Hosho, the blockchain security company that focuses on auditing smart contracts, announced last week that they will be laying off 80% of their staff. The company was founded in July 2017 when the ICO market was exploding, and expanded rapidly during this period.
“We thought we were going to go to the moon and audit lots of ICOs,” Sawhney told CoinDesk in a phone call.
Unfortunately, shortly after Hosho opened for business, cryptoassets were hit by some of the biggest losses in the short history of the market. Like many other crypto startups, Hosho massively overestimated the short-term gains in the market and can no longer keep up with the demands of their budgets.
All things considered, Hosho has been relatively successful in the bear market.
The company claims that they have audited more smart contracts than anyone else in the world in it's short existence. Despite being at the top of their field, the losses in the market and the slow down in new ICO projects has forced them to pivot and massively reduce their staff. Hosho once had 37 employees, but the team is now being cut down to 7.
“It was painful personally. I’ve never had to let go of that many people...We realized that the most important thing to us was to stay alive.”
Sawhney also added that there was a quick drop-off in business over the past year. “All of a sudden, we were seeing a lot less smart contracts to audit,” he explained.
However, Sawhney admitted that there were warning signs early on, and there were a few things he wishes he did differently:
"The level of immaturity in this space in the first half of 2018 was very high...I would hire slower. We got a little bit excited about going to the moon in this industry.”
In hopes of staying alive, Sawhney said that the company is expanding their services while downsizing their staff. He hopes that the company can begin to help exchanges with some of their auditing issues. Sawhney says:
“Today we have cryptocurrency exchanges losing two to $2.5 million per day. A lot of these things can be avoided with regular penetration testing.”
Bear Market Layoffs
CryptoGlobe has reported on numerous layoffs and downsizing across the industry in recent months. Last month, Erik Voorhees, the founder and CEO the ShapeShift exchange, announced that he was cutting 1/3 of his staff. Steemit, the blockchain based social media platform, has also faced significant downsizing, cutting 70% of its staff and hiring a new CEO. Just this week it was reported that Coinsquare, a Toronto-based cryptocurrency exchange will be laying off 27% of its staff.