- Dropbox is laying off 528 employees, about 20% of its workforce, flattening the company.
- CEO Drew Houston said the cuts were due to softening demand, macro projection and excessive management.
- He said the changes will strengthen Dropbox’s core product and accelerate the growth of new ones.
Dropbox is the latest major company to downsize and flatten its organizational structure.
IN e-mail In an email to employees Wednesday, its CEO and co-founder Drew Houston announced that the cloud storage company is laying off 528 employees — roughly 20% of its workforce.
“As CEO, I take full responsibility for this decision and the circumstances that led to it, and I am truly sorry for those affected by this change,” Houston wrote.
The cuts come as the company goes through what it called a “transitional period.” It’s focusing its efforts on its mature file syncing and sharing business and products like Dash, Dropbox’s AI-powered work assistant.
“However, navigating this transition while maintaining our current structure and investment levels is no longer sustainable,” Houston wrote.
The The head of Dropbox cited “softening demand and macro headwinds” in the company’s core business.
“But external factors are only part of the story,” he added. “We’ve heard from many of you that our organizational structure has become too complex and redundant layers of management are slowing us down.”
Houston said the layoffs targeted areas that were “overinvested or underperforming.”
Dropbox is the latest example of a tech giant thinning out its management ranks to create a flatter organizational structure to move faster. Amazon announced a similar move earlier this year, when CEO Andy Jassy said he wanted senior management teams to “increase the ratio of individual contributors to managers by at least 15% by the end of Q1 2025. Mark Zuckerberg introduced management cuts and increased the average number of direct reports for Meta Managers after complaining about “managers managing managers.”
Dropbox’s layoffs come more than a year after company decision cut roughly 16% of its workforce, or 500 employees, in April 2023. A Houston memo to employees at the time also credited those layoffs with headwinds and freeing up investment bandwidth for other AI-powered products.
Starting Wednesday, affected workers will be entitled to 16 weeks of pay, with an additional week of pay for each completed year of tenure, the release said. They will also see their equity in the fourth quarter and have access to free job placement and coaching services, he added. Affected employees can also keep their work devices.
Dropbox did not immediately respond to a request for further comment.
Read the full report below
hello everyone I am writing to let you all know that after careful consideration we have decided to reduce our global workforce by approximately 20% or 528 Dropboxers. As CEO, I take full responsibility for this decision and the circumstances that led to it, and I am truly sorry for those affected by this change. Why are we making this decision?
As we have shared over the past year, we are in a transition period as a society. Our FSS business has matured and we are working to build our next phase of growth with products like Dash. However, going through this transition while maintaining our current structure and investment levels is no longer sustainable. We continue to see easing demand and macro projects in our core business. But external factors are only part of the story. We have heard from many of you that our organizational structure has become too complex and too many layers of management are holding us back. And while I’m proud of the progress we’ve made over the past few years, in some parts of the business we’re still not delivering at the level our customers deserve, or performing in line with industry peers. So we’re making more significant cuts in areas where we’re overinvesting or underperforming, while designing an overall flatter and more efficient team structure. An opportunity before us
The changes we’re making today are difficult, but they come at a crucial time when the market is accelerating right where we’ve placed our biggest bets. Over the past few weeks, it’s been incredibly rewarding to see customers and prospects use Dash for Business for the first time, much like people did when we first launched Dropbox. And this time we start from a position of strength. Millions of customers trust us as the home for their most important files, making the leap to organizing all their cloud content a natural progression. But we don’t go according to our own plan. This market is moving fast and investors are pouring hundreds of millions of dollars into this space. This confirms the opportunity we have been watching and underscores the need for even more urgent, even more aggressive investment and decisive action. The steps we are taking today are necessary both to strengthen our core product and to accelerate the growth of our new products. We will share more about our 2025 strategy in the coming days. Caring for disabled employees
For those leaving Dropbox, we are committed to supporting you in this transition. You will be entitled to the following benefits and support: Severance pay, equity and transitional payment
- All affected employees will be entitled to sixteen weeks of pay starting today, with one additional week of pay for each completed year of service with Dropbox. Severance pay will vary internationally depending on regional practice and legal requirements.
- All affected employees will receive their equity in the fourth quarter.
- Those with a Company Bonus Plan will be entitled to a one-time transitional payment in a prorated amount corresponding to their 2024 bonus target based on Company performance forecasts and in accordance with their level.
- We will pay eligible remaining current and approved upcoming paid leave, including medical or family leave.
- We will support affected visa holders by giving them more time to transition and access to 1:1 immigration advice.
Health care and benefits
- US employees will be eligible for up to six months of COBRA.
- Employees from Canada will be eligible for a one-month health care extension.
- All employees will continue to have access to modern health to support their mental well-being.
Device
- Affected employees will be able to keep company devices (phones, tablets, laptops and peripherals) for personal use.
Employment mediation
- Job placement services and career coaching will be available free of charge.
Next steps
We’ll share more high-level details about the changes later today, and later this week we’ll be hosting company-wide town halls to answer questions and discuss our plans in more detail. I know this is incredibly difficult and unwelcome news. To everyone leaving Dropbox, I am deeply grateful for all you have done for our company and our customers. Drew