Dapper Labs lays off 22% of staff as NFT market falls

Dapper Labs cuts 20% more staff in a second round of layoffs

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Dapper Labs Inc. announced Thursday that the company is laying off 20% more of its employees as part of a restructuring plan less than four months after the company behind the NBA Top Shot nonfungible token marketplace said it was cutting 22% of staffers.

“As shared earlier today, we are restructuring the Dapper Labs organization to improve our focus and efficiency, strengthening our position in the market and better serving our communities,” Roham Gharegozlou, founder and chief executive of Dapper Labs, said in the announcement. “As part of this restructure, we made the difficult decision to part ways with 20% of full-time employees.”

Dapper Labs is known for developing “CryptoKitties,” a game where players can collect, breed and sell virtual cats, which are represented by NFTs. As the cats are unique crypto assets, they are controlled by the users they maintain value and can be bought and sold by the users for cryptocurrencies and exchanged for money.

The company announced its first round of layoffs in November during a downturn in NFT sales on its platforms in 2022. NBA Top Shot was one such platform that suffered from this marked downturn. The Top Shot marketplace allows users to buy, sell and trade crypto assets that represent collectible video clip “moments” stored on the company’s Flow blockchain.

At the time, Gharegozlou revealed that the company had increased its headcount too quickly when the NFT market boomed between 2020 and 2021 by expanding the number of employees from 100 to 600.

In the announcement on Thursday, he wrote that in 2020 the company’s sales brought in $5 million in 2020 and $167 million in 2021, following the soaring markets. However, NFT markets would decline markedly in 2022 during what would be dubbed “crypto winter” alongside cryptocurrency values, although NFT values are beginning to rebound.

To handle the loss in sales and new markets, Gharegozlou said, the company needed a new cost structure and new forward-thinking plans.

The company has also been rolling with other punches this past week. On Wednesday, a federal judge ruled that Dapper Labs NBA “Top Shot Moments” NFTs might be securities and denied Dapper’s motion to dismiss a class action lawsuit against the company in New York. The suit alleges that the “moments” should have been registered with the Securities and Exchange Commission before being sold to the public.

For outlook in 2023, Gharegozlou said that Dapper Labs “remains in a strong cash position with no outstanding debt,” and has multiple major launches planned in the upcoming year including two new unannounced global IPs and development toward mobile-first platforms.

Image: Dapper Labs

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