Dive Brief:
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In the Silicon Valley startup world, a sure sign of change may be a decrease in perks. Recently, Dropbox cut some of its lavish perks and also counseled employees to be better savers, "reflecting its more cutthroat attitude toward cash management," according to Business Insider.
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In a March e-mail to employees obtained by Business Insider, Dropbox had canceled its free shuttle in San Francisco and pushed back dinner to 7 p.m. (from 6), while limiting the number of dinner guests to five a month, among other things.
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Dropbox isn't alone, according to Business Insider, which also listed Evernote, Jawbone and Tango as companies reducing cost through layoffs, office closings or reduced perks. On a higher level, Business Insider mentioned Prosper, last valued at $1.9 billion, publicly admitting that that its CEO Aaron Vermut would give up his entire annual salary in 2016, plus laying off 28% of its workforce.
Dive Insight:
Even seemingly minor changes can make a difference. Business Insider says at an average of $25,000 in perk reductions annually per employee, that's $38 million a year in cost savings for Dropbox, which declined to comment for the article.
"Because of the recent changes in the financing environment, I would guess that most startups are carefully rethinking their spending and becoming more conservative with cash management," Matrix Partners' David Skok told Business Insider. "Over the long haul, that’s likely to be a very good thing, and is when the great entrepreneurs will shine."
Of course, with less perks and layoffs come employee retention challenges. Employees may get impatient and seek greener pastures with larger, more established employers with the lure of strong benefits and even stronger bottom lines.
