How a laid off Shopify employee started his own business

  • Stella Alexandrova was one of 1,000 employees laid off by e-commerce giant Shopify in July.
  • She saw the layoff and five months of severance as an opportunity to start a business.
  • A recession is actually a good time to start a company, says venture capitalist Paul Asel.

Stella Alexandrova had been Canada’s growth leader at Shopify for three years when she received an email one morning in July informing her that she had been laid off.

“I was surprised,” Alexandrova said in an interview. “I was so confused because I couldn’t have seen it coming.”

Although there had been layoffs at other major tech companies, she had “felt pretty safe” and didn’t think her job would be affected.

Alexandrova was one of 1,000 employees laid off at the e-commerce giant this summer. Shopify CEO Tobi Lütke explained the cuts in a memo, saying he had wrongly predicted that pandemic-fuelled demand for e-commerce would continue.

“Ultimately, making this bet was my decision and I was wrong,” Lütke wrote. “Now, we have to adjust. As a consequence, we have to say goodbye to some of you today and I am deeply sorry.”

Tech firms have been cutting thousands of jobs this year in an effort to cut costs and prepare for the recession. This month alone, Meta announced plans to lay off 11,000 employees, Twitter cut 50% of its 8,000 employees and Amazon is cutting 10,000 jobs.

Alexandrova saw her dismissal as an opportunity to start her own business.

“I can’t control the layoff, that’s what happened and the company had to make those cuts,” he said. “I can’t control the result, but I can control my reaction.”

It is unlikely that she is alone. Entrepreneurship is known to grow during downturns, and some of the most successful tech companies emerge out of downturns, like Airbnb, Uber, and Microsoft.

It makes sense to get a high-paying job at a stable company “when hiring is hot and wages are high,” said Paul Asel, a venture capitalist at NGP Capital. But in a recession, “the opportunity cost of quitting your job and starting a business is much lower.”

That, he said, frees up potential entrepreneurs to start their own businesses.

Severance pay may be the clue

Alexandrova, an avid traveler, was planning a trip earlier this year when she realized that the rise of DIY travel sites means consumers are now spending hours browsing different sites to plan trips.

Shopify offered her five months of severance after she was fired, effectively “paying me so I can start my own business,” she said.

“This is five months where I don’t have to worry about an income to pay my rent. It gave me peace of mind not having to think about my bills and it’s a clue most people wouldn’t get.” at the beginning of its activity.

A week after being laid off, Alexandrova launched her Mave travel app to help people plan trips in minutes. After sharing her plans to launch Mave on LinkedIn, the post went viral. Despite the support, Alexandrova fully felt the risk of starting a business.

Now is a good time to start your own company, Asel said, because “capital requirements have decreased” and companies can grow at a more moderate pace.

“One of the biggest mistakes any entrepreneur makes is that they try to grow their business too fast, too soon,” Asel said. In a recession, entrepreneurs have more time to create products that meet customer needs, increasing the chances of success.

Asel said it “seems like it’s harder” to start a business in a recession because it’s harder to raise money, but the “chance of long-term success is actually higher.”

“It’s just more painful at first, but that pain turns into success at a faster rate for those who can overcome those early hurdles,” he said.

Alexandrova has now hired 11 employees and says the waiting list for Mave has grown to 16,000 people. She plans to raise funds for the start-up on time.

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