Tuesday was a tough day for creator platform Patreon. The membership-based company laid off 80 employees, representing about 17% of the company’s workforce. The layoffs affect Patreon’s go-to-market, operations, finance, and people teams. In addition, the company will close its Berlin and Dublin offices. Engineering will be centralized in the U.S., so the nine engineers in Dublin will be offered relocation packages.

Severance packages

Employees in the U.S. will receive three months of severance pay plus an additional two weeks for each half year after their first year with the creator platform. They will also receive COBRA health benefits for the balance of the year. Staffers in Europe would also receive three months of pay plus an additional two weeks for each half-year of service after their first year plus three months of health care. How the health care severance will work depends on the region where the employees are located.

Regardless of location, all employees will be eligible to receive three months of mental health benefits through Spring Health. Employees currently getting financial counseling through Origin will receive an additional three months of coverage. In addition, Patreon has contracted with outplacement services to provide departing employees with job matching assistance, resume writing, and cover letter writing services until they find their next position. The company is waiving the one-year equity vesting cliff for employees for those who are or wish to become shareholders, regardless of their length of service.

Conte notifies staff in a letter

On Tuesday, Patreon CEO Jack Conte wrote a letter to staff, which he also posted to the Patreon blog, to share the coming changes.

“Over the last nine months, we’ve seen the tech industry – and the whole economy – change considerably. Many of you have asked me about layoffs at All Hands meetings as we’ve set out to tighten our focus, and I’ve said that layoffs would be a last resort. Today we are taking that step, and I am deeply sorry to the kind, talented, creator-first people who will be leaving Patreon,” Conte wrote.

Conte explained how the creator economy has grown to more than tens of millions of creators reaching billions of fans in the last decade. While the creator economy is booming, the economics that support creators in building their businesses are not adequate. While Patreon has tried very hard to meet the ever-changing needs of creators, even their creator platform needs to adapt.

“Patreon started over nine years ago to address this problem by designing a better way for creators to build stronger relationships with their communities and better businesses around their work,” wrote Conte.

Strategic and operational changes

He said this remains true, and he believes it is more important than ever to support the work of creators. However, the pandemic changed the game, and Patreon had to adapt. Now, with global economics slowing down, the needs to make additional adjustments behind the layoffs. Conte shared some of the changes to the company’s operations in his letter and post. Patreon will:

• Increase investments in their product, engineering, and design teams to provide needed udates that creators and patrons need
• Maintain their commitment to providing outstanding service and support to creators
• Restructure marketing under a smaller team that will focus on updating the brand, developing creator resources, and launching new products
• Restructure their Creator Partnerships with a more scaled approach, driven by a smaller, consolidated team in the U.S.
• Reduce the size of operations, recruiting, and other internal support functions to adapt to Patreon’s new scale and priorities

What’s next?

When Conte sent his letter to company staff, he had not yet informed individuals of whether their jobs were affected. Each team member who would be impacted would have a conversation with a senior member of their team. Those who would be leaving the company were to receive calendar invitations for those conversations within 10 minutes of the letter’s distribution. In those meetings, they would learn more about their separation from the company and get the chance to ask questions. Anyone who did not receive a calendar invitation would not be separated from the company.

Unrelated security changes

Separate from the 80 layoffs, Patreon has “let go” five employees within their security team. Conte said this decision was separate and not related to the other layoffs. Instead, it was part of a “longer-term strategy to distribute security responsibilities across the entire engineer team,” as well as to develop more expertise internally, and to continue to utilize outside experts as needed.

Conte’s parting thoughts

Conte thanked the teammates the company would be losing.

“Because of your work, hundreds of thousands of creative people are building stronger businesses and communities. I am so sorry for the difficulty this causes you, and I am grateful for your kindness, creator-first attitudes, and impact you have had on our mission,” Conte said.

To those who will be part of Patreon’s future, he said, “The second Renaissance has already begun, and we have a massive opportunity ahead of us to change the course of history for creative people, to give them leverage and control, to give them direct relationships with their communities, and to help them build beyond their dreams. Our focus is sharpened, but our mission is unchanged: we will help build a world in which creative people are cherished, respected, and powerful, with tools and infrastructure to help them realize the potential of their imagination.”

Patreon’s current plan and pricing structure

The creator platform says on their home page that they represent “creativity powered by membership.” Using Patreon’s tools, creators can publish and monetize their work while building an audience. They offer three plans and pricing structures. The Lite plan is a basic creator page with access to Patreon communication tools and workshops. The creators pay Patreon 5% of the revenue they earn on the creator platform, plus payment processing fees. The Pro plan includes a host of additional features including membership tiers, analytics and more. Creators pay Patreon 8%, plus payment processing fees. The Premium plan has even more tools, including a dedicated partner manager, merch for membership and team accounts. For this type of plan, creators pay Patreon 12%, plus payment processing fees.

Patreon’s valuation

In April 2021, Patreon’s valuation jumped to $4 billion after the company raised $155 million in Series F funding.

The funding round was led by a new investor, Tiger Global Management. Other Series F investors include Woodline Partners, also new, and previous investors Wellington Management, Lone Pine Capital and New Enterprise Associates, reports Tubefilter. Patreon has raised $413.3 million since starting in 2013. Six months prior, after a $90 million funding round, Patreon was valued at $1.2 billion. Patreon says this extraordinary accomplishment “is proof of the incredible power and potential of creators, and of building this new economy.” It is not clear how the layoffs will impact Patreon’s valuation.

Insider Take

If you’ve ever watched any of Conte’s videos, you know he is passionate about the creative platform he has built and the creators it is meant to support. These decisions had to be very difficult for him to make, and as he noted, they are not the only company faced with similar decisions right now. This year has been particularly difficult for companies who scaled to support growth during the pandemic, only to have to scale back as growth slowed and they could no longer afford to remain on the same path.