Citing Permanent Shift to Work from Home, Dropbox Cuts 11% of its Workforce

Citing Permanent Shift to Work from Home, Dropbox Cuts 11% of its Workforce

Corporate cost cutters salivate over working from anywhere. Oh my, the free gourmet cafeteria is gone. Companies already said they’d cut salaries if folks move to cheaper locations.

By Wolf Richter for WOLF STREET.

Dropbox, which offers file hosting in the cloud and is headquartered in San Francisco, and which had announced on October 13 that it was switching to permanent work-from-anywhere, today announced cost cutting moves associated with this shift: laying off 11% of its workforce.

In a new twist that will likely become more common, it specifically cited work-from-anywhere as one of the reasons for these layoffs because suddenly, with people working remotely, there are “teams” that used to deal with those people in the office, and that used to deal with the office itself, that aren’t needed anymore.

In an email to employees, then published as a blog post, cofounder and CEO Drew Houston, who has already bailed out of San Francisco as part of the California Techsodus and purchased a home in Austin for his full-time residence, said that the company made “the difficult decision” to cut its “global workforce by 315 people, or approximately 11% of the company.”

Early on in the Pandemic, as millions of people lost their jobs in a matter of days, Dropbox was one of the tech companies that said that it wouldn’t lay off people in 2020. OK, 2020 is over, it’s now January 13 of 2021, and here come the layoffs.

This cut is “necessary to implement the new strategies we’ve shared over the last few months.” Namely its “remote work policy,” which Drew Houston himself exemplifies. And then he cites this shift to work from anywhere for these cost cuts:

“For example, our Virtual First policy means we require fewer resources to support our in-office environment, so we’re scaling back that investment,” Drew Houston said.

Shifting the workforce to be remote all the time, from the CEO on down, is a radical change for a company, sending all kinds of previously sacred assumptions flying out the window. And it entails some radical shifts in spending, shifts from the company to the employees.

Unneeded office space is going to get dumped, with all the cost cuts associated with it, and the people that take care of it.

But employees have to create an office at home. They need space, furniture, equipment, appropriate broadband service, and they have to drink their coffee at home and go to the bathroom at home, and clean the kitchen and the bathroom, and buy their own toilet paper and supplies and lunches, and pay for the added utility costs of powering a home office all day long.

On the other hand, Dropbox employees could move from San Francisco to anywhere, save an enormous amount of money on housing, and save time and money by not having to commute in the Bay Area. And if you skip out to ski for a couple of hours mid-day, in the brilliant winter sun, you can make up for it by working late. For employees working from anywhere, this arrangement could be a big net benefit.

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Wolf Richter

In his cynical, tongue-in-cheek manner, he muses on WOLF STREET about economic, business, and financial issues, Wall Street shenanigans, complex entanglements, and other things, debacles, and opportunities that catch his eye in the US, Europe, Japan, and occasionally China. WOLF STREET is the successor to his first platform… TP-Title-7-small-200px …whose ghastly name he finally abandoned in July 2014. Here’s the story on that. Wolf lives in San Francisco. He has over twenty years of C-level operations experience, including turnarounds and a VC-funded startup. He earned his BA and MBA in Texas and his MA in Oklahoma, worked in both states for years, including a decade as General Manager and COO of a large Ford dealership and its subsidiaries. But one day, he quit and went to France for seven weeks to open himself up to new possibilities, which degenerated into a life-altering three-year journey across 100 countries on all continents, much of it overland. And it almost swallowed him up.