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Layoffs are never fun... sad :( For the more biz-minded commenters out there: does laying off sales + recruiting signal a specific scenario (other than the ob

Layoffs are never fun... sad :( For the more biz-minded commenters out there: does laying off sales + recruiting signal a specific scenario (other than the obvious recent legal woes)? Rather than laying off engineers?

pkaye 11y ago
Some possibilities are: 1. They have been trying to automate their sales infrastructure so less staffing needs. 2. Business is down but they feel confident to work on the product development.
- gravity13 11y ago
  Or a "Sales ALL THE THINGS" manic ex-CEO, who used massive rounds of funding to hire uncontrollably fast, was replaced by a more product-oriented one.
trjordan 11y ago
Zenefits is a classic enterprise sale, meaning you staff the sales team at: # of reps X average quota = expected sales. The recent problems will hit their sales hard, and leadership knows it. With the growth they've had, there's a chunk of their sales team that's not fully ramped (meaning not producing revenue). Laying off reps + recruiting says they think they can't grow as fast as they previously could. Not laying off engineers is probably more about how hard it is to hire engineers today, and knowing that when they get past these problems, it'll be easier to re-hire reps than re-hire engineers.
- w1ntermute 11y ago
  Why exactly is it so hard to hire engineers as opposed to sales people? Isn't it just as hard to find a 10x sales person as a 10x engineer?
  - braythwayt 11y ago
    Without commenting on the possibility that 10x engineers exist, I can tell you from experience in sales that 10x salespeople are extraordinarily easy to identify, but nearly impossible to hire. The problem is that the market for salespeople is very efficient. So your 10x salesperson is nearly always already earning an outstanding amount of money working for an excellent company. They are already selling a product with a demonstrable value-add, and they are employed by a company with a good reputation. Why would they want to come and work for a start-up that stumbled and then at some future date tried to turn itself around?
    - waterlesscloud 11y ago
      Perhaps offer them more than the outdated model of a fraction of a percent of equity. And of course be a company with a convincing path to success, which is as a rare an entity as those 10x salespeople.
    - w1ntermute 11y ago
      > 10x salespeople are extraordinarily easy to identify, but nearly impossible to hire Doesn't that just mean you need to offer a higher percent commission, more equity, or whatever it takes to sweeten the deal?
      - braythwayt 11y ago
        Well, now you're into a different problem: If the market is efficient, what makes you think you can afford to pay them that much? Your equity isn't magically worth more than the equity of the company that already employs them. And if you give them a tremendous chunk of every sale they make, your COS is through the roof and you aren't making any money. You might go raise a ton of cash and spend it buying great salespeople so you can buy some MRR and ARR, but everyone else is playing the exact same game, so you don't automatically raise more money than anyone else to spend on better salespeople. In the end, what I am saying is that there is an efficiency in that market for salespeople such that anything you might think of doing to bring them on board, their existing employer has already done. And possibly better than you ever could.
- jordanb 11y ago
  > Not laying off engineers is probably more about how hard it is to hire engineers today, and knowing that when they get past these problems, it'll be easier to re-hire reps than re-hire engineers. I don't think labor hoarding is a good theory for why they're keeping their product team. If they don't have work for them now and are winding down they would be getting rid of them. Rather, I think they believe they don't have a product they can sell right now, but they believe they can change it to make it viable. You need engineers to change your product.
  - w1ntermute 11y ago
    From what other articles have said, they've actually been doing a ton of paper shuffling on the backend using human labor (by hiring a ton of people with all that VC cash), which means that engineering has a lot of work to do if Zenefits is going to be profitable at scale in the long run.
- nostrademons 11y ago
  This may also be an easy way of firing people for culture fit. David Sacks's original letter was heavy on the need to change the culture at Zenefits, and there's usually some degree of culture change at a company whenever a new CEO takes over. It could be that this is a convenient way to fire the ringleaders of the party culture, the people having sex in the stairwell, the most egregious rulebreakers or those who're disgruntled about having to go through all the regulated training, all without needing to build the paper trail that safely firing for cause would require.

pkaye 11y ago

Some possibilities are: 1. They have been trying to automate their sales infrastructure so less staffing needs. 2. Business is down but they feel confident to work on the product development.

gravity13 11y ago
Or a "Sales ALL THE THINGS" manic ex-CEO, who used massive rounds of funding to hire uncontrollably fast, was replaced by a more product-oriented one.

trjordan 11y ago

Zenefits is a classic enterprise sale, meaning you staff the sales team at: # of reps X average quota = expected sales. The recent problems will hit their sales hard, and leadership knows it. With the growth they've had, there's a chunk of their sales team that's not fully ramped (meaning not producing revenue). Laying off reps + recruiting says they think they can't grow as fast as they previously could. Not laying off engineers is probably more about how hard it is to hire engineers today, and knowing that when they get past these problems, it'll be easier to re-hire reps than re-hire engineers.

w1ntermute 11y ago
Why exactly is it so hard to hire engineers as opposed to sales people? Isn't it just as hard to find a 10x sales person as a 10x engineer?
- braythwayt 11y ago
  Without commenting on the possibility that 10x engineers exist, I can tell you from experience in sales that 10x salespeople are extraordinarily easy to identify, but nearly impossible to hire. The problem is that the market for salespeople is very efficient. So your 10x salesperson is nearly always already earning an outstanding amount of money working for an excellent company. They are already selling a product with a demonstrable value-add, and they are employed by a company with a good reputation. Why would they want to come and work for a start-up that stumbled and then at some future date tried to turn itself around?
  - waterlesscloud 11y ago
    Perhaps offer them more than the outdated model of a fraction of a percent of equity. And of course be a company with a convincing path to success, which is as a rare an entity as those 10x salespeople.
  - w1ntermute 11y ago
    > 10x salespeople are extraordinarily easy to identify, but nearly impossible to hire Doesn't that just mean you need to offer a higher percent commission, more equity, or whatever it takes to sweeten the deal?
    - braythwayt 11y ago
      Well, now you're into a different problem: If the market is efficient, what makes you think you can afford to pay them that much? Your equity isn't magically worth more than the equity of the company that already employs them. And if you give them a tremendous chunk of every sale they make, your COS is through the roof and you aren't making any money. You might go raise a ton of cash and spend it buying great salespeople so you can buy some MRR and ARR, but everyone else is playing the exact same game, so you don't automatically raise more money than anyone else to spend on better salespeople. In the end, what I am saying is that there is an efficiency in that market for salespeople such that anything you might think of doing to bring them on board, their existing employer has already done. And possibly better than you ever could.
jordanb 11y ago
> Not laying off engineers is probably more about how hard it is to hire engineers today, and knowing that when they get past these problems, it'll be easier to re-hire reps than re-hire engineers. I don't think labor hoarding is a good theory for why they're keeping their product team. If they don't have work for them now and are winding down they would be getting rid of them. Rather, I think they believe they don't have a product they can sell right now, but they believe they can change it to make it viable. You need engineers to change your product.
- w1ntermute 11y ago
  From what other articles have said, they've actually been doing a ton of paper shuffling on the backend using human labor (by hiring a ton of people with all that VC cash), which means that engineering has a lot of work to do if Zenefits is going to be profitable at scale in the long run.
nostrademons 11y ago
This may also be an easy way of firing people for culture fit. David Sacks's original letter was heavy on the need to change the culture at Zenefits, and there's usually some degree of culture change at a company whenever a new CEO takes over. It could be that this is a convenient way to fire the ringleaders of the party culture, the people having sex in the stairwell, the most egregious rulebreakers or those who're disgruntled about having to go through all the regulated training, all without needing to build the paper trail that safely firing for cause would require.