How a Laid-Off Shopify Employee Started Her Own Business

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

Stella Alexandrova had been Shopify’s growth leader in Canada for three years when she received an email one morning in July telling her she was fired.

“I was shocked,” Alexandrova said in an interview. “I was so confused because I couldn’t see it coming.”

Although there were layoffs at other major tech firms, she “felt pretty safe” and didn’t think it would affect her work.

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 note, saying he had incorrectly predicted that pandemic-induced e-commerce demand would continue.

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“After all, making that bet was my call to make, and I was wrong,” Lütke wrote. “Now we have to adjust. As a result, we have to say goodbye to some of you today, and for that I am very sorry.”

Tech firms have cut thousands of roles this year as they try to cut costs and prepare for the recession. This month alone, Meta announced plans to cut 11,000 jobs, Twitter cut 50% of its 8,000 jobs, and Amazon is cutting 10,000 jobs.

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

“I can’t control the layoffs — they happened and the company had to make these cuts,” she said. “I can’t control the outcome, but I can control my reaction.”

She will hardly be alone. Businesses are known to thrive during recessions, with some of the most successful tech companies emerging from recessions, such as Airbnb, Uber, and Microsoft.

It makes sense to find a high-paying job at a stable company “when the work is hot and the wages are high,” said Paul Assel, a venture capitalist at NGP Capital. But during a recession, “excepting a job and starting a business is much lower.”

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This, he said, frees up would-be entrepreneurs to continue with their businesses.

Severance pay can be a treadmill

Alexandrova, a keen traveller, was planning the trip earlier this year when she realized that the rise of DIY travel websites meant consumers were now spending hours trawling through different websites to organize trips.

Shopify offered her five months of severance after the layoff, effectively “paying for me to start my own thing,” she said.

“That’s five months where I don’t have to worry about the income to pay the rent. It gave me the peace of mind that I don’t have to think about my bills and that’s a treadmill that most people wouldn’t get at the start of a business.”

A week after being fired, Alexandrova launched her travel app, Mave, to help people plan trips in minutes. After LinkedIn shared its plans to launch Mave, the news went viral. Despite the support, Alexandrova fully felt the risk of starting a business.

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Now is a good time to start your own company, Assel said, because “the capital requirements are down” and businesses can grow at a more moderate pace.

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

Assel said starting a business during a recession is “harder” because it’s harder to raise money, but “the likelihood of long-term success is actually higher.”

“It’s just more painful in the beginning, but that pain turns into success at a faster rate for those who can get through those first couple of hurdles,” he said.

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

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