Upstart Layoffs

For others still in UPST, they just filed an 8-k announcing layoffs. Here’s the single line in the filing:

Given the challenging economy and reduction in the volume of loans on our platform, on November 1, 2022, we notified approximately 140 hourly employees who help process loan applications that their positions had been eliminated.

My takeaways:

  1. The layoffs are of hourly workers who process loans. Salaried folks, who would be in the jobs that matter for R&D, engineering, and sales, are not going anywhere. Not good for people losing jobs, but not likely to affect the business.

  2. Reduction in volume of loans is why they had an excess in the workforce and the macro environment is why they didn’t keep people anyway. The reduction in loan volume could be due to several factors, likely a combination. Here are some reasons in order of likelihood (as I see it):

  3. People feeling squeezed by inflation aren’t making bigger purchases for which they need loans.

  4. Since they are holding loans on their balance sheet, they have reached the amount they are comfortable holding and have to turn people away.

  5. The terms being offered are not competitive.

  6. Their sales team is not effective.

Since they continue to add credit union partners and just added Honda as a retailing partner, I think ineffective sales people is the least likely explanation. But I’ll be listening for info about this on the call.

Upstart was getting a good bounce off of a good SoFi report, but this is now dragging it down.

My main takeaway is that they continue to be affected by the economic headwinds and management is closely watching expenses. They can’t do anything about the first and I’m glad they’re doing the second, although sorry for those who have lost jobs.

My main question is whether reduction of loans on our platform carries over to the loan volume through their partners. Again, that will have to wait for the call to get additional color.



“but not likely to affect the business.”

Hi Jabbok,

I’m afraid that you are trying to put lipstick on a pig. Laying off workers due to loan applications falling means that revenue is falling.

Laying them off is “not likely to affect the business” because they already have nothing to do. Laying them off is a response to the fact that the business has already been affected.

None of our SaaS companies is laying off workers. They are all still hiring and have rising revenues.




Laying off 140 hourly employees seems too less. They are most likely not backfilling vacancies and have implemented a hiring freeze to conserve cash and stopped buybacks.
Upstart needs to survive this downturn.

Their auto loan product launch was important since it is an asset backed loan that will have lower defaults (than personal loans).

It is a tough balance between continuing to launch new products and feature freeze.