Key Takeaways: Kape Technologies Layoffs

• Following a change in ownership resulting in the company going private, Kape Technologies has reportedly laid off around 180 people (or 12% of staff), according to Kape itself.
• ExpressVPN founder Peter Burchhardt exited the company around the time it was taken private, and CTO Dan Gericke also decided to exit along with the laid-off staff.
• Former and current employees of Kape and ExpressVPN have taken to the internet to voice their complaints, posting on LinkedIn and Reddit, as well as emailing various tech publications.

According to recent reports, technology firm Kape Technologies — which owns popular VPN services such as ExpressVPN, Private Internet Access and CyberGhost — has laid off around 180 members of its staff. Following the Kape Technologies layoffs, ExpressVPN CTO Dan Gericke announced that he was leaving the company.

This comes as part of a recent surge in layoffs across the tech industry as tech companies seek to cut costs and improve profitability. That said, many employees have taken to the internet to air their complaints with Kape Technologies and its recent business practices.

Kape Technologies Layoffs: What We Know

According to Kape’s own statement on July 29, the company carried out an internal restructuring that resulted in the layoffs of around 180 employees across different divisions, which represented a 12% reduction in the company’s global workforce.

“We recently conducted an organizational restructuring. Following a careful evaluation, this included the difficult decision to implement a reduction in force, resulting in approximately 180 employees, around 12% of our workforce, being made redundant across the business. The restructuring impacted teams across the organization, including project/program managers, talent acquisition, HR, design, IT, support, operations, engineering, and marketing.“

– Kape Technologies

The statement goes on to say that the company retains the engineering teams directly responsible for “pioneering technologies such as ExpressVPN’s Lightway and TrustedServer.” This seems to indicate that ExpressVPN’s engineering team was minimally affected by the restructuring process, but there’s no way to tell for sure based on Kape’s statement alone.

High-Level Executives Exit

Following the layoffs, the Chief Technology Officer (CTO) of ExpressVPN, Dan Gericke, announced in a LinkedIn post that he was also leaving the company .

“As many of you may know, Kape Technologies (which includes ExpressVPN, CyberGhost, and PIA VPN brands) was taken private on June 1st and this week decided to retrench a portion of their global workforce. I decided to exit along with my many amazing colleagues that were terminated and am officially announcing my departure as CTO of ExpressVPN and the Kape Privacy Division.”

– Dan Gericke, LinkedIn

The post also contained a link to a list of affected workers looking for new jobs. At the time of writing, the list numbered 94 people from various departments residing in multiple countries, including the U.K., Hong Kong, Singapore, Poland and India.

This comes after ExpressVPN’s founder, Peter Burchhardt, left the company in June 2023. Although his statement also had a neutral tone, the timing of it all certainly raises some red flags, given that it coincided with Kape Technologies going private (more on that further down).

Former and Current Employees Speak Out

Here at Cloudwards, we received an anonymous email from an employee at Kape, or one of the companies owned by Kape, which contained strong criticism for the recent layoffs and management in general.

Teams Affected by the Layoffs

According to the source, the layoffs mostly affected employees in Hong Kong, London and Singapore. The email also directly contradicts Kape’s official statement, claiming that ExpressVPN, particularly the engineering team, was especially hard-hit.

“ExpressVPN’s team took the biggest hit when it comes to cutting people. This includes all levels: VPs, Directors and mid-level managers as well as a ton of ICs. The most sensitive part of this is that a lot of engineers and QA specialists were also hit.”

– Anonymous Kape employee email

When we reached out to ExpressVPN for response, they stated that “the restructuring impacted teams across the organization, including project/program managers, talent acquisition, HR, design, IT, support, operations, engineering, and marketing.” While this doesn’t outright contradict what our source said, it does seem to imply that engineering took a lesser or at least equal hit to other departments.

Severances, Reddit and ExpressVPN Leadership

The email goes on to state that many of the people laid off received as little as one month of pay in severance, and some had to leave their country of residence as they no longer qualified for a work visa. However, information we received on background from sources contradict this claim.

Additionally, the email referenced a Reddit thread that has since been removed by the moderators of r/Express_VPN and locked to comments. However, the email references an incident when a Kape employee called an unhappy customer an imbecile, and that they didn’t recall this happening in ExpressVPN before these changes.

Finally, the email points out that with the departure of Burchhardt and Gericke, ExpressVPN no longer has the same degree of independence from Kape Technologies.

“Some more interesting facts: after the restructuring, ExpressVPN’s team has lost all independence. That’s not the worst thing as the company is now managed by Teddy Sagi, Ran Greenberg (vpnmentor.com founder) and Koby Menachemi, appointed as COO.”

– Anonymous Kape employee email

As has been covered previously, both Teddy Sagi and Koby Menachemi (co-founders of Kape Technologies) have previous ties to intelligence services in Israel, namely Unit 8200. While this isn’t a great look for a privacy company, it’s worth noting that military service is compulsory in Israel, and Unit 8200 is the largest unit in the Israeli Defense Forces.

Kape Technologies Going Private

Another side to this story is the recent ownership changes that have taken place with Kape Technologies itself. Back in April, the majority shareholder (54.8%) in Kape Technologies, a holding company called Unikmind, offered to take the company private for the price of approximately $1.6 billion.

This offer got the sufficient support of at least 90% of shareholders, allowing Unikmind to squeeze out any remaining holdouts (if there were any) and acquire all the shares of the company.

This move allowed Unikmind to delist Kape Technologies from the London AIM stock exchange, making it a private company wholly owned and controlled by Unikmind. This can have benign reasons such as wanting greater flexibility and control over the direction of the business. However, it also means the company becomes less transparent as it no longer needs to meet the same reporting requirements.

Although there’s no proof that the change in ownership and delisting led to the exit of ExpressVPNs founder and the layoffs, it’s certainly hard to ignore the timing of it all. In our eyes, this could spell concerning times ahead for the cybersecurity company.

Kape’s Response

We reached out for comments and received a response from an ExpressVPN spokesperson. They assured us that ExpressVPN (and other brands owned by Kape) retains complete independence and that the restructuring will have no impact on users.

“We recognize that organizational changes can raise concerns. However, we’d like to reassure you that these changes won’t alter how we operate our products and services. Kape’s brands continue to operate independently — this extends to our VPN infrastructure which remains completely separate, including our servers.”

– ExpressVPN Representatives

Furthermore, they said that ExpressVPN’s commitment to privacy remains unchanged. “At ExpressVPN, we remain committed to annual independent audits of our Privacy Policy compliance and absolutely no collection of activity logs, connection logs, or any data that can be used to link VPN activity or traffic with any individual user.”

Finally, the spokesperson pointed out that while Peter Burchhardt has departed the company, ExpressVPN co-founder Dan Pomerantz remains an active part and leader in the business.

How This Might Affect VPNs Going Forward

We at Cloudwards run daily performance tests for speed and latency on a selection of top VPNs. Although we haven’t seen any changes to Kape VPN performance immediately following the layoffs, it’s certainly possible that the reduced teams will struggle to maintain their services’ quality.

There are some rumblings of decreased performance in various VPN Subreddits, but we’ve been unable to replicate this in our own testing.

Could ExpressVPN Go Downhill?

It’s certainly possible that ExpressVPN (or other Kape-owned VPN’s) will suffer a noticeable blow to quality, especially if the reports that engineering and QA departments have been hit heavily are true. However, all we can do for now is wait and see.

Several of Kape’s VPNs rank highly in many of our VPN rankings, and for now there’s no reason to change that. That said, we’ll be keeping a close eye on all these services to look for any downstream effects of the layoffs.

Should You Stop Using ExpressVPN?

For now, there’s no reason to unsubscribe from ExpressVPN or any other Kape-owned VPN if you’re happy with the service. We haven’t seen any noticeable change in performance in our routine speed and latency tests, and there’s been no change to the privacy policies of the VPN services to indicate anything nefarious.

That said, we’ll certainly be keeping a close eye on things as they develop. If we see a dip in performance, or worse, weakened user privacy, with any of the services owned by Kape, you can expect to hear about it.

Final Thoughts

That’s all there is to know about the Kape Technologies layoffs and the controversy surrounding the whole situation. Although large-scale layoffs have been all too common in the tech industry this past year, the timing of this restructuring process does seem suspicious given the recent changes in ownership.

We hope that VPNs like ExpressVPN, CyberGhost and Private Internet Access are able to maintain their quality and privacy, but only time will tell.

What do you think of these developments? Do you currently use a Kape-owned VPN? If so, are you considering switching to an alternative? Let us know in the comments below, and as always, thank you for reading. 

FAQ: Layoffs at Kape Technologies 

• What is the ExpressVPN Controversy?

  ExpressVPN’s parent company, Kape Technologies, was recently acquired and made private by another entity, holdings company Unikmind. At the same time, ExpressVPN founder Peter Burchhardt left the company and a few months later, the company laid off 12% of its workforce, coinciding with the exit of ExpressVPN’s CTO, Dan Gericke.

• Why Did Kape Lay Off Its Staff?

  Kape claims that the layoffs were caused by an organizational restructuring that made the positions redundant. According to former employees, the decision to lay off so many workers is a direct result of a recent change in ownership taking Kape Technologies private, and is an effort to cut costs and increase profits.

• Are VPNs Getting Worse?

  No. According to our routine tests, there has not been a noticeable drop in the quality of Kape-owned VPNs across the board.