter will cut 50% from 8,000 employees, and Amazon will cut 10,000 jobs.
Alexandrova saw her layoff as an opportunity to start her own business.
“I can’t control the layoffs – that’s what happened and the company had to make these cuts,” she said. “I can’t control the outcome but I can control my reaction.”
It is unlikely that she will be alone. It is known that entrepreneurship thrives during recessionswith some of the most successful tech companies emerging from recessions — like Airbnb, Uber, and Microsoft.
It makes sense to get a high-paying job at a stable company “when the hiring is hot and the salaries are high,” said Paul Asel, a venture capitalist at NGP Capital. But in downturns, “the opportunity cost of quitting your job and starting a company is much lower.”
He said this frees up potential entrepreneurs to pursue their own projects.
Severance pay could be included
An avid traveler, Alexandrova was planning a trip earlier this year when she realized that the rise of DIY travel websites means consumers are now spending hours searching for different sites to organize trips.
Shopify offered her five months’ severance pay after she was laid off, “actually paying me to be able to start my own business,” she says.
“That’s five months of not having to worry about an income to pay my rent. It’s given me peace of mind that I don’t have to think about my bills and it’s included that most people won’t have at the start of their business.”
A week after being laid off, Alexandrova started her own travel app Maeve To help people plan trips in minutes. After sharing her plans to launch Mave on linkedinThis post went viral. Despite the support, Alexandrova fully felt the dangers of starting a business.
Now is a good time to start your own business, Aseel said, because “capital requirements have come down” and businesses can grow at a more moderate pace.
“One of the biggest mistakes any entrepreneur makes is trying to grow their business too quickly, too soon,” Aseel said. In times of economic downturn, entrepreneurs have more time to build products that meet customer needs, which increases the chances of success.
Asil said it “seems difficult” to start a business in a downturn because it is harder to raise funds but “the probability of success in the long run is actually higher.”
“It’s more painful at first, but that pain turns into success at a higher rate for those who can get through the first two hurdles,” he said.
Alexandrova has now hired 11 employees and says the Mave wait list has grown to 16,000 people. Plan to raise startup funds in a timely manner.