Sharing details of our cost reduction plans

Today we shared details of a proposed cost reduction plan with employees at GoCardless. These plans will see us reduce our cost base by ~15% and will affect 17% of the roles at GoCardless. 

Our goal is to build a sustainable business for the long-term, which means we are constantly looking for ways to improve our business operations. In light of the current economic environment, we have decided to focus our efforts on the core areas of our business and reduce our investment in initiatives with longer term payback. 

Here is a summary of the internal message with we shared with our employees this morning:

Team,

Thank you for your patience over the last few weeks as we have worked through the details of our proposals to reduce costs and put ourselves on a faster path to profitability. I know it’s been an uncertain time, and your continued dedication and delivery have been amazing to see.

We have now finalised our plans to focus on fewer things and the resulting reductions to our cost base in order to get to profitability faster. These plans will see us reduce our cost base by ~15% and will affect 17% of the roles at GoCardless. We will be saying goodbye to some really talented GeeCees as part of this process. If your role is at risk, we will let you know by the end of today in the UK/US and by tomorrow morning in ANZ.

For those of you that will be leaving as part of this process - I want to say sorry that we are having to make these decisions and I take full responsibility for the decisions we made that led to this outcome. I’m really sad that we have to say goodbye to so many talented GeeCees that have put their faith in us.

Cost reductions

We are going to realign our business by focusing on fewer things and reducing our cost base. Our strategy won’t be changing fundamentally, however, we will do more in sequence vs parallel. 

These changes have led us to make the difficult decision to reduce our headcount by 15% (around 135 roles). In addition, we are planning to move an additional 15 roles to Riga from the UK bringing the total number of potentially impacted roles to around 150 (that’s 17% of our headcount). This will reduce our overall headcount from just over 900 today to below 800 post these changes.

Our proposed redundancies will be in the UK, US, and ANZ. We are not planning any redundancies in France. In Riga, we plan on growing the team by ~60 positions over the next 12 months. Therefore regardless of any changes we might make we are confident that we can find other opportunities for any roles that may be affected by this. 

We will be reducing the size of our senior leadership team by around 25% as we believe that a smaller group is more suitable to lead a smaller organisation. 

Finally, we have closed 59 new or backfill open roles, and are recruiting only for roles aligned to our top priorities. We will try and ensure we fill as many of these open roles internally by offering them to impacted GeeCees.

Process

Our priority is to give everyone as much clarity as to whether they are affected as soon as possible. At the same time, we need to follow any legal requirements in each country that we operate. The process will therefore differ by country. 

In the UK and ANZ, GeeCees with impacted roles will receive a notification letter via bob by 6PM BST today in the UK, and by 9am AEST tomorrow in Australia. This letter will also make it clear how likely your role is to be made redundant (i.e., if we are proposing to make 2 out of 5 similar roles redundant then we will share that information with you). 

If you don’t receive a notification letter then this means your role is not at risk. We will notify everyone when the process of sending these notifications is complete.

We will then follow the locally defined processes in order to identify the specific individuals who will be made redundant over the coming weeks. 

It’s important to remember that, due to the way the process works, we will ‘pool’ many of the roles at risk, which means there’ll be significantly more letters being issued than the ultimate number of redundancies we need to make. For example, in the UK nearly 300 letters will go out to those at risk but we are planning on making significantly less roles redundant.

In the US there is no requirement to run a longer process to make redundancies. We will therefore have 1-1 meetings with all individuals whose roles are affected today to let them know that they are being asked to leave GoCardless.

Everyone that is being made redundant will receive 2 months' pay + payment of any notice periods, as well as vested equity to the leave date. We will also be paying any accrued but unused time off, and FY23 bonuses/earned commissions for anyone that is eligible.

In the UK and ANZ, we will offer all those at risk the option to apply for voluntary exit. We will offer an additional month of compensation on top of the compulsory redundancy package for those that take voluntary exit. The process will open tomorrow and you will be able to apply for voluntary exit via GoHere. This process will close at the end of this Sunday 18 June at 6pm BST. Once you have submitted your request, the team will be in touch with you in the following week to discuss the next steps. 

Recommitting to the journey

As part of this process, I have already shared with you how important I think it is that those that stay recommit to the journey ahead. I want to revisit the comments I made last week about this. Based on feedback I have received it is clear to me that a couple of things did not land as I intended them to.

Firstly, I want to acknowledge that there are many GeeCees working incredibly hard and doing great work already. They already exemplify much of what I think our culture needs to become in order for us to be successful. I think you all know who you are, and I want to be very clear about how much I appreciate your incredible work ethic and commitment to everything we do. So whilst we may need to change some of how we work to deliver better results, I certainly don’t expect these people to need to work harder than they already do (if anything some of you work unreasonably hard already). I’m sorry that I made you feel so unappreciated last week and I really hope that we don’t lose you through this process.

Second, I heard that there was a lack of humility in acknowledging the part that our leadership, and more specifically I have played in getting to this point. To be honest, this hurt a lot as I know how much the rest of the exec team and I feel responsible for this situation. However, on reflection, I can see how this came across. In our rush to get everything done, I missed that acknowledgement in last week’s communications. We fully recognise our part to play in this and that as a leadership team we have not delivered. Please believe me when I say we are all soul searching to reflect on how we do better in future.

I also wanted to take a moment to clarify how I see the culture of GoCardless needing to change in order for us to be more successful. 

Firstly, we will continue to focus on holding our culture up to the values that we have always held so dearly. We won’t compromise on the high integrity, humble, and caring culture that I think is at the core of what makes GoCardless such a great culture.

However, I want to see us:

• Setting higher expectations for each other and taking more accountability to deliver results.

• Working at a faster, more intense pace and with a heightened sense of urgency. 

• Be less accepting of failure and losing and being more driven to win and succeed no matter what.

• Be more ruthless about stopping things when they aren’t working so that we can focus our efforts on the things that do work.

• Empower and encourage our people to do the kind of work and drive the types of outcomes that they never thought possible.

• Have an environment where it’s safe to have hard, productive conversations in service of a shared outcome without fear of repercussions.

• Celebrate and get more excited about winning whether that be deals, product launches, or customer satisfaction.

This will be a harder culture to be part of as the expectations will generally increase. However, I also believe that it will be a more rewarding culture to be part of too. I strongly believe that it isn’t possible to have a meaningful impact without the journey being challenging.

I realise that this is not necessarily what everyone signed up for. If that is the case, we understand and want to offer you the option to leave with support and without judgement. 

We are therefore offering the same voluntary exit package for everyone, regardless of whether your role is at risk. This will be available to everyone except those that are still in their probationary period, already working under a redundancy agreement, or are fixed-term contractors. The process will be the same as the process we outlined above, however, will need to vary by country. The team will then be in touch to discuss next steps.

Also, there are a couple of caveats to those applying in areas that are not at risk. Firstly, we may ask you to stay for a period in order to ensure a smooth transition. Second, if we believe you are someone that we really want to be part of the future journey we will try to convince you to stay. We are counting on our best people to help us deliver on the next phase of the GoCardless journey.

The opportunity ahead of us

Whilst the changes we are announcing today are painful, I feel really good about the prospects for GoCardless. We can see that our revenue will continue to grow strongly, and the changes we are announcing today will get us within touching distance of profitability in the near future. This will make us one of very very few technology companies that is generating hundreds of millions of dollars in revenue, growing fast, and being profitable. 

So, whilst we are experiencing a turbulent period and many challenges - we also see a huge opportunity ahead of us. We continue to see many of our customers growing fast and relying ever more heavily on our services. We are finding opportunities to work with ever larger and faster growing potential customers. There is more and more focus on A2A payments as a disruptive change in the world of payments. Over time, I’m really confident that these tailwinds will prevail - we just need to make sure we position ourselves to take advantage of them.

I am excited about the next chapter of our journey. Driving more of a performance culture will push us to do better work than we thought possible. Increasing our level of urgency will inject more energy into our working environment. Being hungrier to win will create the opportunity for huge personal growth. My hope is that the changes we make will help us to recapture some of the start-up spirit that I fear we lost as we have scaled the company. 

Finally, for those of you that are leaving, thank you for helping us get this far. I am very sorry that we will be saying goodbye to so many talented GeeCees. Whilst we are having to make difficult decisions, I hope you feel proud of what we have accomplished together. So very few companies get this far, and it is thanks to your contributions that we have the opportunity that we have ahead of us. I will always feel incredibly grateful for you being part of our journey.

For those of you that will be staying, thank you for your patience. I realise this process has been difficult and has created a lot of uncertainty. We are counting on you to help us to make the sacrifices we are making worthwhile and to help us fulfil the promise that we have ahead of us. I am looking forward to regrouping when we have finished this process and re-focusing on driving the growth of our business.